Application in Private

This will be rather lengthy because, as they say, I didn't have enough time to make it shorter. But let me give you the conclusion so that you are not held in suspense, then I will give you the reasons.

First, the claimants are given permission to accept the offer as of today. The defendants, insofar as is necessary, are refused permission to withdraw their offer. The defendants are to pay the costs of the claimants up to November 28, 2016. The claimants are to pay the costs of the defendants from 28 November 2016 to today, when permission to accept is given and acceptance is to be taken as having occurred. Then, subject to argument in relation to the costs of this application, or these applications, which seem to me to fall into a separate category, my provisional conclusion is that the defendants are to pay the claimants 50% of their costs, all costs on the standard basis.

Here are my reasons. The court is faced with two applications relating to Part 36 offers made by the defendants on 7 November 2016, in a number of actions that are being heard together. Many of the claimants have settled, but there remain three groups of claimants who wish to accept the offers made to them, and apply to the court for permission so to do because that is what CPR Part 36 provides, once the actions have gone to trial.

For the sake of simplicity, I shall refer to the remaining action simply as "the action", to the offers as "the offer", and to the remaining claimants as "the claimants".

The second application is made by the defendants as a precautionary application, as they submit, because they say it's not necessary on a proper understanding of the framework of CPR Part 36 because the claimant needs the court's permission to accept the offers made.

The application is for permission to withdraw the offer.

There was a degree of argument and debate which to my mind ultimately was arid about the framework of Part 36, because, as it seemed to me at the outset and to both parties in their skeleton arguments, the test which the court applies when considering the grant of permission either for acceptance of an offer during trial or for withdrawal of an offer made less than 21 days before trial, is the same. I adhere to that view, despite the defendants resiling from the position stated at paragraph 93 of their skeleton in the following terms:

The defendants now contend that the test set out in CPR 36.10(iii) for an application for permission to withdraw an offer before the expiry of the "relevant period" is more limited than the test to be applied when a party seeks permission to accept an offer during the course of a trial.

The terms of CPR Part 36.3(g) define the relevant period as meaning: (i) in the case of an offer made more than 21 days before trial, a period of 21 days unless the parties agree to extend it; (ii) otherwise the period up to the end of trial where a trial is defined in Part 36.3 as any trial in a case whether of all issues, liability or quantum or some other issue or issues, and a trial is considered to be in progress until judgment is given or handed down.

In the present case, the offer was made on 7 November 2016 during the two week period of time allocated to the judge to read the hundreds of pages of opening submissions made by the parties on 24 and 31 October. The oral openings began on 14 November 2016, and following the adjournment over Christmas the trial on liability, commonly referred to as phase 1, is scheduled to end on 2 or 3 March of this year, with a further trial on quantum scheduled for June 2018, should that be necessary.

The relevant period under CPR 36.3 is therefore the duration of this trial on phase 1, right up to the moment when the judge gives judgment.

The terms of CPR 36.11 in relation to acceptance of Part 36 offers reads as follows:

It will be noted that a Part 36 offer can be accepted at any time, whether before or after the relevant period has expired, but the court's permission is needed if the trial is in progress. The significance of the relevant period is that, subject to other parts of the rules, CPR 36.13(i) provides for automatic cost consequences in the event of acceptance. If there is an acceptance within the relevant period before trial, the offeree is entitled to the costs of the proceedings up to the date when notice of acceptance was served on the offeror. To accept once the trial has begun, however, the offeree needs the court's permission. If that is given, then CPR 36.11(4) provides that in the absence of the agreement of the parties the court must make an order dealing with costs and may order that the cost consequences in CPR 36.13 apply.

Apart from CPR 36.13(1) to which I have already referred, CPR 36.13 contains other provisions, including CPR 36.13(4) which provides:

The court is thus bound to make an order for costs if permission is given to accept an offer during trial, but the general discretion on costs and the general principles which apply across the board to costs are not trammelled by anything in Part 36 where the acceptance is within the relevant period, whereas CPR 36.13(5) by reference to CPR 36.13(4)(b) provides for the position where the acceptance is after the expiry of that period, with an allocation of liability for costs before and after the expiry of the relevant period unless the court considers that to be unjust.

