The difference between a Calderbank and part 36 offer

22 Oct 2014 | Comment

A recent judgment in the Court of Appeal has sent an important reminder to those of us involved in the litigation process of the difference between a Calderbank and part 36 offer.

The case referred to below concerns an intellectual property claim but its ramifications can be felt across all aspects of contentious litigation.

In brief, litigation arose following Mr Coward’s resignation and subsequent trading in a competing business. It was the case of both parties that the other was using software whose copyright was owned by the other.

At trial in July 2013 Phaestos Ltd was the successful party and, save for a 15% deduction, it was awarded its costs which Coward was ordered to pay.

Coward appealed on the basis that one year prior to trial he had made Phaestos Ltd a Calderbank offer that would have given Phaestos substantially what it went onto achieve at trial.  His position was that the court should have assessed the Calderbank offer by reference to the terms of Part 36.14(1A), which defined ‘more advantageous’ as being ‘better in money terms by any amount’.

His appeal was dismissed. The Judge had carefully considered the offer.  She identified a number of factors that was an improvement upon his Calderbank offer – namely that his offer had not included an injunction or an undertaking which he had subsequently given.

Under Part 44.2 the court has wide discretionary powers to make a costs award. The Court of Appeal found that the judge’s discretion in this matter was without fault and therefore the appeal failed.

This case is an important reminder to all litigants of the uncertainty of Part 44. We must remind ourselves that there is no strict rule under Part 44 for judges to apply and therefore it carries a significant amount of uncertainty particular to the circumstances of the case before the judge. Put simply, if a party wants the protection that follows from a Part 36 offer then it should, where possible, make its offer in Part 36 terms.

[2014] EWCA Civ 1256

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