Kerry Underwood

PART 36 AND INDEMNITY COSTS

with 5 comments


I am organizing, chairing, and speaking at a Part 36 Conference in Central London on Tuesday 14 November with Ben Williams QC and David Pilling. For more information, or to book, click here.

In The Governors and Company of the Bank of Ireland (1) and Bank of Ireland (UK) PLC (2) v Watts Group PLC [2017] EWHC 2472 (TCC)

a High Court Judge refused to make an order for indemnity costs in circumstances where the Claimant failed to beat the Defendant’s offer.

That must be right.

However the court referred to the fact that where a Claimant fails to beat a Defendant’s Part 36 offer then, unlike a successful Claimant, there is no automatic entitlement to indemnity costs.

The court observed:

“I know this misalignment is considered by some to be unjustified, but it remains the law.”

With respect to the judge, that shows a misunderstanding of the true position.

Where a Claimant fails to beat a Defendant’s offer, but nevertheless wins the case, the Claimant is punished twice.

Firstly it does not receive any costs from the date of expiry of the Defendant’s Part 36 offer, even though it has won the case.

Secondly it has to pay the Defendant’s costs on the standard basis from the date of expiry of the offer which it failed to beat.

Thus the double penalty on the Claimant is that they are having to pay part of the costs of the action, and are being deprived of part of the costs of the action, even though they have won the case.

A Claimant who beats its own offer would have no incentive to make an offer without the award of indemnity costs, as it would recover costs in any event as the winner of the action.

If a Defendant was to get indemnity costs when its own offer was not beaten, then the logic would be that a Claimant would get indemnity costs when it beats the Defendant’s offer, and that has not happened.

Some judges seem never to have got to grips with the idea of Claimants’ Part 36 offers.

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Written by kerryunderwood

October 10, 2017 at 10:44 am

Posted in Uncategorized

5 Responses

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  1. Double punishment. Don’t make me laugh. They’d won the case at the time the part 36 offer was made and should’ve been accepted.

    David

    October 10, 2017 at 1:54 pm

    • It quite clearly IS a double punishment, David – Kerry has explained why very well. Further, on FRC cases C is restricted to FRC yet D is not. Another inequality.

      martin hulston

      October 13, 2017 at 1:25 pm

    • kerryunderwood

      October 13, 2017 at 1:38 pm

      • Unsurprisingly I agree with Martin and disagree with David and I am grateful to you both for commenting.

        Kerry

        kerryunderwood

        October 13, 2017 at 3:59 pm

    • kerryunderwood

      October 13, 2017 at 1:40 pm


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