Decision Shows ‘Wide Discretion’ On Costs Issues
A recent case has highlighted how the courts have a “wide discretion” on costs issues involving Part 36 offers, according to a specialist commercial litigation lawyer.
The recent case of Bataillon and another v Shone and another  EHWC 3177 (QB) has brought the issue of Part 36 offers into the spotlight and provided some guidance on when the court chooses to make an additional award.
Part 36 offers, named after the Civil Procedure Rule in which the requirements for making such an offer are found, are becoming ever more useful for Claimants.
Since 6 April 2015, if a Claimant succeeds in ‘beating’ a Part 36 offer at trial, i.e. obtaining a judgment that is at least as advantageous as the terms of the offer, the benefits it can receive are significant and include:
- Interest on the principal sum awarded at up to 10% above base;
- Its costs being awarded on an indemnity basis, i.e. an increase on the normal costs order;
- Interest on those costs at up to 10% above base;
- An additional 10 per cent of the principal sum claimed up to a maximum of £75,000.
Under CPR 36.17(4) the court must, unless it considers it unjust to do so, order the above consequences where a Claimant has beaten its Part 36 offer at trial.
In Bataillon, the Claimant obtained Summary Judgment against the Defendant and beat its Part 36 offer. In addition to the principal sum claimed, this led to the court awarding interest on the principal sum and indemnity costs.
However, Judge Waksman QC chose not to award the full additional amount set out at point 4 above and instead he awarded $50,000 (around £30,000 at today’s exchange rate).
Reacting to the news, Irwin Mitchell’s specialist Commercial Litigation team outlined how the case put several key issues in the spotlight.
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“The judge made this level of additional award despite the Claimant obtaining judgment for a sum in excess of $2m including interest. The judge’s reasoning was that the Claimant had succeeded at Summary Judgment rather than at trial and because he had already awarded a significant amount of interest.
"This case highlights two very important principles when it comes to the issue of litigation. Firstly, it demonstrates that the court has a very wide discretion when it comes to the issue of costs.
"Secondly, it is more beneficial than ever for a Claimant to make a Part 36 offer which it has a realistic prospect of beating at trial or Summary Judgment.”
Stephen Murphy - Associate