To make the point, take an extreme example of a claimant who has a slam-dunk claim. The case goes to trial and (to almost everyone’s surprise) the trial judge rules against the claimant, who is accordingly ordered to pay £100K towards the defendant’s costs. It later transpires that the only reason the defendant won at trial was that, a few days before the trial started, the defendant (allegedly) forged an apparently crucial document which ultimately featured at the heart of the judge’s judgment. Nonetheless, as the claimant is required to do so (see CPR 52.7), the claimant complies with the costs order by paying £100K to the defendant. However, the claimant also files an appeal notice and then makes a Part 36 offer, which the defendant quickly accepts to avoid the risk of being embarrassed at the appeal hearing.
You might understandably think that, as the claimant’s Part 36 offer has been accepted, the defendant will have to repay to the claimant the £100K of costs. However, it seems from the wording of CPR 36.13 (which is entitled Costs Consequences of Acceptance of a Part 36 Offer) that that may well not be the case. The effect of that rule in the context of appeal proceedings seems rather unclear. It’s certainly at least arguable that the defendant is entitled to keep the £100K because, although under CPR 36.13(1) the claimant/appellant “will be entitled to the costs of the proceedings”, the meaning of the phrase “costs of the proceedings” (and, in particular, the meaning of the word “proceedings”) in the context of an appeal appears not to be defined in Part 36, nor in the glossary to the CPR. So does the phrase mean costs of the appeal proceedings only? Or does it mean costs of the entire case, including the first instance phase? Neither interpretation of the phrase is obviously more convincing than the other. For example, the wording of CPR 7.2 suggests that the £100K must be repaid, but CPR 36.4 suggests otherwise.
A key reason for making (or for accepting) a settlement offer is to avoid the uncertainty associated with a judge later determining the parties’ dispute. If the effect of accepting a Part 36 offer in appeal proceedings is as uncertain as it appears to be, I think a litigant will often instead be better off making a settlement offer that’s not made pursuant to Part 36 (unless, of course, the litigant loves uncertainty).