MRA and THE EDUCATION FELLOWSHIP LIMITED (aka RUSHDEN ACADEMY)

Where a Part 36 offer is accepted after the relevant period, the ordinary costs consequences apply unless the offeree proves that it would be unjust to impose them. The question is injustice, not whether it was reasonable to delay acceptance. Uncertainty about prognosis will not ordinarily suffice where the injury is diagnosed, the available evidence permits a reasonable valuation, and the offer is a genuine, early and high-end attempt to settle. A claimant’s incapacity does not of itself justify a different approach. The court must consider all the circumstances and the factors in rules 36.13(6) and 36.17(5), but may not treat the reduction of damages caused by the ordinary costs rule as an independent reason to disapply it.

The claimant brought a damages claim against a school arising from historic sexual abuse by a teacher. Breach of duty had been admitted, leaving causation and quantum in issue. The defendant made an early Part 36 offer of £80,000 on 19 January 2018. The claimant neither accepted nor rejected it within the relevant period and sought an extension because prognosis was uncertain. No extension or stay was agreed. The claimant accepted the offer on 2 April 2020 and sought costs from the defendant. The central issue was whether, under rule 36.13, it would be unjust to impose the ordinary post-expiry costs consequences.

1. Application of Part 36. The claimant bore the burden of showing that the ordinary costs consequences would be unjust. The court was required to consider all the circumstances, including the matters listed in rule 36.17(5).
2. Nature of the uncertainty. The diagnosis was clear and had not materially changed. The uncertainty principally concerned whether the claimant would improve with treatment. That was an ordinary litigation risk, unlike Hewitt, where all experts agreed that diagnosis could not be reached until the child attained majority. The case was closer to Briggs, concerning difficulty in evaluating outcome rather than inability to diagnose.
3. Assessment of the offer. The evidence available when the offer was made permitted advice on value. The £80,000 offer was an early, genuine and high-end offer, based on a pessimistic assessment and within the pleaded valuation. The claimant’s request for an extension did not alter the position because no agreement or stay followed.
4. Authorities and capacity. Following the approach in Matthews v Metal Improvements Co Inc, the court did not ask whether delaying acceptance was reasonable. The claimant’s lack of capacity did not justify departing from the ordinary rule. The observations in Downing v Peterborough & Stamford Hospitals NHS Foundation Trust did not establish injustice on these facts.
5. Impact on damages. It was impermissible to treat the deduction of post-offer costs from damages as a reason in itself to disapply Part 36. Detailed assessment provided protection against excessive costs. The wider policy of Part 36 and QOCS also supported retaining the ordinary rule.
6. Order. It would not be unjust to apply rule 36.13(5). The defendant was entitled, subject to assessment, to deduct its costs for the period from expiry of the relevant period to acceptance.

First-instance decision. No prior appellate decision in the same proceedings was stated.