- Bookmark
- Share
- CaseIQ
AB v CD & Ors
Factual and Procedural Background
This opinion concerns a dispute involving Part 36 offers made by both parties in the context of a split trial where the court has determined liability but not quantum. Each side has made a Part 36 offer which it contends has been or may be beaten, implicating the costs consequences under CPR rule 36.14. The parties disagree on the validity and effect of the other's Part 36 offer. The court has anonymised the judgment by agreement and deferred consideration of other outstanding matters until this ruling on Part 36 issues is delivered. Practical steps were agreed to conceal the existence and terms of the offers from any future trial judge until quantum is decided, including any appeal on liability.
Legal Issues Presented
- Whether the claimant's Part 36 offer was a valid offer to settle for the purposes of CPR Part 36.
- Whether the defendants' amended Part 36 offer was a valid offer to settle under CPR Part 36.
- The consequences for costs of the judgment on liability in relation to these offers, including whether costs should be reserved until the conclusion of the quantum stage.
- The extent to which disclosure of Part 36 offers should be made to the court at the liability stage of a split trial, and the implications for costs orders.
- The impact of non-disclosure of financial information relevant to the assessment of a Part 36 offer on the validity and costs consequences of the offer.
Arguments of the Parties
Claimant's Arguments
- The claimant’s Part 36 offer was a genuine offer to settle the entire claim and counterclaim, providing a mechanism to assess quantum while avoiding a trial on liability.
- The claimant was not in a position to evaluate the defendants’ monetary offer due to lack of financial information, which was necessary for a rational assessment of the case.
- The defendants’ refusal to provide requested financial information undermined the validity of their Part 36 offer or at least the monetary element of it.
- The claimant’s offer included concessions such as undertakings related to specific trade marks, discontinuance of the counterclaim, and confidentiality provisions, which constituted genuine concessions of value.
- The claimant sought an immediate award of costs on an indemnity basis up to the date of 19 August 2010, relying on alleged unreasonable conduct by the defendants and criticisms in the judgment.
Defendants' Arguments
- The claimant’s Part 36 offer was not a genuine offer to settle but rather a disguised request for total capitulation without meaningful concession.
- The limitations in the claimant’s offer regarding the scope of undertakings and the monetary sum were illusory and did not constitute real concessions.
- The defendants’ amended Part 36 offer was a valid offer to settle the entire claim and counterclaim, including undertakings and a monetary payment.
- The claimant could assess the defendants’ offer despite the lack of financial disclosure, and the refusal to provide information did not invalidate the offer.
- Costs incurred since the expiry of the defendants’ offer acceptance period should be reserved until the conclusion of the quantum trial.
- The entire costs of the action, including those before 19 August 2010, should be reserved to allow a full review of conduct and the effect of Part 36 offers at the conclusion of the litigation.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Carver v BAA Plc [2008] EWCA Civ 412 | Interpretation of Part 36 offers and payments into court under CPR Part 36. | Used to explain the modern form of Part 36 and the distinction between payments into court and offers to settle. |
| Gibbon v Manchester City Council [2010] EWCA Civ 726 | Part 36 as a self-contained and prescriptive code; principles on offer evaluation and certainty. | Authoritative guidance on the interpretation of Part 36, emphasizing the need to read it according to its terms without importing general contract law rules. |
| HSS Group Plc v BMB Limited [2005] EWCA Civ 626 | Disclosure of Part 36 payments/offers in split trials and discretion on costs. | Clarified that disclosure of Part 36 offers/payments to the trial judge is limited and that costs should generally be reserved until all issues are decided. |
| Garratt v Saxby [2004] EWCA Civ 341 | Discretion of the court on breach of non-disclosure of Part 36 offers. | Confirmed that breach of disclosure rules is directory and the court may continue the case despite such breach. |
| Ford v G. K. R. Construction Ltd [1999] EWCA Civ 3030 | Importance of disclosure and conduct of parties in costs decisions under CPR. | Used to emphasize the need for parties to conduct litigation with disclosure to enable informed decisions on offers and costs. |
| Roache v News Group Newspapers Limited [1998] E.M.L.R. 161 | Assessment of who is the "real winner" for costs purposes in complex cases. | Guided the court on determining success in litigation by substantive value obtained rather than formal outcomes. |
| Colgate Palmolive Limited v Markwell Finance Limited [1990] R.P.C. 197 | Practice in split trials for intellectual property cases and costs allocation. | Discussed the two-stage trial procedure and the principles for awarding costs at different stages. |
Court's Reasoning and Analysis
The court began by analysing the nature and validity of the claimant's Part 36 offer. It concluded that the claimant’s offer did not constitute a genuine settlement offer under Part 36 because it lacked a clear monetary sum and essentially required total capitulation by the defendants. The offer contained limitations that appeared designed to ensure that success at trial would automatically be deemed to beat the offer, thus lacking a real concession of value. The court held that a valid Part 36 offer must involve a genuine element of give and take, reflecting the policy of encouraging sensible settlement before trial.
Regarding the defendants' Part 36 offer, the court considered the claimant's argument that lack of financial disclosure invalidated the offer. The court rejected this, noting that Part 36 does not require invalidation of an offer for failure to provide information, but rather provides mechanisms such as rule 36.8 for clarification requests and allows the court to consider conduct when deciding costs consequences under rule 36.14(4)(d). The court found the defendants’ amended offer to be a valid Part 36 offer.
On the issue of costs, the court addressed the split trial context and the prohibition on disclosure of Part 36 offers to the trial judge until the case is decided. The court noted the practical difficulties this creates for dealing with costs at the liability stage and observed that in this case the parties agreed to disclosure for the purpose of this judgment. The court held that costs incurred since the expiry of the defendants’ offer acceptance period must be reserved until the quantum trial concludes. It further held that it is preferable to reserve all costs up to that date as well, to allow a comprehensive review of conduct and the effect of Part 36 offers at the end of the litigation.
The court also considered established principles from relevant authorities on assessing who has truly won for costs purposes, the nature of Part 36 as a self-contained code, and the importance of certainty and clarity in the operation of Part 36 offers. It applied these principles to the facts, concluding that the claimant’s offer was not a valid Part 36 offer and that the defendants’ offer was valid but that costs consequences must be deferred until the entire matter, including quantum, is resolved.
Holding and Implications
The court’s final decision was as follows:
- The claimant’s Part 36 offer was not a valid offer to settle under CPR Part 36.
- The defendants’ amended Part 36 offer was a valid offer to settle under CPR Part 36.
- Costs incurred since the defendants’ offer acceptance period expired on 19 August 2010 are reserved until the conclusion of the quantum trial.
- Costs incurred before 19 August 2010, including those relating to the counterclaim, are also reserved to allow a full review of conduct and costs consequences at the end of the litigation.
The direct effect of this decision is that no immediate costs orders will be made, and the parties must await the outcome of the quantum stage before costs are determined. The court did not set any new precedent but clarified the application of Part 36 in the context of split trials and the interplay between offer validity, disclosure, and costs consequences. The judgment underscores the importance of genuine concessions in Part 36 offers and the procedural mechanisms available to address information deficiencies without invalidating offers.
Alert