Litigation is never an ideal scenario and for the two parties involved there is always a level of risk judgement may not be wholly or in part in their favour. This can be particularly the case in the food sector where disagreements over contract terms and damage to goods can arise regularly.
Settlement offers under Civil Procedure Rule Part 36 should be taken very seriously as there are costs implications for the refusal to settle if the offer is either matched or exceeded in any subsequent judgement. This has been emphasised further by a recent case where the losing party was ordered to pay an extra £65,000 after declining to settle a case over a difference amounting to less than £5,000.
In the case of Hochtief (UK) Construction Ltd & Anor v Atkins Ltd the settlement offered was £875,000. Two years later the judgement of £879,848 was awarded. Mrs Justice O’Farrell ruled that when the difference between the rejected offer and the final award was so relatively small the Part 36 rules still applied. Context, such as; the stage of proceedings the offer was made at, the information available to the parties at the time and whether the offer was a genuine attempt to settle proceedings would all be considered.
It was ruled the claimants, were entitled to an enhanced rate of interest on damages and costs from the date of expiry of the offer. Interest on damages was set at 6% above base rate and ordered that costs be assessed on an indemnity basis. This resulted in the claimants receiving an extra £65, 123 on top of their awarded damages.
For further information on this please contact Richard Dawson-Gerrard on Email: Richard.Dawson-Gerrard@mills-reeve.com