Samco Europe, The Owners or Charterers of the Ship v MSC Prestige, The Owners or Charterers of the Ship

Under CPR Part 61.4, a compliant collision-settlement offer may retain costs significance after withdrawal. The court must decide whether applying the prescribed costs consequences would be unjust in the circumstances.

The central inquiry is what caused the costs incurred after the offer should have been accepted. Where those costs resulted from the offeree’s unreasonable failure to accept an offer that should have been accepted, the offeree will usually bear them. Withdrawal is relevant, but does not automatically deprive the offer of effect.

Following a collision claim in which liability was apportioned 60:40 in favour of the Owners of Samco Europe, the court determined the parties’ dispute about costs.

The Owners of Samco Europe had made a compliant offer under CPR Part 61.4 to settle liability 60:40 in their favour. The offer was withdrawn before trial, but the eventual judgment adopted that apportionment. The issue was whether the withdrawal made it unjust to apply the costs consequences under Part 61.4.

1. The offer made on 9 September 2009 complied with CPR Part 61.4(12), and the conditions in Part 61.4(10) were satisfied. The offeror was therefore entitled to the specified costs consequences unless it would be unjust to make that order.
2. Unlike Part 36.14(6), Part 61.4 contains no express provision dealing with withdrawn offers. Nevertheless, withdrawal is a circumstance which must be considered when deciding whether the order contemplated by Part 61.4(11) would be unjust.
3. The court declined to treat The Toni [1974] 1 Lloyd’s Reports 489 as establishing a binding rule that a withdrawn offer cannot have costs effect. Its ratio lay in the Court of Appeal’s conclusion that the first-instance costs discretion had been open to the judge. The reasoning of Megaw LJ was persuasive but not binding, and the rules of court had since changed.
4. The court followed the approach in Bristol and West Building Society v Evans Bullock and Trustees of Stokes Pension Fund v Western Power Distribution [2005] 1 WLR 3595. The question was what caused the later costs. If they were caused by the offeree’s unreasonable failure to accept an offer which ought to have been accepted, the offeree would usually bear them, even if the offer was subsequently withdrawn.
5. Withdrawal might affect the order where, for example, it occurred before the offeree should have accepted the offer, or where another party made the same offer after the original offer had been withdrawn. Neither circumstance applied.
6. The withdrawal therefore did not make the order unjust. Costs incurred before 1 October 2009 were apportioned 60:40. The Owners of MSC Prestige were ordered to pay the Owners of Samco Europe’s costs incurred after 1 October 2009.