In a recent case where the claimant beat its Part 36 offer to settle, the High Court held that it would be unjust to apply the Part 36 costs sanctions against the defendant (namely, indemnity costs and enhanced interest) until the defendant had received the claimant’s evidence and was in a position to take an informed view of the quantum of the claim: Thai Airways International Public Company Ltd v KI Holdings Co Ltd  EWHC 1476 (Comm).
The court said it was not necessary to decide whether the claimant had failed to disclose evidence in a timely way. What was clear was that the information needed to establish what losses the claimant had suffered as a result of the defendant’s breaches of contract was in the claimant’s own possession. The court took the view that it would be unjust to subject the defendant to the financial risks of not accepting the Part 36 offer until it had been able to consider the relevant information.
In many cases, of course, the information needed to establish a claimant’s losses will be in the possession of the claimant rather than the defendant. This may be a useful decision for defendants who wish to argue that they should not be penalised for a failure to accept a Part 36 offer until they had access to the relevant information. Defendants should not however assume that such an argument will always find favour; each case will be assessed on its own facts. The practical message for claimants who have made Part 36 offers is that it may be in their interests to give early disclosure of information needed to assess the quantum of the claim.
The case is also of interest for the court’s decision to award enhanced interest at 8%, rather than the maximum permitted by Part 36 which is 10% above base rate. Continue reading