Part 36 Costs Sanctions Don't Kick In Until Defendant Is In a Position to Assess Quantum

News

01 July, 2015

In the recent case of Thai Airways v Ki Holdings Co Ltd (formerly Koito Industries Ltd (2015) the Court considered whether it was unjust for the Defendant to pay costs sanctions to the Claimant pursuant to CPR 36.17(4).

The Claimant had been successful at trial and had beaten a Part 36 offer it had made early on in proceedings. At trial, the Claimant obtained judgment for nearly three times the amount it had offered to settle for. Relying on CPR 36.17(4), the Claimant claimed all of its costs on an indemnity basis, from 15 November 2013, at 10 per cent above base rate.

Under CPR 36.17(4) the presumption was that the Claimant would be entitled to its costs on an indemnity basis for the period after 15 November 2013 unless the court considered it unjust. The court was required by CPR 36.17(5) to take into account all of the circumstances, including:

  • the stage at which the offer was made,
  • the information available to the parties, and
  • the conduct in giving or refusing information.

The Defendant maintained that it had "sound reasons" for not accepting the Part 36 offer. Koito argued that the Claimant had failed to disclose the evidence relied on in support of its claim in a timely way.

The Court held that the Defendant would not have been able to assess the Claimant's losses until October 2014 when it was in receipt of all the necessary information. It therefore held that it would be unjust to award costs on an indemnity basis or to award interest at an enhanced rate prior to October 2014.

Forbes Comment

This case may prove useful for Defendants who wish to argue that they were not able to assess a Part 36 offer until they were in receipt of all of the necessary information. However, a word of caution as this argument is more likely to be successful if the pertinent information was in the possession of the Claimant at the relevant time. Furthermore, all cases will turn on their own facts and ultimately it will be for the Judge to decide whether it is "unjust" to award cost sanctions.

For further information please contact Sarah Wilkinson on 01254 662831 or email sarah.wilkinson@forbessolicitors.co.uk

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