Jockey Club Racecourse Ltd v Willmott Dixon Construction Ltd

A Part 36 offer need not reflect an outcome which the court could technically order. In a binary liability case, an offer to accept a discounted proportion of damages may be valid if it contains a genuine and commercially meaningful concession. A modest discount is not automatically derisory. Once such an offer is bettered, the prescribed costs consequences apply unless unjust in all the circumstances. The court must consider the offer’s terms, timing, available information, the parties’ conduct and whether it was a genuine attempt to settle. An incompletely pleaded quantum claim does not invalidate a liability-only offer, but may justify postponing indemnity costs until the defendant had a reasonable opportunity to assess the claim.

The claimant sought indemnity costs after the defendant conceded liability in proceedings concerning defects and storm damage to a racecourse grandstand roof. The claimant had made a Part 36 offer to settle liability on the basis that the defendant would pay 95% of the damages to be assessed. The offer was made before the full quantum claim, including the cost of replacing the roof, had been pleaded. The issues were whether the offer was valid, whether it was a genuine attempt to settle despite liability being incapable of apportionment, and whether indemnity costs would be unjust from the usual date. The court also considered whether decisions on interest should be deferred pending assessment of the claim.

1. Validity and outcome. The preliminary liability issues had been resolved by consent in the claimant’s favour, and the order was treated as a judgment for Part 36 purposes. The claimant had therefore been wholly successful. The offer was valid and a genuine attempt to settle.
2. Genuine concession. The court endorsed the reasoning in AB v CD [2011] EWHC 602 (Ch): a request for total capitulation is not an offer to settle, which must contain a genuine concession of significant value in the context of the litigation. The 5% discount here was modest but represented £20,000 and was not derisory.
3. No available-outcome requirement. Although liability was binary and the court could not apportion it at 95%, validity did not depend on the offer reflecting a possible or likely judgment outcome. The approach in Huck v Robson [2003] 1 WLR 1340 was applicable. A discount may reflect the value of certainty and the avoidance of trial. The court also relied on the comparison in Wharton v Bancroft [2012] EWHC 91 (Ch), where an offer was not derisory although it did not reflect an available outcome.
4. Unjustness and timing. Under CPR 36.17(5), the court considered all the circumstances, including the terms of the offer, its stage, the information available, the parties’ conduct and whether it was a genuine attempt to settle. The fact that quantum had not been fully pleaded did not affect validity, but it made indemnity costs from 21 days after the offer unjust because the defendant had only recently learned the increased scale of the claim. The defendant should thereafter have investigated promptly and instructed appropriate experts. Indemnity costs were ordered from 29 May 2015, four months after the offer, with standard costs before that date.
5. Interest. Questions concerning interest were deferred until the final financial outcome and the parties’ subsequent conduct were known.