PART 36: A MAJOR PROBLEM
A claimant makes a Part 36 offer and after the time for accepting the offer the defendant makes a higher Part 36 offer which the claimant then accepts.
Does the claimant then just get ordinary costs in the ordinary way or indemnity costs from the date of expiry of its own offer?
Thus the question can be asked:-
“Can a defendant avoid the costs consequences of late acceptance of a claimant’s Part 36 offer by making a higher offer, which the claimant then accepts, thus triggering a right to ordinary costs in the usual way, but not indemnity costs from expiry of the claimant’s offer, or will the court find that the claimant has beaten its first offer and is entitled to those indemnity costs?”
Does the same apply the other way round:-
“Can a claimant make a lower Part 36 offer than a previous one made by a defendant, thus avoiding paying costs from the expiry of the defendant’s offer?”
From the number of emails and blog comments I am getting this is now happening a lot and both sides are taking advantage of this apparent lacuna.
For what it is worth my view is that in those circumstances the court should exercise its very wide discretion on costs and take into account the original offer.
If the court does not do so then in any case where there is effectively late acceptance, the paying party can simply make a higher offer that is say £5.00 above the original offer, or the receiving party could make an offer of say £5.00 below the original offer and effectively neuter Part 36.
Consequently my view is that public policy demands that in those circumstances the claimant would have to pay costs from the expiry of the original defendant’s offer and a defendant would have to pay indemnity costs from the expiry of the claimant’s Part 36 offer.
Any thoughts anyone? Any decisions on this point?
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