The Court of Appeal has held that the court was not entitled to apply the Part 36 costs consequences “by analogy” to award indemnity costs and enhanced interest where a party failed to beat an opponent’s settlement offer which was not made under Part 36: F & C Alternative Investments (Holdings) Limited & Ors v Barthelemy & Anor [2012] EWCA Civ 843.

The decision illustrates the courts’ strict approach to the application of Part 36, and therefore the need for careful drafting to ensure that an intended Part 36 offer complies with the formal requirements. Where an offer falls outside Part 36, whether intentionally or otherwise, the court will not simply apply the Part 36 costs consequences as if it had been a valid offer. In particular, it may be difficult to argue that a claimant’s offer which does not comply with Part 36 should attract the same costs consequences as an equivalent offer made under Part 36.

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