LEGAL UPDATES

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PROCEDURE AND PRACTICE

COWARD v PHAETOS [2014] EWCA Civ 1256 ALL ER (D) 17 (Oct)

Without Prejudice Save As To Costs Offers (Calderbank Offers) and Part 36 Offers

The central argument behind Coward’s appeal related to a without prejudice save as to costs offer (the Calderbank offer), which he made to the respondent part way through the proceedings. Coward argued that the Calderbank offer offered the respondent substantially all that it achieved at trial and that the high court judge had therefore been wrong not to order either that the respondent pay his costs from the date the Claderbank offer or at least that from that date onwards each side should bear its own costs. However the Court of Appeal agreed with the high court judge’s analysis that the order achieved by the respondent at trial was materially better than the terms advanced in the Calderbank offer.

The case makes it clear that the courts will approach the question of costs differently where there has been a Claderbank offer rather than a Pt 36 offer. Part 36 is a self-contained regime dealing with offers of settlement subject to the terms of Pt 36, which specifies particular consequences in the event that such offers are not accepted. By contrast Pt 44 (court’s discretion in respect of orders for costs) contains no rules as to the way in which the court is to have regard to offers. The court should exercise its discretion as to the just order for costs, having regard to all the circumstances of the case, including those specified in Pt 44.2(4).

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SUGAR HUT GROUP v AJ INSURANCE [2014] EWHC 3775, [2014] ALL ER (D) 205 (Nov)

Part 36 and Part 44

The claimants (whose claim related to losses arising out of a fire at a nightclub) received an  interim payment of £1,090,02.02 from the defendant with an outstanding balance of £277,021.02 still due to the claimants. The defendant had made a Pt 36 offer of £250,000.00 to settle the balance which was therefore unsuccessful. At the costs hearing the court considered the offer letter as “highly relevant” and exercised his discretion under CPR 44(2) (2) (2) (b) and reduced the claimants’ recoverable costs by 30% having regard to “all the circumstances” including the ‘conduct of all the parties’. (The claimants did not engage properly with disclosure and pursue certain meritless or inflated claims causing the defendant to incur considerable expense in the process). It seems therefore that the court’s discretion as to costs under CPR 44 may trump the confines of the usual rules in order to see justice done between the parties.

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