Yentob v MGN Ltd

Under CPR 36.17, the question whether a claimant failed to beat a Part 36 offer is separate from whether imposing the usual costs consequences would be unjust. The court must consider all the circumstances, including the terms and circumstances of the offer. Material relevant to the threshold question may also be relevant to injustice. A reasonable decision not to accept an offer is insufficient by itself. In an exceptional case, limited admissions, uncertainty about whether the defendant would make an effective statement in open court, and the absence of material disclosure may justify departing from the usual order. The result may be no order as to costs, rather than an order awarding the claimant costs.

MGN Limited appealed from a costs order made by Mann J in the Chancery Division, cited as EWHC 1816 (Ch). The underlying proceedings concerned misuse of private information through hacking and other wrongful activities.

Mr Yentob obtained damages of £85,000, but failed to beat MGN’s Part 36 offer. Mann J nevertheless made no order as to costs, relying on MGN’s limited and late admissions, the uncertainty whether it would join in a statement in open court, and the lack of disclosure revealing the full extent of the hacking. The central issue was whether those matters could make the usual Part 36 costs consequences unjust.

Lady Justice Arden delivered the judgment, with Lady Justice Rafferty and Lord Justice Kitchin agreeing. Permission to appeal was granted, but the appeal was dismissed.

1. Separate inquiries. CPR 36.17 requires two distinct inquiries. First, under paragraph (1)(a), the court asks whether the claimant obtained a judgment more advantageous than the offer. Secondly, under paragraphs (3) and (5), it asks whether applying the normal costs consequences would be unjust. The material relevant to the first inquiry is not automatically excluded from the second.
2. All the circumstances. Paragraph 36.17(5) requires consideration of all the circumstances. That includes the terms and surrounding circumstances of the offer. There is no logical or textual basis for excluding them merely because the claimant failed to beat the offer. The settlement objective of Part 36 is important, but the rule also prevents injustice resulting from its ordinary consequences.
3. Meaning of injustice. It is insufficient to show only that refusal of the offer was reasonable. The claimant must establish that it would be unjust to impose the normal consequences. A general wish to have facts investigated and publicly determined will ordinarily not suffice.
4. Application. A statement in open court under CPR 53 could be relevant to the injustice inquiry, but it would not achieve its purpose unless MGN participated fully. The judge was entitled to find that MGN’s admissions were late, vague and materially narrower than the findings at trial, and that the absence of relevant documents and the limits of disclosure became clear only during the trial. In those exceptional circumstances, Mr Yentob had justification for proceeding and it was positively unjust to penalise him with MGN’s costs.
5. The judge was entitled to make no order as to costs from the expiry of the relevant period, rather than award Mr Yentob his costs throughout. The exercise of discretion was not challenged, and there was no error of law.

• Court of Appeal (Civil Division) — Granted permission to appeal but dismissed MGN Limited’s appeal against the costs order.
• High Court of Justice, Chancery Division — Mann J made no order as to costs after Mr Yentob failed to beat MGN’s Part 36 offer. The decision is cited as EWHC 1816 (Ch).