Onay v Brown

An offer expressly made under Part 36 and solely concerning liability carries the prescribed costs consequences when accepted within the relevant period. An offer concerning liability is not an offer relating only to part of a claim for the purposes of the separate costs provisions.

When identifying the successful party under the general costs discretion, the court asks who really won. It must examine the underlying realities rather than isolate contributory negligence artificially from primary liability. A claimant who obtains substantial damages after an apportionment strongly in the claimant’s favour will ordinarily be the successful party, despite accepting some contributory negligence.

The claimant was seriously injured when his motorcycle collided with the defendant’s car. The defendant admitted primary liability, and judgment was entered for damages to be assessed, subject to contributory negligence. Shortly before the trial of that issue, the claimant accepted the defendant’s offer of a 25% deduction from damages.

His Honour Judge Bailey ordered the claimant to pay the defendant’s costs of the contributory-negligence issue. The claimant appealed from the Central London County Court. The questions were whether the accepted letter was an effective Part 36 offer carrying the costs consequences of rule 36.10(1), and whether the judge had exercised his general costs discretion properly.

1. Appeal allowed. The defendant’s letter was expressly headed as a Part 36 offer, stated that it was intended to have the consequences of that Part, and identified a relevant acceptance period of 21 days. Objectively construed, it invoked rule 36.2(2)(c). Acceptance within that period therefore made the defendant liable for the claimant’s costs under rule 36.10(1). The offer’s silence about costs did not displace the prescribed consequence.
2. Rule 36.2(5) expressly permits a Part 36 offer solely concerning liability. Such an offer is not an offer relating only to part of a claim for the purposes of rules 36.10(2) or 36.11(3). The fact that the remaining liability question was contributory negligence did not alter that conclusion.
3. The appeal would also have succeeded under the general costs discretion. Under rule 44.3(2), the starting point is that the unsuccessful party pays the successful party’s costs, subject to the court’s power to order otherwise. The successful party is identified by asking who really won and examining the underlying realities. An appellate court should nevertheless interfere with a costs order only where it falls outside the judge’s wide discretion or is plainly wrong or perverse.
4. The county court had treated contributory negligence too narrowly as separate litigation won by the defendant. Although primary liability had been admitted, the prospective trial would still have required an assessment of causation and the parties’ relative blameworthiness. The settlement attributed 75% responsibility to the defendant and entitled the injured claimant to 75% of his damages. In those circumstances it was artificial to describe the claimant as anything other than the winner.
5. Carnwath LJ added that certainty requires the court generally to take an express invocation of Part 36 at face value and, so far as possible, give effect to the consequences prescribed by the rules. A party wishing to avoid those consequences should formulate the offer in another permitted way. Toulson and Carnwath LJJ agreed with Goldring LJ.

1. Court of Appeal (Civil Division): The claimant’s appeal was allowed. The accepted letter was a Part 36 offer carrying the costs consequence in rule 36.10(1), and the county court’s alternative exercise of its costs discretion was flawed.
2. Central London County Court: His Honour Judge Bailey ordered the claimant to pay the defendant’s costs of the contributory-negligence issue, except for the claimant’s costs of a second expert report caused by the defendant’s disclosure failure.