The importance of sensible early Part 36 offers in lower value injury claims

Posted: 22/11/2016

For now, the Government may appear to have put the proposed reforms for low value injury claims on hold, but it is a timely reminder of the importance of Part 36 offers on these lower value injury claims. Earlier this year, the Court of Appeal judgment in Broadhurst v Tan (2016) ruled that assessed costs and not fixed costs, should apply to cases where a claimant succeeds on a Part 36 offer.

At the same time, the court heard the case of Taylor v Smith. Both cases were initially pursued through the portal as low value injury claims. However, failing agreement within the portal, they had proceeded to final hearing. The judges in both cases had ruled differently on the same issue of costs following a claimant beating a Part 36 offer.

The defendants argued that pursuant to CPR 45.29A, the only costs allowed were fixed costs as allowed under CPR 45.29C and that it was irrelevant that the claimant had beaten a Part 36 offer. The claimants argued that indemnity costs should follow, as was the normal rule under Part 36.

The Court of Appeal ruled that under the fixed costs rules there was no provision for what should happen where a claimant beats a Part 36 offer and that the fixed costs rules should not override or standalone from CPR Part 36. It also ruled that a claimant beating a Part 36 offer would createan exception to the fixed costs rules and should recover their costs on an indemnity basis.

It therefore appears that costs in such situations will be fixed costs of the appropriate stage reached at the effective date of the Part 36 offer and thereafter costs on an indemnity basis (subject to the normal rules).

Following this decision, it is clear that claimants should, whenever possible, make sensible and early Part 36 offers and defendants equally must give special attention to any such offers made.

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