Gilham v MGN Ltd & Anor

In an offer of amends case, indemnity costs under CPR rule 44.3 require conduct that is unreasonable to a high degree. Refusal to accept a non-Part 36 settlement offer will only rarely justify that order. The statutory expectation of meaningful negotiation applies to costs as well as compensation and apology.

The automatic additional amount under CPR rule 36.17(4)(d) may apply in an offer of amends case. It is principally an incentive to settle and need not be compensatory. Enhanced interest under Part 36 similarly involves a two-stage inquiry: whether an award would be unjust, followed by the appropriate rate. Prior compensation for distress may affect the rate, but does not necessarily bar an award.

The claimant had accepted the defendants’ qualified offer of amends in a defamation claim. In an earlier judgment, the court assessed compensation under section 3(5) of the Defamation Act 1996. The parties agreed that the defendants would pay the claimant’s costs, subject to detailed assessment, but disputed the date for indemnity costs, the claimant’s entitlement to the 10% additional amount under Part 36, and enhanced interest on damages.

The central issues were whether pre-action settlement conduct justified indemnity costs from an earlier date, whether Part 36 consequences applied notwithstanding the offer of amends procedure, and whether enhanced interest would be unjust because the damages award already compensated the claimant to judgment.

1. Indemnity costs. The court rejected the claim for indemnity costs from the date of the without-prejudice save-as-to-costs offer. Under CPR rule 44.3, refusal of a settlement offer must be unreasonable to a high degree. This was not such a case. The defendants had raised genuine issues concerning the apology, the scope of the correction, and the recoverability of success fees and ATE premiums. The claimant had also declined to negotiate meaningfully about costs. Costs were therefore payable on the indemnity basis only from 10 January 2020, as agreed.
2. Additional amount. The 10% additional amount under CPR rule 36.17(4)(d) was not compensatory and did not amount to double recovery. It served the policy of encouraging reasonable settlement offers and acceptance. There was no general principle excluding it from offer of amends cases. On the facts, the Part 36 offer was made in good faith, six months before trial, after extensive negotiations and when only the amount of compensation remained in dispute. It was not unjust to impose the additional amount.
3. Enhanced interest. The court declined to treat McPhilemy v Times Newspapers Ltd as preventing enhanced interest in a defamation case. Following Omv Petrom SA v Glencore International SA and Telefonica UK Ltd v The Office of Communications, the court first considered whether an award would be unjust and then determined the appropriate rate. The fact that damages already compensated the claimant to judgment was relevant to the rate, not to the existence of the power. Enhanced interest was awarded at 2% above base rate from 10 January 2020.

not stated in the judgment.