Read v Edmed

A claimant who makes a valid offer to settle liability at a stated proportion, which the defendant rejects and the court later awards precisely, may ordinarily receive indemnity costs and interest after the offer expires. The strict conditions in Part 36.21 need not be satisfied before the court may give effect to the rule’s settlement incentives through its general costs discretion. The result remains subject to fairness, including any material change in the case or unreasonable conduct by the claimant. A Part 36 offer made before proceedings must be taken into account when costs are determined.

The claimant, an elderly cyclist, brought a personal injury claim after a road accident. Liability was found to be equally apportioned between the parties. Before proceedings, she had made a valid offer under Part 36 to accept 50 per cent liability, which the defendant’s insurers rejected. The court initially ordered standard costs, but reconsidered that order after further argument. The central issue was whether the claimant could obtain indemnity costs and interest when the judgment matched, rather than exceeded, her offer.

1. The wording of CPR Part 36.21(1) did not apply directly because the judgment matched the claimant’s proposal and was not more advantageous to her. The claimant had not obtained more than she had offered to accept.
2. That conclusion did not prevent the court from giving effect to the policy and spirit of Part 36 through the general costs rules. CPR Part 36.10 required the offer to be taken into account, while Part 44.3 preserved a wide discretion and required the court to have regard to admissible offers to settle.
3. As a general principle, in a relatively uncomplicated personal injury claim, where a valid offer proposes a proportion of liability, the defendant rejects it, and the court awards precisely that proportion, the claimant should ordinarily receive indemnity costs from expiry of the offer and appropriate interest on those costs. This was subject to circumstances making that result unfair, such as a significant change in the case or unreasonable conduct by the claimant.
4. The approach was consistent with the settlement incentives discussed in Huck v Robson, [2002] EWCA (Civ) 398, Petrotrade Inc v Texaco Limited, [2002] 1 WLR 947, and McPhilemy v Times Newspapers Limited (No.2), [2001] EWCA (Civ) 933 and [2002] 1 WLR 934.
5. On the facts, the evidence had not materially changed between the offer and trial, and no unfairness arose. The claimant was awarded standard costs of the liability issue until 18 August 2003 and indemnity costs thereafter, with interest at 6 per cent per annum on the indemnity costs. No order was made at that stage concerning interest on damages.