Dorothy Moradi v The Home Office

Where a Civil Procedure Rules 1998 Part 36 offer is accepted less than 21 days before trial, the court must determine liability for costs. The absence of prescribed consequences does not give the court an unfettered discretion. The costs jurisdiction under Part 36 should operate consistently and harmoniously with CPR 44.2.

The successful party ordinarily receives its costs, but the court may make a proportionate adjustment for unreasonable conduct, including an unreasonable failure to negotiate. There is no automatic costs penalty. The court must consider all the circumstances, including the nature and merits of the dispute, settlement efforts, proportionality, delay, and the effect of the conduct on costs.

The claimant brought a claim for unlawful detention against the Home Office and the Ministry of Justice. The Ministry of Justice admitted part of the detention claim and later settled. The Home Office denied liability.

The Home Office made a Part 36 offer of £10,000 in November 2021. The claimant did not make a further offer for several months. The claim settled shortly before trial when the claimant accepted a revised Home Office offer of £15,000. Damages were agreed, but the parties disputed the appropriate costs order.

The central issue was how the court should determine costs where a Part 36 offer made less than 21 days before trial was accepted, and whether the claimant’s settlement conduct justified reducing her costs.

1. Applicable costs framework. The accepted offer fell within CPR 36.13(4)(a), which requires the court to determine liability for costs where an offer made less than 21 days before trial is accepted. Although the rule specifies no particular consequence, it does not confer an unstructured discretion. Part 36 is a self-contained code, but its silence should be addressed consistently and harmoniously with CPR 44.2.
2. Starting point. Under CPR 44.2, the unsuccessful party normally pays the successful party’s costs, subject to the court’s discretion and all the circumstances, including conduct, partial success and admissible settlement offers. Consistently with Fox v Foundation Piling [2011] 6 Costs LR 961 (CA), the claimant remained the successful party because she recovered more than the Home Office had previously offered. Partial recovery and the risks inherent in an unlawful detention claim did not justify depriving her of costs up to 21 December 2021.
3. Unreasonable settlement conduct. The claimant’s failure to negotiate for nine months after expiry of the £10,000 offer, followed by an inflated offer, constituted moderately unreasonable conduct. Such conduct may justify an adjustment under CPR 44.2, particularly where it causes substantial additional costs. However, as explained by Halsey v Milton Keynes [2004] EWCA Civ 576 and PGF v OMFS [2014] 1 WLR 1386 (CA), there is no automatic costs consequence. The court must assess all the circumstances. The conduct was not sufficiently serious to justify disallowing all costs for the period.
4. Proportionate order. The court rejected both the proposed 50 per cent reduction and the claimant’s proposed 10 per cent or no reduction. A fair and proportionate adjustment was to award 66 per cent of the claimant’s reasonable costs incurred after 21 December 2021. The defendant was ordered to pay the claimant’s reasonable costs up to that date and 66 per cent thereafter. A £30,000 payment on account was approved.

First-instance costs judgment following settlement of the claim before trial. No appellate history was stated.