Kerry Underwood


with 2 comments

Kerry is undertaking a 10 city Autumn Tour with his new course – Getting the Retainer Right.

For further details click here


As we await the decision in the case of the Hislop v Perde, it is interesting to look back at the views of the Court of Appeal on this subject on Thursday 21 March 2002 in the decision in


Home Office v Lownds [2002] EWCA Civ 365 (21st March, 2002).


This case is better known as being the case that set out the tests to be considered under the old, pre Jackson, proportionality test.

An important part of the judgment in fact concerns the incentives needed in order for claimants to make Part 36 offers, and the explanation given by the Court of Appeal in that case is highly relevant to the issue of whether a claimant should get indemnity costs on late acceptance by a defendant of a claimant’s offer.

Here is paragraph 8 of that judgment:


8. The new requirement of proportionality, which is in mandatory and unqualified terms in Part 44.4(2), is important in itself, since it should discourage parties from incurring disproportionate costs as those costs will not be recoverable unless an indemnity order is made. This restriction on costs should encourage parties to conduct litigation in a proportionate manner, which is an important objective of the CPR. The contrast between standard costs and indemnity costs is also important because of the impact it has on offers to settle, whether under Part 36 or otherwise, by claimants. A defendant, unlike a claimant, does not need to have an additional or particular incentive to make an offer to settle, since an offer to settle is likely to result in his obtaining an order for costs in his favour if the claimant does not obtain a better result than that which was offered. (See Part 36.20). A claimant does need to have an incentive to make an offer to settle since if he succeeds in an action he is normally entitled, without making any offer to settle, to his standard costs and interest. It is in order to provide the required incentive that Part 36.21 provides that the claimant who obtains a more favourable result than that contained in his Part 36 offer can receive interest at a higher rate and an indemnity order for costs from the latest date when the defendant could have accepted the offer without needing the permission of the court.”


No reference there to there needing to be a judgment.

That, in my view, is an important and correct statement of the law and the principles behind the law, by the Court of Appeal and should be followed in the Hislop v Perde case.

If the Court of Appeal decides that the Civil Procedure Rules as written, are such that it simply cannot make that order, that is that a claimant should always, absent exceptional circumstances, get indemnity costs on late acceptance, then I hope that the Court of Appeal will express, in the strongest terms, its view that the Civil Procedure Rules need amending.

It should be noted that Parliament felt it necessary, in Section 55 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, to give claimants an even greater incentive to make a Part 36 offer, and that is the 10% uplift on damages if a claimant matches or beats its Part 36 offer.

It cannot be the case that Parliament intended to give claimants that extra incentive, but to have a set of Civil Procedure Rules that removed the indemnity costs incentive.

A purposive construction of the law leads to only one answer, and that is that a claimant is entitled to indemnity costs on late acceptance of its Part 36 offer by a defendant.

Written by kerryunderwood

July 17, 2018 at 11:59 am

Posted in Uncategorized

2 Responses

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  1. Do we know when the reserved judgment from Hislop v Perde is to be handed down?


    July 17, 2018 at 12:05 pm

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