Legal Cost Specialists

Accepting offer after detailed assessment has commenced

Can a “Calderbank” offer made during the course of detailed assessment proceedings be accepted by a receiving party after the detailed assessment hearing has commenced and once it has become clear that the receiving party will ultimately recover less than the amount of the offer?  Yes, ruled Mr Justice Morris in MEF v St George’s Healthcare NHS Trust [2020] EWHC 1300 (QB).

Various offers and counter-offers had been made during the detailed assessment proceedings.  These concluded with an offer on 19 August 2019 by the paying party to settle for £440,000 (the same amount as had previously been offered) with the following condition attached:

“The Defendant’s offer dated 27/09/18 is only capable of acceptance subject to the agreement of the Defendant’s costs of Detailed Assessment incurred since that date.”

It was not in dispute that this was not a Part 36 offer.

The matter was listed for a three day detailed assessment due to commence on 17 September 2019.

At the end of the second day of the hearing, the Bill of Costs had been reduced – as a consequence of concessions already made by the receiving party and by decisions made by the costs judge – to below £440,000.  Just before the end of the second day, the receiving party sent an email purporting to accept the 19 August 2019 offer.  The paying party argued it was too late for the offer to be accepted.

The matter initially came before Master Rowley for determination as to whether the detailed assessment proceedings had been compromised.  He concluded that the matter was subject to common law principles of offer and acceptance.  As there was no time limit placed on acceptance of the offer, he held that the offer had been properly accepted.

On appeal before Mr Justice Morris, it was decided that Master Rowley had not expressly applied the contractual principle of an offer being capable of lapsing after a reasonable time.  However, applying that principle to the facts of the case, where none of the earlier offers had contained a time limit, he concluded that the offer had not lapsed and was therefore still capable of acceptance.

Although it was held that the prior offers were “highly relevant context”, it is not obvious that the position would be materially different as against a different factual matrix.  To the extent to which a “Calderbank” offer is made without a time limit, a court is likely to conclude it may be accepted at any point before the conclusion of the detailed assessment.

The Court expressly noted that it would have been open to the paying party to put a time limit on the offer or to have withdrawn the offer themselves during the hearing.  The Court did not explore to what extent, if any, a time limited or withdrawn offer would reduce the costs protection afforded by the offer.  To the extent to which the offer subject to Part 44.2(4)(c) (“In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including … any admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply”), if it had not been accepted its existence would simply be one of the factors the Court could take into account when deciding what order to make in respect of the costs of assessment.

The clear lesson is that any “Calderbank” offers made in detailed assessment proceedings should be time limited.

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