This was an appeal and cross appeal from the first instance judge's order in respect of costs. The case itself related to physical and sexual abuse at the defendant's children's home, but the point in this appeal relates to costs and Part 36 offers. Royal & Sun Alliance was the first defendant's insurer. The first instance judge awarded damages, which were increased on appeal. Some claimants had made Part 36 offers and then obtained judgment for more than those offers. The first instance judge therefore ordered the second defendant to pay the claimant's costs on an indemnity basis but refused to award the claimant interest on those costs. However, he did order the second defendant to pay interest on the award of general damages at the penalty rate of 8% above the base rate from the last date on which the defendant could have accepted the claimant's Part 36 offer to the date of the first instant judgment.
Royal & Sun Alliance appealed in respect of the award of interest on the general damages. The claimant, on the other hand, challenged the refusal of the first instance judge to award interest on the indemnity costs. The claimants basically argued that the "date of judgment" referred to in CPR Part 36.21(2) meant the date of judgment in the Court of Appeal.

Reference

The Court of Appeal decided that the "date of judgment" could only be the date of judgment of the first instance judge. They took the view that a fresh Part 36 offer was required to be made during the appeal proceedings in order for the machinery of Part 36 to be available to the Court of Appeal. They refused to use their general discretion to apply the pre-appeal Part 36 offer to the appeal proceedings. In respect of interest, the trial judge was bound by CPR Part 36.21(4) to make an order for interest on costs unless he considered it unjust to do so. The judge had not considered that paragraph of Part 36, and in this case it would not be unjust to order interest at 4% above base rate on the costs.

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Postscript

The interesting aspect of this decision is that it seems that unless a fresh Part 36 offer is made during appeal proceedings, the Court of Appeal will not fail itself of CPR Part 36, which provides that the court can award costs on an indemnity basis and then award interest at a penal rate on those costs. So, if a party makes an offer to settle in litigation that is then subject to an appeal, a further Part 36 offer will need to be made in respect of the appeal proceedings if the appeal at court is to have power to award costs and interest at a penalty rate in respect of those appeal proceedings.