The effect (or lack of) a withdrawn Part 36 Offer

Linzi Walker – Costs Lawyer

Introduction

The case of BritNed Development Ltd v ABB AB & Anor [2018] EWHC 3142 (Ch) relates to the effect of withdrawing a Part 36 offer. The decision was made by a Mr Justice Marcus Smith, a High Court Judge. This was the first ruling in a UK cartel damages claim.

Summary

This case stems from a 2014 European Commission decision which found that ABB and ten other companies were involved in a global cartel in the underground and submarine high-voltage-power cable sector.

BritNed (Claimant) was a customer of ABB (Defendant) during this cartel period. In 2015 the Claimant issued proceedings against the Defendant in the High Court claiming damages of 180 million euros for the alleged cartel overcharge.

The Claimant obtained Judgment at Trial on the 9th October 2018 in the High Court of England and Wales. The Defendant was ordered to pay the Claimant in excess of 13 million euros damages. It was concluded that the factual and expert evidence did not support the Claimant’s claim that it had been overcharged 180 million euros. The Defendant had made a Part 36 offer, which it withdrew after Trial, but before Judgment. The Defendant’s Part 36 offer was higher than the sum received by the Claimant.

The Claimant, whilst ultimately the successful party, recovered less than 10% of the damages sought and less than the Defendant’s Part 36 offer.

The Defendant argued that they should be entitled to their costs given the existence of the Part 36 offer. However, as the offer was withdrawn, Part 36 consequences could not be applied and the Defendant was not entitled to its costs.

The Judge concluded that the existence of the Defendant’s offer was not enough to reverse the incidence of costs. “So, I do not consider that the Defendant should have a costs order in its favour. But I do consider that the making of a commercial offer early on that was not beaten by the Claimant does mean it would be unjust for the Defendant to pay any of the Claimant’s costs.” The fact that an offer had been made led the Judge to make no order for costs throughout. Had the Judge held that the Claimant should have received its costs, that would have been on the basis of a substantial discount of the order of 40% to reflect the Claimant’s failure on the overcharge claim.

On the 18th October 2018 the High Court gave both the Claimant and Defendant permission to appeal. The appeal is currently due to be heard by October 2019.

Conclusion

There is a common misconception that parties can safely ignore a withdrawn Part 36 offer. This is not the case, and the effect of a withdrawn Part 36 offer will ultimately depend on all of the circumstances of the case when costs are assessed. Although the starting point is that the unsuccessful party will pay the successful party’s costs, the Court has discretion on costs, subject to any contrary provision in the CPR. None-the-less a withdrawn Part 36 offer means that the party making the offer cannot reap the prescribed benefits and therefore careful consideration should first be given before withdrawing any offer. It’s also worth remembering that there is no limit on the number of Part 36 offers which can be live on a case.

If you’ve any doubts or concern over Part 36 then please do not hesitate to get in touch and we would be happy to advise further.

 

Linzi Walker – Costs Lawyer – Partners in Costs

21.03.2019

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