Saigol v Thorney Ltd (t/a Thorney Motorsport)

A settlement offer not made under CPR Part 36 carries no automatic costs consequence. It is only a factor in the court’s general discretion. The court must assess its terms, timing and the circumstances in which it was made. An unusually short acceptance period may give an offer little weight, particularly where it appears tactical and gives inadequate time for consideration. A costs decision is materially flawed if the judge treats such an offer as a Part 36 offer. The appellate court may set aside the order and determine costs itself where remittal would cause disproportionate expense.

The claimant appealed against paragraph 4 of an Oxford County Court order following a trial concerning the conversion and retention of a racing car. The county court awarded the claimant £745 and the defendant £375 on its counterclaim, with set-off producing a net payment of £370 to the claimant.

The judge ordered the claimant to pay the defendant’s costs from 1 April 2012. He relied on the claimant’s failure to accept an open offer of £2,000 in full settlement, which remained open for about 22 hours. The central issue was whether the judge had wrongly treated that offer as a CPR Part 36 offer or had otherwise failed to exercise the costs discretion on the correct basis.

1. Appeal allowed. The county court judge’s costs order was materially flawed because he treated the defendant’s 8 March 2012 offer as carrying the normal costs consequences of a CPR Part 36 offer. The offer was not a Part 36 offer. Its expiry therefore had no automatic consequence and was only a factor relevant to the general costs discretion.
2. The judge’s references to the normal consequence of failing to accept the offer, and his question whether costs should run after 14 or 21 days, showed that he had misunderstood its nature. He was also likely influenced by improper reference to without-prejudice mediation discussions, which should have been excluded from consideration.
3. The starting point under CPR Part 44.2(2) was that the claimant, as the successful party at trial, should receive his costs, although the court retained discretion to make a different order. The claimant’s limited success and the parties’ unjustifiably large financial claims supported the judge’s initial view that there should be no order as to costs, apart from the injunction costs.
4. The £2,000 offer was open for only about 22 hours, gave little time for consideration, appeared tactical and did not reflect the defendant’s later or earlier assessment of the merits. It did not justify imposing all subsequent costs on the claimant. Neither side deserved credit for its settlement conduct.
5. Remission was disproportionate. Paragraphs 4 and 5 of the order dated 1 February 2013 were set aside and replaced by an order that, save as provided in paragraph 3, there be no order as to costs.

• Court of Appeal (Civil Division): The appeal from the Oxford County Court was allowed. Paragraphs 4 and 5 of the county court order were set aside and a new paragraph 4 providing no order as to costs, save for the injunction costs in paragraph 3, was substituted: [2014] EWCA Civ 556.
• Oxford County Court: His Honour Judge Harris QC awarded the claimant £745, awarded the defendant £375 on its counterclaim, applied set-off and ordered the claimant to pay the defendant’s costs from 1 April 2012. The appeal concerned the costs order only.