Court of Appeal holds that sanctioned offer and payment regime does not apply to appeal proceedings

In the recent case of CEP Ltd v Wuxi Jiacheng Solar Energy Technology Co Ltd, CACV 97/2014, 8 January 2016, the Court of Appeal held that the sanctioned offer and payment regime under Order 22 of the Rules of High Court Order does not apply to appeal proceedings.

In this case, the Plaintiff had filed a notice of appeal against the judgment made at trial. At the time, there was an extant application by the Defendant before the judge for an enhanced costs order on account of a sanctioned payment it had made. The Defendant’s solicitors wrote to the Plaintiff’s solicitors, making a Calderbank offer (i.e. an offer without prejudice, save as to costs), offering to withdraw its application to the judge and accepting payment of its costs on a party and party basis with no order for enhanced interest, in return for the Plaintiff withdrawing its appeal. The Plaintiff did not accept the Calderbank offer and the Court dismissed the Plaintiff’s appeal.

The Defendant sought to rely on the Calderbank offer to seek the costs of the appeal on a higher basis than usual (whether on an indemnity basis or common fund basis). The question for the court was whether the Defendant could rely on the Calderbank offer in view of Rules of High Court, Order 62, rule 5(1)(d), which provides that the court cannot take into account any written offer expressed to be “without prejudice save as to costs” (i.e. a Calderbank offer) if at the time it was made the party making it could have protected his position as to costs by means of a sanctioned payment or offer under Order 22.

The Court of Appeal held that the Order 22 sanctioned offer and payment regime does not extend to appeal proceedings. Accordingly, the Defendant could not have protected its position as to costs of the appeal by means of a sanctioned offer and the court could, therefore, take into account the Calderbank offer. The court exercised its discretion to order the costs of the appeal to the Defendant on a common fund basis.