Kivells Ltd v Torridge District Council

Where a claimant’s Civil Procedure Rules 1998 Part 36 offer is at least as advantageous as the judgment obtained, the prescribed consequences should follow unless doing so would be unjust. The burden lies on the party resisting those consequences to identify circumstances taking the case out of the norm. An apparently inflated pleaded claim, the timing of the offer, and earlier settlement attempts do not necessarily establish injustice. Once the consequences apply, the court retains discretion over the applicable rates of interest. A rate may exceed ordinary compensation where it reflects the claimant’s superior position following rejection of an advantageous offer.

Following judgment for the claimant on the claim and counterclaim, the court considered the costs and interest consequences of the claimant’s Part 36 offer dated 28 February 2019. The claimant had offered to accept £250,000 in full and final settlement, including the counterclaim and interest. The judgment was substantially more advantageous, being approximately £458,500 before Part 36 consequences. The council argued that it would be unjust to impose the consequences because the pleaded claim had exceeded £1 million, the offer was made relatively late, and the council had made other settlement attempts.

1. The claimant’s judgment was at least as advantageous as the proposals in its Part 36 offer. The condition in CPR 36.17(1)(b) was therefore satisfied.
2. Under CPR 36.17(4), the court must ordinarily order the specified consequences unless it considers that would be unjust. The guidance in the White Book indicates that something taking the case out of the norm is required before the consequences are withheld.
3. No such circumstances existed. The pleaded value of more than £1 million reinforced the attractiveness of the £250,000 offer. The timing of the offer did not make its rejection reasonable, particularly because the costs budget and likely costs exposure were already apparent. The council’s other settlement efforts did not justify disapplying the rule.
4. The consequences therefore followed: enhanced interest on the judgment sum, indemnity costs from 4 April 2019, interest on those costs, and the additional amount permitted by CPR 36.17(4).
5. The court retained discretion over the interest rates. Ten per cent was not appropriate, but a rate below six per cent was also unjustified. Eight per cent was awarded under both CPR 36.17(4)(a) and (c), reflecting treatment of the claimant as a judgment creditor from expiry of the offer and the superior position created by the rejected offer.