Carruthers Law

Part 36 Offer: PGF II SA v OMFS Company [2012]

February 2, 2012

Part 36 Offer : PGF II SA v OMFS Company and Bank of Scotland PLC [2012] EWHC 83 (TCC)

The case concerned claims for dilapidations arising out of alleged breaches of repairing covenants of three properties.The claimant accepted a Part 36 offer on the 10^th January 2012 the day before the trial was due to start. That offer had been made on the 11^th April 2011.

An application was made for the defendant to pay the claimants cost on the standard basis from the period prior to May 2011 and then from the period from 03^rd May 2011 to the 09^th January 2012. There was no dispute that the defendant was entitled to the costs from the date up until 02^nd May 2011 which was 21 days following the offer of the 11^th April. The dispute arose was in relation to costs from the 03^rd May 2011 to 09^th January 2012.

The claimant contended that they were entitled to the costs for this period as it only became aware that the defendant raised an argument on the 10^th January 2012; that it had not been aware of previously. The claimant also relied on an allegation that the defendant was unreasonable and unreasonably refused to mediate.

The relevant section of the law is:

Civil Procedure Rule (CPR) 36.10 (4) (b) A Part 36 Offer accepted after expiry of a relevant period, if the parties do not agree liability for costs the court will make an order as to costs.

And;

CPR (5) [4] (b) applies unless the court orders otherwise

1. The claimant will be entitled to the costs of proceedings up to the date where the relevant period expires and;

2. The offeree will be liable for the offerors costs from the period from the expiry of the relevant period to the date of acceptance.

Unless an application is made by the claimant, the claimant will be liable for the defendants costs for the period from 03^rd May 2011 to 09^th January 2012. The judge made reference to the case of Lumb v Hampsey [2011] EWHC 2808 (QB). The court considered how it would exercise its discretion under CPR 36.10 (5) (b) and it concluded that it would depart from the usual order if it was unjust for the claimant to pay the defendants costs for that period. Guidance was also given as to matters the court should take into account when considering whether it should depart.

1.  the terms of any Part 36 offer;
2. the stage in the proceedings when any Part 36 offer was made, including in particular how long before the trial started the offer was made;
3. The information available to the parties at the time when the Part 36 Offer was made;
4. The conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer to be made or evaluated.

The judge decided to adopt the analysis provided in Lumb. The judge considered both parties conduct and the judge did not consider that if the information had been made available it would have made a difference to the claimants’ acceptance of the Part 36 Offer. But the judge did consider the defendant unreasonably refused to mediate.

The judge therefore made an order that the claimant was entitled to costs on the standard basis that occurred up to that expiry of the relevant period following the Part 36 Offer on the 11^th April 2011; that is until the 02^nd May 2011, however there would be no order as to costs in respect of the period thereafter. As to the costs on the hearing on the 11^th January 2012 he said that each party should bear there own costs giving neither party had succeeded in full.