Courts consider reasonableness of Part 36 offers

A recent case of Carver v BAA (2008) regarding an appeal against an order that the claimant pay the defendant's costs at first instance, raises an example of how the Courts will seek to apply the amendments to the Civil Procedure Rules 36.

At fist instance the defendant admitted liability and after seeing the claimant's medical evidence, made a global offer on a Part 36 basis. After further medical evidence the defendant increased the offer to 4520. The claimant's claim was way in excess of this offer at 19000. The matter eventually proceeded to trial and judgement was entered for the claimant for 4686, inclusive of interest.

However, the trial judge considered thePart 36 offer had not, in essence, been beaten. As such it ordered the defendant's costs be paid. The claimant appealed but the Court of Appeal upheld the costs order.

Under the old costs rule it is likely the claimant would have recovered costs on the basis that the Part 36 offer had been beaten in monetary terms. However by the time of this case, the new rules relating to Part 36 offers - the Civil Procedure (Amendment No 3) Rules 2006 - applied. The purpose of the change in the rules was to ensure a broader view when considering whether to pursue litigation, and such a viewpoint was not restricted to money. Parties must now take account of all the facts and issues within a case.

Examples from this case of the extra issues totake into account include the stress the claimant would continue to feel in bringing the claim, and the fact only a small amount recovered over and above the offer was far outweighed by the costs to bring an action to trial. The gain was so small thatno onewould haveissued and pursued a claim for this amount to a final hearing.

Another factor taken into account here was the manner in which litigation was conducted and pursued was seen as unsatisfactory by the Court of first instance. The claim was exaggerated and the offer was areasonable one, given the amounts assessed as reasonably recoverable.

All of these factors must now be taken into account when considering the reasonableness of a Part 36 offer.

Post Magazine: June 2008