Lilleyman v Lilleyman & Anor

A Part 36 offer does not lapse merely because the period for its ordinary costs consequences has passed. It remains open unless properly withdrawn under the code.

Where an offeree fails to obtain a more advantageous judgment, the prescribed costs consequences normally follow. The discretion to displace them is narrower than the general costs discretion. However, the requirement to consider all the circumstances permits a court, in an appropriate case, to take account of the offeror’s post-offer conduct where it unnecessarily increased costs and did not serve justice.

A proportionate disallowance of otherwise recoverable costs may therefore be justified, even though the offeree took the risk of rejecting a generous offer.

The claimant, the deceased’s widow, had brought a claim for reasonable financial provision from his estate. Following judgment on the substantive claim, the court determined the parties’ costs.

The defendants had made a July Part 36 offer. The claimant did not accept it and obtained a less advantageous award. The parties disputed whether a later without-prejudice offer had withdrawn the July Part 36 offer and whether it would be unjust to apply the ordinary post-offer costs consequences.

The central issues were the continuing effect of the July offer and the extent to which the parties’ conduct of this Inheritance Act claim justified a departure from those consequences.

1. The court held that the defendants’ January 2012 without-prejudice offer did not withdraw their July Part 36 offer. Construed in its commercial and procedural context, the January letter expressly withdrew and replaced the earlier without-prejudice offer, not the Part 36 offer. The expiry of the 21-day period did not itself cause the Part 36 offer to lapse; it remained capable of acceptance unless withdrawn by the prescribed notice.

2. The claimant had failed to obtain a judgment more advantageous than the July offer. The ordinary consequence under Part 36.14(2) was therefore that the defendants should recover their costs from 17 August 2011, with interest, unless that would be unjust. The court rejected the alternative reliance on Part 36.14(6)(b), because the judgment did not beat the January without-prejudice offer.

3. Part 36 confers a materially narrower discretion than Part 44. Its focus is normally the offer, the timing of its making and the information available to the offeree. Nonetheless, the requirement to consider all the circumstances permitted the court to consider whether the offeror’s subsequent conduct had pursued the litigation in a way which did not serve justice. The court applied the procedural approach described in Gibbon v Manchester City Council [2011] 2 All ER 258.

4. The claimant’s decision to continue after rejecting a generous offer, and the resulting reduction in her maintenance resources, did not alone make the ordinary costs order unjust. She had undertaken a high-risk attempt to obtain a better award. However, the defendants had maintained unrealistic issues, delayed concessions and pursued a no-holds-barred approach which unnecessarily enlarged the costs. Such an approach was particularly unsuitable for an Inheritance Act claim, where costs can frustrate settlement and consume the subject matter of the dispute.

5. The claimant’s costs up to 17 August 2011 were payable from the estate. She was ordered to pay 80% of the defendants’ costs incurred thereafter, with judgment-rate interest. Costs were to be assessed on the standard basis, with no interim payment on account.

not stated in the judgment.