Part 36 Offers and IPEC

Part 36 and IPEC

IPEC offers a streamlined procedure and a fixed term for trial.  IPEC is only concerned with claims which have an IP element where the value is under £500,000 and the issues are sufficiently simple that they can be resolved within a two-day trial. Â

IPEC has a series of costs caps for each stage of the proceedings plus an overall costs cap of £50,000.  There have been various attempts to allow for costs outside this £50,000, most notably in Henderson v All Around the World [2013] EWPCC 19 (27 March 2013) re the ATE insurance premium (at that time recoverable from the other side) and OOO Abbott v Design & Display Limited [2014] EWHC 3234 (IPEC) (10 October 2014) re costs on the indemnity basis from the period after the Relevant Period for the Part 36 offer has expired.Â

In both instances, the court held that both ATE premiums and indemnity costs were subject to the costs cap.  This reduced the value of Part 36 offers in the IPEC and, arguably, made it harder to settle cases.

Since those cases, the Court of Appeal has considered the impact of fixed costs on Part 36 offers (Broadhurst v Tan [2016] EWCA Civ 94).  The Court of Appeal concluded that Part 36 took precedence over the fixed costs.  Although some of the court’s reasoning was specific to personal injury cases, HHJ Hacon in a recent IPEC decision, PPL v Hagan [2016] EWHC 3076 (IPEC) (30 November 2016) identified two principles which could apply to Part 36 offers in IPEC:

  1. where fixed costs are intended to prevail over Part 36, the civil procedures explicitly say so [37] and
  2. if there was any doubt, the court is entitled to refer to the Explanatory Memorandum which states that, if a claimant makes a successful Part 36 offer, “the claimant will not be limited to receiving his fixed costs, but will be entitled to costs assessed on the indemnity basis…” [38].

On that basis HHJ Hacon concluded that both staged costs and the cap in IPEC does not apply to an award of costs under Rule 36.14(3)(b).

This decision has positive implications for IPEC litigants as it enables Part 36 offers to be of greater importance in IPEC and give more reasons for litigants to settle cases earlier.Â

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