Civil claimants despairing at Part 36 costs rules have a ray of hope following a court's decision to swing the pendulum their way again. In Holmes v West London Mental Health NHS Trust the High Court ruled last week that a defendant party who waited 15 months to accept a Part 36 offer must pay indemnity costs covering the period of delay.

His Honour Judge Gore QC said that the defendant’s conduct took the case ‘out of the norm’.

The trust faced a clinical negligence claim over the prescribing of the drug lithium, which left the patient in intensive care for 19 days.

The assigned master at the case management conference described the defendant’s case as ‘worse than hopeless’, while HHJ Gore said it was ‘a little difficult to characterise the conduct of the defendant as reasonable pursuit of a defence when it eventually capitulates’.

The decision came a week after the Court of Appeal opted not to impose indemnity costs against a slow-moving party, saying the conduct had not triggered an ‘exceptional circumstances’ provision set out in Civil Procedure Rules.

In Holmes the claimant made a Part 36 offer in February 2017 to settle at 95% of the full liability value of the claim. It was not effectively accepted until May 2018.

In the meantime, the judge noted with ‘utter dismay’ that the trial window was set for between October 2018 and April 2019. Preparation for this trial ‘dawdled along’, with witness statements exchanged late and agendas for expert discussions never even agreed.

Claimant solicitors had to chase the defendants throughout, the judge said, with the NHS trust not responding to repeated invitations to engage in ADR.

The judge dismissed the defendant’s contention about the strength of its defence, which was inconsistent with the trust ‘drip feeding’ settlement offers before the ‘capitulation’ after 15 months. He insisted that the defendant’s letter accepting the claimant’s 95% offer could not be construed as a Part 36 offer of its own. As a result, the claimant was entitled to invite the court to order costs on the indemnity basis from the date by which the Part 36 offer fell to be accepted.

He said this was a case where the court had a wide discretion as to costs, and the burden of proof should shift so the defendant pays indemnity costs.


Jeremy Hyam QC, instructed by Leigh Day, appeared for the claimant. Matthew Barnes, instructed by Bevan Brittan, appeared for the defendant.