Court of Appeal
The Issues: The Claimant was awarded £4,686.26 at trial, beating a previous Part 36 offer of £4,520.00. However the trial judge ruled that taking into account all the circumstances, the Claimant had not obtained a judgment “more advantageous” than the offer, (the wording in CPR 36.14), and awarded the Defendant its costs from the time the offer expired. If a Claimant beats a Part 36 offer by a modest amount, even £1, have they obtained a judgment “more advantageous” than the offer or is the Court entitled to look at all the circumstances of the case in deciding where the advantage lies?
Held: The Civil Procedure Rule Part 36.14 was brought in to replace 36.20 under which a claimant used to be liable for the defendant's costs where they 'failed to better' the Defendant's Part 36 offer. The rules were changed in order to allow Defendants to make non-monetary offers on a Part 36 basis and to avoid an accompanying payment.
The Court of Appeal broadly agreed with the trial judge, and did not vary any of the costs order. Lord Justice Ward said that the aim of the new rules was for lawyers to use a modern approach to litigation. He said:
' The CPR, and Part 36 in particular, encourage both sides to make offers to settle. Compromise is seen as an object worthy of promotion, for compromise is better than contest and for the administration of justice as a whole. Litigation is time-consuming and it comes at a cost, emotional as well as financial. There are, therefore, appropriate factors to take into account in deciding whether the battle was worth it. Money is not the sole governing criterion.'
The Court took account of the fact that Part 36 offers could be used in non monetary claims. The Court already had the difficult task of assessing whether those offers were “more advantageous” so there was no reason to avoid the same exercise in monetary claims.
Comment: This judgment has far reaching consequences for claimants since it increases the pressure of any offer made by a defendant. Clearly claimants must now take care not to press on to trial simply because they are reasonably confident of being awarded more than what is offered, but they must instead attempt to value the non-financial costs of reaching the court door. Part 36 offers are no longer black and white but shades of gray - offers which are nearly enough should probably now be accepted.
Note that the 'more advantageous' test although introduced in April 2007, applies to Part 36 offers made before that date, so all existing offers need to be carefully reconsidered.