The unresolved issue of whether indemnity costs should be awarded following late acceptance of a Part 36 offer where judgment has not been entered has once again come before the County Courts.

Where a Part 36 offer is accepted after the relevant period, CPR 36.13 (4) provides that the liability for costs must be determined by the court unless the parties have agreed the costs. There is currently no binding decision on the issue as to whether in such circumstances indemnity costs should be awarded, although the issue has been dealt with in the County Courts on several occasions before, with many contrasting decisions being made.

The latest decision is the case of Russell v Noble, 15 May 2017, Oldham County Court where the Judge carefully considered the issue before agreeing with the Claimant and granting indemnity costs. The case involved a Road Traffic Accident where the Claimant would have been limited to the fixed costs regime, but for the award of indemnity costs.

The Judge distinguished from the case of Fitzpatrick Contractors Ltd v Tyco Fire and Integrated Solutions (UK) Ltd [2010] 2 Costs LR 115 on the basis that the background in Fitzpatrick was far removed from the fixed costs regime and that the potential outcomes were limited to either assessing costs on a standard basis or an indemnity basis and that the impact of a fixed costs regime was not considered. To the contrary the issue in Russell extended to the Claimant being granted indemnity costs, with the alternative being limited to fixed costs.

It was decided that it would be against the Overriding Objective to allow a Defendant to delay acceptance of a Claimant’s Part 36 offer with the only consequence being the incremental costs arising from the stages in the fixed costs regime.

In support of the decision reference was made to Broadhurst v Tan and Taylor v Smith [2016] EWCA Civ 94 (23 February 2016) which established that in such fixed costs matters where a Claimant beats their own Part 36 offer at Trial indemnity costs should apply from the expiry of the relevant period (in the normal way) meaning that in such circumstances Part 36 overrides fixed costs.

The decision in Russell is in contrast to the recent and more unfortunate case of Anderson v Ladler in Newcastle County Court where the Judge ruled that a Defendant did not have to pay indemnity costs for accepting the Claimant’s Part 36 offer 10 months late.

In general, post-LASPO restraints on Claimants have seen the importance of Part 36 further elevated as a fundamental tool in modern litigation. In view of the somewhat conspicuous absence of recognition in the Rules, it seems a picture is emerging that courts are more willing to demonstrate support for these cases that settle without the need for a trial where a Claimant has made a sensible Part 36 offer accepted late by a paying party. Perhaps one could hope for further rule form in this area to save the cost of building litigation on the point, cementing the incentivised effect of an early and sensible Part 36 offer for Claimant Solicitors who take a proactive approach to concluding cases efficiently.