Thinc Group Ltd v Kingdom

A successful Part 36 offer must receive due weight and will often decide the incidence of costs. The prescribed consequences remain subject to the court’s power to avoid injustice. That power permits modification to the extent necessary, including a percentage award on the indemnity basis.

When deciding whether the prescribed consequences would be unjust, the court may consider the whole litigation history. Relevant matters include earlier settlement offers, the parties’ conduct and a failure to supply reasonably requested costs information. Success on the claim does not require a winner-takes-all costs order.

The claimant recovered £9,510 plus interest on its claim against the defendant, while the defendant’s counterclaim under regulation 17 of the Commercial Agents (Council Directive) Regulations 1993 was dismissed. His Honour Judge Salomonsen divided the costs of the claim by periods and awarded the claimant 20% of its later costs on the indemnity basis.

The defendant appealed parts of that order, and the claimant cross-appealed. Each argued that the judge had wrongly exercised his costs discretion. The central issues concerned the significance of earlier Calderbank offers, the claimant’s successful Part 36 offer, its failure to clarify its costs, and the scope of the court’s power to depart from the usual Part 36 consequences where they would be unjust.

1. Appeal and cross-appeal dismissed. The judge’s evaluation and resulting costs order disclosed no appealable error. Macur LJ delivered the judgment, with which Ryder and Arden LJJ agreed.

2. The claimant was properly regarded as the successful party because the defendant’s insufficient pre-action offer had necessitated proceedings. That conclusion did not require a winner-takes-all order. Under rule 44.3 of the Civil Procedure Rules 1998, the judge could give considerable weight to the monetary realism of the Calderbank offer and to the claimant’s peremptory and uncooperative rejection of settlement proposals. His allocation of costs for the period following that offer was unassailable.

3. A Part 36 offer is a significant feature of litigation. It requires the parties to reassess the issues and their expectations and to consider the adverse costs and interest consequences of continuing. A successful offer within rule 36.14(1) must receive due weight and will often be decisive, but the court must still determine whether the prescribed consequences under rule 36.14(2) or (3) would be unjust.

4. The words “unless it considers it unjust to do so” in rule 36.14(2) and (3) mean “unless and to the extent of”. The court’s choice is therefore not confined to imposing all the prescribed consequences or none of them. It may make a percentage costs order on the indemnity basis where that produces the just result.

5. The claimant’s offer was at least as advantageous as the judgment. Nevertheless, the defendant had reasonably requested clarification of the claimant’s costs on the same day, and the claimant gave no response before trial. That omission was relevant under rule 36.14(4)(c) and (d). The judge was also entitled under rule 36.14(4)(a) and (b) to consider the parties’ entire litigation history, including earlier offers and enduring conduct amounting to brinkmanship, professional discourtesy or failure to assist the court in furthering the overriding objective.

6. The absence of costs schedules did not itself prevent a proportionate or percentage costs order, because detailed assessment could provide further scrutiny. An alternative order might have been more attractive, but that did not make the order actually imposed wrong.

1. Court of Appeal (Civil Division): The appeal and cross-appeal were dismissed. The County Court’s costs order was left undisturbed: [2013] EWCA Civ 1306.

2. Plymouth County Court: His Honour Judge Salomonsen awarded the claimant £9,510 plus interest, dismissed the defendant’s counterclaim, and made a costs order dividing responsibility by periods and awarding 20% of certain later costs on the indemnity basis. No citation is stated.