Cost Caps and the Part 36 incentatives

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Cost Caps and the Part 36 incentatives

December 14th, 2016, Blog, Legal Updates

In a recent case in which this firm acted for the successful claimant, the Intellectual Property Enterprise Court ruled on the interaction between the costs caps in that court and the various incentives to make offers of settlement under Part 36 of the Civil Procedure Rules.

Previous case law had limited the effect of the Part 36 incentives, holding that the costs caps still applied to the rewards otherwise available to a party making and then beating its Part 36 offer. This severely limited the benefits of making a generous offer of settlement (and so limited the attraction to the other party of considering whether to accept that offer) as there is likely to be little room left in the staged costs caps in which to recover any additional sums.

In PPL v Hagan, HHJ Hacon has altered the costs position. The judge followed the Court of Appeal’s decision in Broadhurst v Tan (on fixed costs) and ruled that an award of indemnity costs pursuant to Part 36 fell outside of both the stage and overall cost caps.

This will provide a strong incentive for claimants and defendants to make reasonable part 36 offers, especially in the early stages of the litigation. Failure to accept an offer that subsequently beaten will deprive the paying party of the protection of the costs cap (from the time that the offer was due for acceptance) and so is likely to have a severe effect on the amount of costs that will be awarded against them.

In a recent IPEC decision, PPL v HaganÊ[2016] EWHC 3076 (IPEC) (30 November 2016) HHJ Hacon concluded that both staged costs and the cap in IPEC does not apply to an award of costs under Rule 36.14(3)(b).

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