Kerry Underwood

PART 36 AND RESERVING COSTS TO END OF CASE

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In Interactive Technology Corporation Ltd v Ferster [2017] EWHC 1510 (Ch)

the Chancery Division of the High Court held that the existence of Part 36 offers by the Defendants meant that the issue of costs after a preliminary hearing had to be reserved until the end of the case.

The judge was unaware of terms of the offers but the very fact that they had been made meant that the preliminary trial costs must be reserved, even though there had been a lengthy trial on the preliminary issue.

CPR 36.16 provides:

“36.16.— Restriction on disclosure of a Part 36 offer

(1) A Part 36 offer will be treated as “without prejudice except as to costs”.

(2) The fact that a Part 36 offer has been made and the terms of such offer must not be communicated to the trial judge until the case has been decided.

(3) Paragraph (2) does not apply—

(a) where the defence of tender before claim has been raised;

(b) where the proceedings have been stayed under rule 36.14 following acceptance of a Part 36 offer;

(c) where the offeror and the offeree agree in writing that it should not apply; or

(d) where, although the case has not been decided—

(i) any part of, or issue in, the case has been decided; and

(ii) the Part 36 offer relates only to parts or issues that have been decided.

(4) In a case to which paragraph (3)(d)(i) applies, the trial judge—

(a) may be told whether or not there are Part 36 offers other than those referred to in paragraph (3)(d)(ii); but

(b) must not be told the terms of any such other offers unless any of paragraphs (3)(a) to (c) applies.”

The judge then applied CPR 36.16 to the facts of this case and said:

“Applying CPR 36.16 to this case, the position is as follows:

(1) The case has not “been decided”, for the purposes of rule 36.16(2), because there are issues in the case which remain to be decided; see Beasley v Alexander [2013] 1 WLR 762, a decision on an earlier version of Part 36 but which remains relevant in relation to the current version of Part 36;

(2) Although ITC is content for the court to be told the terms of the three Part 36 offers, the Defendants and, in particular, Jonathan Ferster, do not agree to that and so the case is not within rule 36.16(3)(c);

(3) A part of the case has been decided within rule 36.16(3)(d)(i);

(4) The Part 36 offers do not relate only to parts or issues that have been decided and so the case is not within rule 36.16(3)(d)(ii);

(5) I have been told of the existence of the Part 36 offers, in accordance with rule 36.16(4)(a);

(6) I have not been told the terms of the Part 36 offers, in accordance with rule 36.16(4)(b)”

The judge then explained that he knew that there were Part 36 offers that related not only to the decided issues and he was unaware, and was not entitled to know, whether those offers related only to issues which had not been decided or whether they related both to issues which had been decided and issues which had not been decided.

This follows the decision of the Court of Appeal in

HSS Group plc v BMB Ltd [2005] 1 WLR 3158

which concerned an earlier version of Part 36 but the judge took the view that the relevant reasoning in that case still applied.

I deal extensively with Part 36 in my book Personal Injury Small Claims, Portals and Fixed Costs, which runs to 3 volumes and 1,300 pages and is available for £80.00 from Amazon here or from me here.

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Written by kerryunderwood

June 27, 2017 at 8:27 am

Posted in Uncategorized

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