Huck v Robson

A pre-action offer which complies with Part 36 has the consequences of a Part 36 offer. A claimant who obtains a judgment more advantageous than such an offer is therefore prima facie entitled to the incentives in rule 36.21, including indemnity costs, unless their award would be unjust.

The inquiry is fact-specific and must take account of the circumstances in rule 36.21(5). An offer need not mirror the liability apportionment a court might be expected to make. A genuine offer of a discount from full recovery can create a real opportunity to settle even if the defendant rejects it. The likely refusal of the offer, or the improbability of the precise percentage being awarded at trial, does not by itself make indemnity costs unjust.

The claimant was injured in a road traffic accident and made a pre-action offer to compromise liability on a 95:5 basis in her favour. The defendant maintained a 50:50 proposal and rejected the offer.

At the liability trial in Carlisle County Court, Deputy Circuit Judge Townend QC found the defendant wholly liable. He nevertheless awarded the claimant costs on the standard basis. He regarded the 5% discount as derisory and concluded that indemnity costs would be unjust.

The claimant appealed. The central issues were whether a compliant pre-action offer attracted the consequences of Civil Procedure Rules Part 36, and whether the judge had correctly exercised the discretion under rule 36.21 to refuse indemnity costs.

1. Appeal allowed by a majority. Lords Justices Tuckey and Schiemann held that the claimant should receive indemnity costs, with interest, from the relevant date. Lord Justice Jonathan Parker would have dismissed the appeal.

2. The court unanimously accepted Lord Justice Jonathan Parker’s construction of rule 36.10. A pre-action offer which complies with its requirements and with the rest of Part 36 is taken into account as a Part 36 offer. It therefore carries the relevant consequences under rules 36.20 or 36.21. The contrary construction would add nothing to the general costs discretion under Part 44 and would undermine the encouragement of settlement before proceedings.

3. A claimant who betters a Part 36 offer has a prima facie entitlement to indemnity costs under rule 36.21(4). The question is whether it would be unjust to make that order, having regard to all the circumstances, including the matters in rule 36.21(5). A judge need not expressly recite every listed factor, but must exercise the discretion on a legally relevant basis.

4. The majority held that the county court judge had proceeded on a wrong basis. The offer gave the defendant an actual opportunity to settle for 5% less than the claimant ultimately recovered. It was immaterial that a court would be unlikely to apportion liability precisely 95:5, or that the defendant might choose to reject the offer. The offer was not shown to be a merely tactical attempt to obtain Part 36 incentives.

5. Lord Justice Jonathan Parker dissented. In his view, incentives under rule 36.21 required at least a genuine and realistic attempt to settle, and the judge had been entitled to regard this offer as illusory in the particular circumstances. The majority set aside the standard-basis order and directed assessment on the indemnity basis, with interest.

• Court of Appeal (Civil Division): Allowed the claimant’s appeal by majority in [2002] EWCA Civ 398 . The costs order was set aside and the claimant’s costs were to be assessed on the indemnity basis, with interest.
• Carlisle County Court: Deputy Circuit Judge Townend QC found the defendant 100% liable after trial, but awarded the claimant costs on the standard basis.