The costs of turning down an offer

Steven Ball, barrister at Magdalen Chambers and counsel for the appellant, says the judgment in Patience v Tanner confirms that the trial judge’s discretion in considering the effect of offers is not absolute and must be exercised in accordance with established principles.

In Patience v Tanner and another [2016] EWCA Civ 158, the Court of Appeal (Civil Division) held that the judge had been justified to have held that the appellant should not have his costs paid after 29 May 2014, which was the date on which an offer to settle lapsed. In the circumstances, however, the court found that the judge was neither entitled nor obliged to go further to order the appellant to pay the respondents’ costs thereafter. The appeal would be allowed to the extent that there would be ‘no order as to costs’ after 29 May 2016.

What issues did this case raise? Why is it significant?

The case concerns the remit of the trial judge’s discretion in relation to costs when considering the effect of offers made in the course of proceedings.

What did the Court of Appeal decide?

The court decided the judge had erred in principle in ordering the claimant to pay the defendants’ (defendant and Part 20 defendant) costs of the proceedings from the expiration date of an offer made by the Part 20 defendant, but not accepted by the claimant. Although the offer had agreed to give the claimant the substantive remedy he was claiming in the proceedings, it had been silent as to costs.

However, although the claimant had technically beaten the offer at trial (by being awarded costs up to the date of the offer) the Court of Appeal still felt the claimant should have accepted the offer since to do so would still have entitled him to argue for his costs and it was realistic that the case would then have been brought to an economical conclusion. Nevertheless, the Part 20 defendant was equally wrong to have withdrawn the offer and, together with the defendant, to have continued to contest liability. Accordingly, the appropriate order was that the parties bear their own costs from the date the offer could have been accepted.

To what extent is the judgment helpful in clarifying the law? How does the case reflect developments in this area?

The judgment confirms that the trial judge’s discretion in considering the effect of offers is not absolute and must be exercised in accordance with established principles. However, the decision also shows how success at a technical level is decreasing in importance when it comes to costs awards and may give way in appropriate circumstances to wider considerations of conducting litigation in the most cost-effective manner.

What does all this mean for lawyers and their clients?

The circumstances of this case were quite unusual and it is not possible to draw any more general principle beyond what is stated above.

Steven Ball has expertise and extensive experience in most areas of contract and property litigation representing corporate and individual clients. He also brings considerable background knowledge to cases involving technical subject matter such as construction and electrical or mechanical engineering. Steven acts regularly in partnership disputes and trust matters and in disputes representing executors and beneficiaries of the estates of deceased persons, including contentious probate matters.

Interviewed by Kate Beaumont.

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