Law Report: A Term as to Costs Not within the Scope of an Offer under Part 36 of the CPR ; Mitchells and Others V James and Others ([2002] EWCA Civ 997) Court of Appeal, Civil Division (Lord Justice Peter Gibson, Lord Justice Potter and Sir Murray Stuart-Smith) 12 July 2002

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WHILST A term as to costs was not within the scope of an offer made under Part 36 of the Civil Procedure Rules, that conclusion did not mean that a claimant could not make an offer which included a term as to costs, since CPR 36.1(2) stated that nothing in Part 36 prevented a party from making an offer to settle in whatever way he chose. However, nothing in CPR 36.1(2) permitted a party to include a term as to costs as part of a Part 36 offer for the purpose of obtaining an order for costs on an indemnity basis.

The Court of Appeal dismissed the appeal of the claimants against a decision awarding them the costs of their successful claim against the defendants on the standard basis.

The claimants sent the defendants an offer to settle the action between them pursuant to Part 36 of the CPR. The offer provided, inter alia, for each party to bear his own costs. The offer was not accepted, and at the trial of the action the judge held that the claimants' case succeeded in principle.

At a further hearing to settle the order and to consider costs, the claimants submitted that the judgment obtained by them was more advantageous than the proposal contained in their offer and that they should be awarded costs on an indemnity basis pursuant to CPR 36.21.

They argued, inter alia, that since the Part 36 offer had been turned down and they had won, they would recover their costs from the defendants, and so would be better off than they would have been had the offer been accepted. The judge rejected the claimants' argument, and awarded costs on the standard basis.

The claimants appealed. …