Walsh v Singh

Part 36 consequences are not automatic where the court considers it unjust to impose them. In deciding whether justice requires departure from the usual order, the court must consider all the circumstances, including the offer’s terms, timing, available information and the parties’ conduct. A claimant’s failure to beat a Part 36 offer does not give the successful party licence to conduct litigation improperly or abusively. Conduct such as pursuing abandoned claims, advancing unsuccessful counterclaims, relying on improperly obtained privileged material, and conducting oppressive cross-examination may justify withholding the usual costs consequences. The court may therefore make no order as to costs, including where the offeror achieved the better monetary result.

The court had already determined the substantive dispute between Moira Walsh and Mark Buddhah Singh. It then considered the costs consequences of a Part 36 offer made by Mr Singh on 23 January 2009, under which he offered £85,000 and costs in return for withdrawal of the claims and any related claims.

Mr Singh argued that he had substantially succeeded and that the offer had not been beaten. Ms Walsh disputed the proposed costs order, relying on the parties’ relative success, abandoned and unsuccessful counterclaims, and Mr Singh’s conduct of the litigation. The central issue was whether the usual Part 36 consequences should follow, and what order was just in all the circumstances.

1. Part 36 offer. The claimant had failed to obtain a judgment more advantageous than the defendant’s offer. The court treated the offer as covering the claims and counterclaims, including sums which had not been expressly claimed but were potentially recoverable. CPR 36.14(1)(a) was therefore engaged.
2. Discretion to depart from the usual consequences. Under CPR 36.14(2) and (4), the usual order that the defendant receive costs from expiry of the relevant period was subject to the court’s assessment of injustice. The relevant circumstances included the offer’s terms and timing, the information available when it was made, and the parties’ conduct. The general costs discretion under CPR 44.3 was also relevant.
3. Conduct and overall success. Mr Singh had succeeded on important aspects of the defence, but he had lost or partly lost on several issues. His counterclaim had been abandoned in substantial part, and he was unsuccessful on other counterclaims. The court also considered his conduct, including the use of spyware-derived material revealing privileged communications, attempts to portray Ms Walsh as mentally unstable, irrelevant and oppressive cross-examination, and reliance on matters that should not have occupied substantial trial time.
4. Order. A well-judged Part 36 offer did not permit the offeror to conduct the trial without fear of costs consequences. It would be unjust to order Ms Walsh to pay Mr Singh’s costs and interest after the offer, while it would also be inappropriate to order Mr Singh to pay Ms Walsh’s costs. The court therefore made no order as to costs. It made no order as to the costs of the costs hearing and refused permission to appeal on the basis that the costs decision was discretionary.