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PI and Civil Litigation

Law - practice - procedure

29 DEC 2014

Sugar Hut Group Ltd and others v AJ Insurance [2014] EWHC 3775 (Comm)  

Sugar Hut Group Ltd and others v AJ Insurance [2014] EWHC 3775 (Comm)  
Costs – Part 36 – Insurance

High Court, Queen's Bench Division (Commercial Court): Eder J
19 November 2014

Despite a claimant recovering more than the defendant’s part 36 offer, the majority of costs from the expiry of the beaten offer were awarded to the defendant.

The claimant sued its insurance brokers for negligence and liability was admitted. At a quantum only trial in October 2014, the Judge assessed the claimant’s business interruption losses and interest at just under £1.1 million.

 This defendant had previously made a Part 36 offer which the claimant had narrowly beaten at trial. The defendant argued that the Judge should exercise his discretion as to costs to depart from the general rule that the successful party’s costs should be paid by the unsuccessful party.

 Mr Justice Eder noted that several heads of loss had been advanced by the claimant which were entirely unsuccessful at trial. It was also noted that although the defendant’s Part 36 offer had been based on a gross figure for business interruption losses which was a little higher than the award at trial, the interest offered by the defendant on those losses was at a lower rate than the Judge allowed at trial and it was only as a result of this interest that the claimant had ‘beaten’ the defendant’s offer.

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Although the claimant had beaten the offer, this was an offer the Judge should have regard to in deciding what order to make about costs under CPR 44.2(4)(c). Further, the figure for business interruption losses which was claimed was unreasonable and exaggerated, and the claimant had been tardy and obstructive during disclosure.

Therefore, for the period from 21 days after the defendant’s beaten Part 36 offer, the claimant was disallowed the recovery of its costs and the defendant was awarded its costs on the standard basis, save that the claimant would receive their costs relating to the assessment of interest on their claim as they had clearly beaten the Defendant’s offer on interest rates.

It is clear that simply beating a Part 36 offer on the money alone is not always enough to ensure that the claimant gets their costs. Taking a less obstructive and more consensual approach to the litigation would have avoided these costs penalties.

Joseph Carr & Robin Stewart, Anthony Gold