An offer which purported to come under part 36 but contained a slight deviation from the rule’s terms was not one, the High Court has ruled.
James v James and Ors  EWHC 242 (Ch) concerned the costs of a will dispute. There were two main issues at the trial, both won in January by the defendants. One was whether the testator had had capacity to make his will (called the intestacy claim) and the other was whether a proprietary estoppel equity had been raised in favour of the claimant (the estoppel claim). There was also a counterclaim by the defendants on the intestacy claim.
Last August, the defendants made what they said was a part 36 offer, which the claimant contested in a bid to avoid the consequences of a successful offer.
The claimant argued first about the fact that the letter said it was a claimant’s part 36 offer when they were the defendants and did not make a counterclaim to the estoppel claim.
His Honour Judge Paul Matthews, sitting as a deputy High Court judge, said: “I reject this submission. It is clear from rule 20.2(2)(a) and rule 20.3(1) that a counterclaim is to be treated as a claim for the purposes of the CPR, with certain exceptions, of which part 36 is not one. Rule 36.5 (1)(e) requires that a part 36 offer must ‘state whether it takes into account any counterclaim’.
“It is quite clear from paragraph 3 of the letter that the offer contained in it takes into account the defendant’s counterclaim.”
The claimant’s second argument was that the offer contained a term as to costs, which was inconsistent with the effect of part 36 itself. It offered to settle on terms which included a term that the claimant was to be liable to pay the defendants’ costs of the claims and the counterclaim “up to the end of the relevant period or, if later, the date of service of notice of acceptance of this offer”.
The judge said: “So, not only is this a term on costs, it is also a term which provides differently (albeit not by very much) from what rule 36.13 provides to be the effect of accepting the offer. Essentially, if the offer were accepted, the claimant would pay the defendants’ costs up to the end of the relevant period, whereas by rule 36.13 the claimant would pay the defendants’ costs only up to the date of acceptance within the relevant period [his emphasis]…
“No evidence has been placed before me to show that an error was made in writing the letter… The problem is that the writer is putting forward terms on which costs are to be paid which are inconsistent with the rule. In these circumstances, I hold that this is not an offer within part 36.”
The claimant accepted that he had to pay the defendants’ costs of the estoppel claim, but argued that in relation to the will claim, the second principle in Spiers v English  P 122 – one of the special rules relating to probate claims – applied.
This provides that where the opponents of a will have a reasonable belief in the grounds for the challenge, there will be no order for costs. In the circumstances, HHJ Matthews accepted that the claimant “had a strong belief” in his entitlement to inherit from his father. “But I do not accept that he pursued the challenge to the will at all costs. He pursued the challenge to the will because there was a reasonable basis for doing so… even though, at the end of the day, I have held that the testator had capacity to make his will when in fact he made it”.
As a result, he held that there should be no order as to costs in relation to the will claim. The judge acknowledged that making a costs order on an issues basis complicated the question of agreeing the costs, “but I have no material before me which would allow me to estimate fairly the amounts of work done in relation to the two different heads of claim”.