A part 36 offer which did not reflect an “available outcome of the litigation” was nonetheless valid, the High Court has ruled.
Mr Justice Edwards-Stuart was ruling on a claim by the Jockey Club against developers Willmott Dixon over problems with the roof of a new grandstand at Epsom racecourse.
Mr Justice Edwards-Stuart said that “one knows from experience” that cases were “frequently settled” on the basis of an assessment of risk which combined both the risk of failure and the uncertainty as to the true value of the claim.
“An offer which is made in the light of those considerations will not usually reflect a result that is a likely outcome of the litigation if fought to judgment.”
The court heard in Jockey Club Racecourse v Willmott Dixon Construction  EWHC 167 (TCC) that the roof of the new grandstand was damaged twice by strong winds – but not exceptionally so – in 2012, with further damage the following year.
The Jockey Club made an offer to settle in January 2015, on the basis that the defendant would “accept liability to pay 95% of our client’s claim for damages to be assessed”. Willmott Dixon made no response, and the 21-day period for acceptance expired.
Edwards-Stuart J said: “This is not a case where there is any possibility of a reduction for contributory negligence. Either the defendant is liable for the full extent of the claimant’s damages, as assessed or agreed, or it is not.
“Accordingly, a decision that the defendant is to pay 95% of the claimant’s damages, as assessed or agreed, is not one that is open to the court. The offer, therefore, does not reflect a possible outcome, but is purely commercial.”
The judge said the 5% discount probably represented a reduction that the claimant was prepared to accept in order to achieve “a certain and early outcome”, but it “probably” did not matter.
“All that is, or may be, relevant is that the offer did not reflect an available outcome of the litigation.”
The defendant argued that the Jockey Club did not make a valid offer.
Referring to the ruling of Mr Justice Henderson in AB v CD  EWHC 602 (Ch), in which the judge said the concept of a settlement “must, by its very nature, involve an element of give and take”, Edwards-Stuart J said: “Although the claimant’s offer in this case was hardly generous, in my view it cannot be described as ‘all take and no give’.”
Edwards-Stuart J said he was persuaded by the authorities, including the Court of Appeal ruling in Huck v Robson  1 WLR 1340, that the Jockey Club’s offer was a valid one within the meaning of part 36 and a “genuine attempt” to settle the claim.
“Whilst the discount was very modest, even in the context of a claim of some £400,000 it amounted to £20,000, which in my view cannot be described as derisory.”
Edwards-Stuart J awarded the claimant indemnity costs, not from 21 days after the date of the offer, because the defendant had “only just been made aware for the first time that the claim against it had been increased to about £850,000”.
Instead he said the Jockey Club should be entitled to indemnity costs “from the earliest date after that by which the defendant could reasonably have put itself in a position to make an informed assessment of the strength of the claim on liability”.
Edwards-Stuart J decided that this was four months from the date of the offer, and ordered that the claimant should have costs in relation to liability on the standard basis up to 29 May 2015 and after that on an indemnity basis.