District Judge Etherington’s recent decision in Car Craft Test Centre v. Kirsty Trotman & Advantage Insurance Company (2017), whilst not binding, is being hailed by many costs lawyers as a significant decision regarding the operation of Part 36, following in the footsteps of Broadhurst v. Tan [2016] EWCA Civ 94.

The matter in issue was whether or not the Claimant was entitled to indemnity costs as a result of the Defendant’s late acceptance of a Part 36 offer (the offer was accepted 10 months late but before trial).

The Defendant relied principally on the case of Excelsior Industrial and Commercial Holdings v Salisbury Hammer Aspden and Johnson [2002] EWCA Civ 879 to advance their position that indemnity costs should only be awarded following late acceptance of the offer when there had been “severe misconduct” on the part of the offeree. The Claimant argued that this case could be distinguished as an order for standard costs would result in the Claimant receiving only fixed costs as CPR 45.29B would apply. The Claimant also argued that the Jackson reforms had brought about a key change in thinking since Excelsior had been decided.

District Judge Etherington concluded that the starting point was CPR 36.13(5) and whether such an award would be unjust with reference to the factors outlined in CPR 36.17(5).  On this occasion, it was not unjust to allow such an award and the Claimant was awarded indemnity costs.