Part 36 offers and costs — SQE1 DR question
A worked single-best-answer question on part 36 offers and costs, with why each wrong option is wrong — the way SQE1 traps candidates.
Imogen sues Calder Ltd for damages for breach of contract. Early in the proceedings she made a valid Part 36 offer to accept £80,000, with a relevant period of 21 days. Calder did not accept the offer. At trial the judge awarded Imogen £95,000 in damages. Calder argues that the usual costs order should simply be made.
Which of the following best describes the order the court is likely to make?
- ACalder will pay Imogen's costs on the standard basis, as the successful party, with no further consequences.
- BImogen will pay Calder's costs from the expiry of the relevant period, because her offer was not accepted.
- CThe court must award Imogen an additional amount of 5% of the damages, but no other enhancement.
- DThe Part 36 consequences apply only if Calder acted unreasonably in rejecting the offer.
- EUnless it is unjust, the court will award enhanced interest on the damages, indemnity costs and interest on costs from expiry of the relevant period, and an additional amount of 10% of the damages.
Show answer and reasoning
Rule: If a claimant does at least as well as her own Part 36 offer, the court must (unless unjust) award enhanced interest, indemnity costs, interest on costs and an additional amount of up to 10% of damages.
- A Beating her own Part 36 offer entitles Imogen to the enhanced consequences in CPR 36.17(4), not merely standard costs. (wrong rule)
- B Costs from expiry of the relevant period are paid by a claimant who fails to beat a defendant's offer, which is the reverse of this situation. (answers a different question)
- C The additional amount is 10% of an award up to £500,000, and it comes alongside the other enhancements. (wrong rule)
- D The court applies the consequences unless it considers it unjust; no finding of unreasonable conduct is required. (wrong rule)
Source: CPR 36.17(1)(b) and (4)