Late-Acceptance of Part 36 Offers: Do Fixed Costs Apply? - Tom Collins, 1 Chancery Lane
03/03/17. It’s a little over a year now since the Court of Appeal gave judgment in Broadhurst v Tan, a decision which dramatically raised the stakes in fixed cost EL/PL and RTA cases where Part 36 offers are in play. Practitioners in this area will be very familiar with the case, which was discussed at the time by Thomas Crockett of 1 Chancery Lane. In the twelve months since the decision we have seen a much greater use of Part 36 offers by claimants and a greater willingness in response by defendants to take those offers seriously. By beating a Part 36 offer at trial, the array of benefits set out in rule 36.17(4) is engaged and a defendant may be left with a bill of damages and costs several times what would have been awarded had fixed costs applied, particularly if the offer was made early in proceedings or even pre-action.
By accepting a Part 36 offer within the relevant period (usually 21 days from the date of the offer), a defendant forgoes the opportunity to defend the claim but their liability for costs is limited to fixed costs.
But what are the cost consequences if an offer is accepted after the expiry of the relevant period? It’s not at all uncommon for defendants’ assessment of prospects to change late in the day – for instance if a witness is unable or unwilling to attend trial – by which time an offer could have long expired. The issue was not addressed in Broadhurst.
Rule 36.13(4) and (5) provide that where a claimant’s offer (which relates to the whole of the claim) is accepted after the expiry of the relevant period and the parties cannot agree a liability for costs, then unless the court considers it unjust to do so, the claimant will be awarded costs (i) up until the expiry of the relevant period and (ii) from that date until the date of acceptance. The rule is however silent as to the basis on which those costs are to be assessed. The commentary on this rule in the 2016 edition of the White Book, citing the High Court decision of Coulson J in Fitzpatrick Contractors Ltd v Tyco Fire and Integrated Solutions (UK) Ltd  EWHC 274 (TCC), states that ‘there is no presumption that the court would order a late-accepting party to pay the other party’s costs on an indemnity basis. The usual basis will be the standard basis unless (say) conduct is in issue, in which event r.44.2 will apply’. The Court therefore has a...