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News | Fri 12th Feb, 2016
The case of Jockey Club Racecourse Ltd v Willmott Dixon Construction Ltd  EWHC 167 deals with two interesting questions: (1) does a Part 36 offer have to reflect an available outcome in the litigation to be valid? (2) when is it a genuine attempt to settle liability?
The case concerned a defective roof at the racecourse at Epsom. The claimant offered to settle the issue of liability on the basis that the defendant would “accept liability to pay 95% of our client’s claim for damages to be assessed.” The issues of liability were ultimately resolved by consent wholly in the claimant’s favour. The claim was pleaded at in excess of £5m.
The judge endorsed the remarks of Henderson J in AB v CD  EWHC 602 in which he drew the distinction between a genuine offer or ‘merely a lightly disguised request for total capitulation’. A request to a defendant to submit to judgment for the entirety of the relief sought by the claimant was not an ‘offer to settle’ within the meaning of Part 36. An offer to settle had to contain some genuine element of concession on the part of the claimant to which a significant value could be attached in the context of the litigation. Henderson J considered in the context of a road traffic accident that the offer of 95:5 was derisory. In Huck v Robson  1 WLR 1340 the Court of appeal held that although no judge would apportion liability 95:5, that was irrelevant. The offer reflected the fact that most claimants prefer certainty to the ordeal of trial and uncertainty about its outcome. They did not think it was merely a tactical step to secure the benefit of the incentives provided by the rule but provided the defendant with a real opportunity for settlement.
In Jockey Club Racecourse Edwards-Stuart J. found that, although the Part 36 offer of a 95:5 split was not an outcome available to the court, it did not prevent it being a valid offer. Nothing had been changed by the addition to rule 36.17(5) of subparagraph (e) which requires the court to consider whether the offer was a genuine attempt to settle the proceedings.
The judge then went on to consider whether it would be unjust to order the consequences which flow from a failure to better a Part 36 offer. He did not order the consequences to flow from 21 days after the date of the offer but allowed the claimant to have costs on the indemnity basis from the earliest date after that by which “the Defendant could reasonably have put itself in a position to make an informed assessment of the strength of the claim on liability”. That conclusion sits uneasily with the comments of the Court of appeal in its harsh decision in Matthews v Metal Improvements Co Inc  C.P. Rep. 27 where the judge was criticised for deciding the case on the basis of reasonableness.
The answer to the two questions I posed above is: (1) a Part 36 Offer does not have to reflect an available outcome in the litigation to be valid although this is less likely to be an issue in personal injury where contributory negligence can reduce a finding that a defendant is liable. (2) A genuine attempt to settle liability is one where the offer is not derisory and is one in which there is ‘some genuine element of concession on the part of the claimant, to which a significant value can be attached’. This will depend on the facts of each case although in the context of a personal injury claim an offer of less than a 5% reduction would be risky where the value is not high.
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