Costs on Late Acceptance of a Part 36 Offer

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Practitioners will be keenly aware that over the last year or so, Judges have grappled with the question of what costs would apply on cases which began on one of the Low Value Protocols and exited and which subsequently settled when a Claimant’s Part 36 offer has been accepted out of time.

These issues began following the Court of Appeal’s decision in Broadhurst –v- Tan when the Court decided that where a Part 36 offer was beaten at trial, the Claimant would recover their Fixed Costs applicable at the last date for accepting the offer and their costs assessed on the indemnity basis thereafter.

Since then, Claimants have argued that the same principle should apply where their Part 36 offer is accepted out of time but before trial. The difficulty is that whilst the rules are clear as to what should happen where there is an effective Part 36 offer at trial, they are less clear when the offer is accepted following expiry of the relevant period (usually 21 days) but before trial. The rules provide the Court with a wide discretion in those circumstances.

The latest of these cases were Hislop –v- Perde which was heard by His Honour Judge Walden-Smith on 7 August 2017 and Parsa –v- Smith before His Honour Judge Tindall on 8 September 2017.

In Hislop, The Judge found that the rules provided that the Claimant would be entitled to his costs on either the standard basis or indemnity basis to be assessed if not agreed and it was a matter for the Court to decide whether these would be assessed on the standard or indemnity basis, with no presumption either way. What he was clear about was that where a Part 36 offer was accepted out of time, the costs after the offer would be assessed and would not be fixed.

In Parsa, the Judge found, contrary to the decision in Hislop, that the costs after late acceptance of a Claimant’s Part 36 offer would still be fixed costs.

The Defendant has since filed an appeal with the Court of Appeal in Hislop. The Court has not yet decided whether to grant permission but it is hoped that permission will be granted and an expedited hearing listed in order to provide certainty to the parties.

Settlement of this vexed issue by the Court of Appeal cannot come soon enough.