High Court ruling addresses Part 36 anomaly

In the privacy case of Pallett v MGN Ltd [2021], the Defendant sought to exploit an anomaly in the Part 36 rules by accepting an offer outside the relevant period and inviting the court to consider the liability for costs, on the assumption this would result in them paying less in costs to the Claimant.

CPR 36.13 (4) (b) states that where a Part 36 offer, which relates to the whole of the claim, is accepted after the expiry of the relevant period the liability for costs must be determined by the court.

The Defendant accepted the offer on day 22, post-expiry of the relevant period. If the Defendant had accepted the offer made by the Claimant within 21 days, they would have been bound to pay the Claimant’s costs. The Defendant’s tactic was to avoid these costs consequences and instead have costs put “at large” for determination by the court.

The High Court ruled that although the Defendant was entitled to take this approach, normal consequences should follow and the Claimant was awarded all the costs of the proceedings in the same way they would have been if the offer was accepted within 21 days.

The anomaly in the rules relating to Part 36 may have previously deterred Claimants from advancing Part 36 offers but this case demonstrates that the court can impose the same costs outcome, whether a Part 36 offer is accepted in or out of the 21 days, at their discretion.

This article was featured in our January 2021 newsletter, see the full newsletter here.

Anna Lockyer is an Associate in our Costs and Litigation Funding team. If you have any questions please contact her on 0113 2885619 or at anna.lockyer@clarionsolicitors.com.

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