A claimant who delayed responding to a Part 36 deal can only recover the fixed costs in play when the offer was made, the Court of Appeal has ruled.
The defendant in Attersley v UK Insurance Ltd had made the Part 36 offer while the claim was subject to fixed costs. The claimant accepted well after the expiry of the 21-day period stated in the offer, by which time the case had been allocated to the multi-track where costs could potentially be higher.
Appeal judges ruled that the claimant was restricted to fixed costs, upholding the first instance decision of His Honour Judge Duddridge and overturning the ruling of Mrs Justice Stacey.
Lord Justice Miles, giving the lead judgment, said the defendant’s argument in favour of keeping fixed costs had more ‘rational and coherent consequences’ in terms of preserving the aim of the Part 36 regime.
He added: ‘It would be surprising if a claimant were to become entitled to a greater amount of costs by reason of accepting an offer after the expiry of the relevant period by reason of an allocation of the case to the multi-track in the meantime. Part of the purpose of the rules is to encourage early settlement and it seems to me to be implicit in the rules that 21 days is regarded as a reasonable period in the normal case for a party to be able to decide whether or not to accept the offer.’
The judge said this ability for a defendant to ‘anchor’ its liability on costs was a key principle, and paying parties needed to be confident about how costs would come to be determined.
The underlying claim followed a road traffic accident in 2018 and was submitted under the RTA protocol. The Part 36 offer of £45,000 was made in 2021 but not accepted within the 21-day period. It was allocated to the multi-track in January 2022 and the claimant accepted the Part 36 offer, which had never been withdrawn, in July 2022.
Mrs Justice Stacey relied on Qadar v Esure Services in deciding that fixed costs rules ceased to apply to a case allocated to the multi-track. She rejected the defendant’s argument that this could lead to an ‘absurd outcome’ by perversely rewarding a tardy claimant who could game the system knowing standard costs would follow no matter what.
The defendant was represented by Clyde & Co. The firm’s partners Paul Wainwright and Claire Collins said Attersley strengthens the tactical power of Part 36 offers and gives defendants confidence they can be made without the claimant still being entitled to a windfall.
They added: ‘By confirming that costs consequences attach at the point the relevant period expires - not at some later procedural juncture - the court has ensured that the litigation landscape remains predictable and that defendants remain safeguarded from unwarranted escalation in costs.
‘This decision will resonate across personal injury litigation and strengthen the foundational principles of both the FRC regime and Part 36.’
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