Part 36, late acceptance and costs

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Part 36, late acceptance and costs

Published 7 November 2019

Where a Defendant’s Part 36 offer is accepted after the relevant period, the normal costs Order requires the Defendant to pay the Claimant’s costs up to the end of the relevant period and the Claimant to pay the Defendant’s costs from that point.

In what circumstances should the Court depart from the normal costs Order?

The High Court considered this question recently in Momonakaya v Ministry of Defence (2019).  The Claimant accepted the Defendant’s Part 36 offer six months after it had been made and five months after the relevant period had expired.

At the time when the Part 36 offer was made, the value of the claim was unclear and a medical report from an expert was awaited.  The Claimant contended that he was unable to quantify his claim accurately until the report had been received, his solicitor having written to the Defendant’s solicitors alerting them to this at the time when the Part 36 offer was made.

The judge was required to consider the extent to which the Claimant should be responsible for the Defendant’s costs.   As the report of the expert was significant to the question of quantum, His Honour Judge Blair QC concluded that the Claimant should be allowed costs up to 21 days from the date on which the expert’s report had been provided, and that the Claimant should pay the Defendant’s costs from that point to the date of acceptance of the offer.

In contrast, in Campbell v Ministry of Defence (2019), the Claimant accepted the Defendant’s Part 36 offer 13 months after it had been made.  The Claimant sought to persuade the Court to exercise its discretion to depart from the normal costs Order as, at the time when the offer had been made, it had not been known whether the Claimant would be commissioned as an officer; the question had a significant impact on his claim for future losses.

Mrs Justice Lambert, noting that the Claimant was required to prove that it was unjust to apply the normal costs Order, concluded that the burden on the Claimant was a formidable one, as otherwise the Part 36 provisions would be rendered redundant.  The Claimant faced a substantial hurdle to show injustice, had not applied for a stay of proceedings until the Claimant’s future employment had been considered by his employer (which would have avoided much of the costs in question) and there was nothing in this case that rendered the usual costs order unjust.  The Claimant was ordered to pay the Defendant’s costs from the expiry of the relevant period.

While there are some cases in which the Court will exercise its discretion to depart from the normal costs Order, a litigant seeking to persuade the Court to do this will need to demonstrate that it would be unjust to apply the normal Order and that the circumstances of the case took it out of the norm. 

Authors

David Williams

David Williams

Leeds

+44 (0)113 251 4844

Peter Allchorne

Peter Allchorne

Bristol

+44 (0) 117 918 2275

William Swift

William Swift

Manchester

+44 (0)161 934 3109

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