Interactive Technology Corporation Ltd v Ferster & Ors

Where a case has been split so that some issues remain outstanding, the court should generally reserve costs if a Part 36 offer may relate to both decided and undecided issues. The court may be told of the existence of such an offer, but not its terms, unless an exception in CPR 36.16 applies. A party cannot require an immediate costs order merely because particular liability issues have been decided. The court should ordinarily determine costs after all relevant issues have been resolved and the terms of the offer can be considered.

The judgment concerned consequential costs orders following an earlier decision in disputes between shareholders of Interactive Technology Corporation Ltd. The court had determined liability issues in the claimant’s claim, but other issues, including quantification, remained outstanding. The claimant sought an order that the defendants pay its costs of the liability issues.

The court knew that three Part 36 offers had been made, but could not be told their terms because the offers were not confined to issues already decided and the defendants did not consent to disclosure. The central question was whether costs of the decided issues should nevertheless be determined immediately.

1. The court applied CPR 36.16 on the basis that the case had not been decided because issues remained outstanding. It could be told that Part 36 offers existed, but not their terms. The offers might relate to issues already decided, and the court had to proceed on that basis.
2. The claimant’s submission that its liability costs should be determined separately was rejected. A defendant may make a Part 36 offer covering the whole case even where the trial has been split between liability and quantum, or between specified issues. The court must be able to take that offer into account when it eventually determines the costs of the action.
3. The reasoning in HSS Group plc v BMB Ltd remained relevant. Where damages or other issues remain to be decided, the appropriate course will ordinarily be to reserve costs, except perhaps in the most exceptional case. The claimant’s argument that the offers were irrelevant to the liability issues was not established, because their terms were unknown.
4. The separate petition under section 994 of the Companies Act 2006 did not alter the conclusion. The petition was a separate proceeding, and the fact that overlapping issues had been considered in relation to its costs did not show that the Part 36 offers were irrelevant to the claimant’s claim.
5. The court was not persuaded, on the limited submissions made, that the possible operation of CPR 36.17 justified an immediate costs order. The costs of the liability issues were therefore reserved.

The judgment was a consequential first-instance decision following the court’s earlier judgment in the same litigation, [2016] EWHC 2896 (Ch). It was not an appeal.