Caution: An all inclusive offer has little costs protection
It is often an attractive proposition for a party to make an all-inclusive offer to settle a piece of litigation. It would appear to provide certainty and avoid the tiresome burden of costs assessment.
If accepted the offer will provide that certainty. However, if the offer is not accepted such a “rolled up “offer does not appear to provide any cost protection.
In Comberg v. VivoPower International Services Limited the court held that offers inclusive of costs may not provide a party with cost protection.
In Comberg the Claimant was hired to be the Defendant’s CEO. Part of his remit was to ensure that the Defendant was successfully listed as a PLC in December 2016. The listing fell well short of what was hoped for. The Claimant stepped down and proceedings for unfair dismissal were commenced. The Claimant blamed the failure of the listing on the prevailing political situation following Brexit and the election of President Trump. At trial, the Claimant succeeded in showing that he was unfairly dismissed and received £700,000 in damages. That sum was approximately 20% of the damages claimed. The Court found that the Claimant was the overall winner and there should be a deduction of 20% of his costs. At a cost hearing the court considered the cost inclusive offers made by the parties.
Both parties made offers. The Claimant’s offer was considered at paragraph 63: –
“63. An offer was made on 10 February 2020 which was only a partial offer in respect of certain parts of the claim. It was an offer in respect of the claims to notice period, holiday pay and bonus of £1.2 million inclusive of costs to comprise 70% of the costs of the claim. It did not include the remaining claims including the shares and the three oral fee agreements and the remaining 30% of the costs. Whilst it might be said that with hindsight the offer had attractions, it is not possible to test it because the offer was inclusive of costs. Further, the offer left the trial still to be fought including the misconduct/incompetence allegations which were relevant at least to the share claim, and possibly to the oral fee agreements. In the exercise of the Court’s discretion, the Calderbank offer did not offer a costs protection because the offer was inclusive of costs. Further, the offer was a partial offer which involved the continuation of the litigation. It does not seem unreasonable to refuse such an offer which would still keep the trial open.”
The Defendant’s offers were also considered at paragraph 67: –
“As regards offers from VivoPower, it made no Part 36 offer. It also made no Calderbank offer in which the amount of the claim was offered plus costs. By making a costs inclusive offer, it is not possible readily to show whether Dr Comberg has advanced his position by rejecting or not accepting the offers. The most pertinent to consider was an offer of £1.5 million inclusive of costs, shortly prior to the trial. It now appears likely that Dr Comberg has done better than that by going on to trial in that he has an award of damages of close to one half of that amount and on the basis that he has the majority of his costs, this is likely to exceed the costs which were offered in the rolled-up order. The fact that the offer was rolled up with costs means that it does not provide costs protection.”
This case is a warning that whilst the client may find the idea of an all- inclusive offer attractive, it will not offer much in the way of costs protection.
Bob Hanlon – Costs Lawyer
28.01.21