The High Court has ruled that a costs settlement offer did not lapse when the detailed assessment had started – and the claimant was entitled to accept it mid-hearing.

The defendant in MEF v St George’s Healthcare NHS Trust had appealed an order from costs judge Master Rowley, arguing that the acceptance of the previous offer two-thirds of the way through the assessment was not valid.

The case asked whether a ‘Calderbank’ offer to settle, without an express time limit, could be accepted once the relevant substantive hearing had begun. The defendant had offered to settle the claimant’s claim for costs at £440,000 around a month before the three-day detailed assessment.

Just before the end of the second day, the claimant’s solicitors sent an email purporting to accept that offer. By that stage of the hearing, the court heard, the claimant stood to recover less than £440,000 if it ran to a conclusion.

Mr Justice Morris concluded that offer remained open for acceptance during the hearing, and the claimant’s email had given rise to a contractually binding settlement of the detailed assessment proceedings.

‘At the time that the offer is made and then at the door of the court, there remain incentives, respectively, to make and retain the offer, even if it is capable of acceptance in the course of the hearing,’ said the judge.

‘It was always open to the defendant to put a time limit on the offer. Equally it was open to it to withdraw the offer at any time.’

Lawyers for the defendant had submitted that keeping the offer open during the hearing provided a ‘perverse incentive’, where they ended up in a worse position than if the offer had not been made at all.

The judge rejected that the continuation of the offer provided a ‘free hit’ for the claimant, and there remained incentives for both parties from retaining it. This was demonstrated by the offer not being withdrawn earlier on the second day of the hearing.

The judge ruled that the claimant should pay the defendant’s costs of the detailed assessment, as outlined in the conditions of the offer to settle.