In the recent case of ABFA Commodities Trading Ltd v Petraco Oil Company SA (“Petraco”) [2024] EWHC 706 (Comm), the Court considered procedural conduct in light of a Part 36 Offer. Petraco had made an offer to settle the dispute for payment of $24m. The offer was “beaten” when the Court upheld Petraco’s claim in the sum of circa $27m.
Mr Justice Foxton considered CPR 36.17 and whether it would be unjust to make the costs orders that usually apply to successful Part 36 Offers. He reviewed Petraco’s offer terms, the timing of the offer, the information available to the parties when the offer was made, and the conduct of the parties with regard to the giving/refusal of information to allow the offer to be evaluated. Although the Part 36 benefits were upheld, the Judge held that Petraco’s conduct lead to a reduction in the costs recoverable. Mr Justice Foxton gave careful consideration to the elements of the Part 36 Offer to ensure that a challenge by the paying party that the ordinary costs order would be unjust remains a “formidable obstacle”.
The power of Part 36 Offers was also shown in the high-profile case between Hugh Grant and The Sun, Hugh Grant decided to settle his claim recognising that if he proceeded to trial and was awarded “even a penny less than the settlement offer” he would have to pay the legal costs of both sides.
Link to the judgment: High Court Judgment Template (bailii.org)
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