When considering the justice issue, the court is referred to CPR 36.17(5) which provides:

CPR 36.10 covers the position where an offeror serves notice before the expiry of the relevant period of withdrawal of the Part 36 offer:

This provision does not expressly refer to the situation where the offeree needs the permission of the court to accept the offer, but appears to envisage the situation before trial where a Part 36 offer is made, either more than 21 days before trial or after that.

In either case, if there is no acceptance of the offer in the relevant period, the offer is treated as withdrawn at the end of that period, which would be 21 days later if that expired before the trial, or at the end of the trial if it did not.

If, however, the offeree had served or then served a notice of acceptance before expiry of the relevant period, the offeror requires the permission of the court to withdraw the offer and must apply to do so within seven days of the offeree's notice of acceptance, or before the first day of the trial, if the seven-day period expires thereafter.

The provision, therefore, does not appear to allow for the situation where an offer is withdrawn during trial and purportedly accepted during trial where permission is needed to do so.

Nonetheless, as is in my judgment plain from the authorities, CPR 36.10(3) applies not only to an application to the court by an offeror for permission to withdraw an offer made in the relevant period where a notice of acceptance could be served without the court's permission, but also applies indirectly to the situation where the offeree needs the court's permission to accept an offer when a trial is in progress which, with a late offer made less than 21 days before trial, constitutes part or all of the relevant period.

It matters not, therefore, whether the offeror needed the permission of the court to withdraw the offer because it would not be effective until the expiry of the relevant period under the express terms of CPR 36.10(1) or whether the application is made for consent to accept such an offer during the trial.

There is nothing in the rule which restricts the application of 36.10(1), (2) and (3) to an offer made when the relevant period expires before trial. True it is that the offeree cannot accept without the permission of the court, and the matter comes before the court on that application but resistance to the application for permission to accept is merely the obverse side of the coin to an application to withdraw an offer in the relevant period, which here runs throughout the trial, which is why the same considerations must apply.

The notice at CPR 36.3(2) in relation to the relevant period says this:

Then reference is made to 36.9 to 36.11 and 36.13 and 36.17.

The note goes on:

The basis for the court giving permission under CPR 36.10(3) on an application by the offeror to withdraw an offer in the relevant period is set out thus:

This rule is a relatively new rule coming into effect on 6 April 2015, but it reflects earlier authorities on the withdrawal of offers or acceptance of offers where the permission of the court was required under similar but distinct rules, not the exact rule and not in the exact circumstances which obtain here.

Put shortly, however, in applying the test, the position is this: the court will hold the Part 36 offeror to the terms of its offer by permitting the offeree to accept it, or by refusing permission to withdraw it, unless there has been such a change of circumstances since the making of the offer that it would be unjust to do so.

Although the court has a discretion under the rule, as is shown by the word "may" in CPR 36.10(3) the basis for the exercise of the discretion is set out. The overriding objective of the CPR adds nothing to this in reality because it is the issue of changed circumstances and the interests of justice that are the governing factors in the court's decision-making process.

The object and underlying purpose of CPR Part 36 is, in my judgment, clear in the light of decided authority and, despite the parties' different nuances, was not seriously in issue.

The following is supported by the authorities:

Both parties argued that the starting point in the authorities was the decision of the Court of Appeal in Cumper v Pothecary, [1941] 2 KB 58, and the dictum of Lord Justice Goddard at page 70 in relation to different rules where the court had a complete discretion, unlike the position here:

There was argument as to whether the examples given reflected the tenor of the type of changed circumstances to which a court should have regard under the CPR. Subsequent decisions have sometimes quoted the dictum in full, including the examples, and sometimes not. But, in my judgment, there is guidance to be found in the type of examples cited. It is noteworthy that subsequent decisions draw on those examples in support of the conclusions reached.

Mr Justice Leggatt found in Evans v Wolverhampton Hospitals NHS Foundation Trust [2015] 1 WLR 4659 at paragraphs 51 to 52 that there has to be some serious and significant change in circumstances to justify the offeror being permitted to resile from his offer if the relevant period has not expired. Once the relevant period has expired, however, different considerations may apply, including in particular the lateness of the application to accept out of time when permission was needed for that to be done.

It is accepted that there must be more than a change in the parties' evaluation of known or existing facts or evidence. There must be new evidence which puts a wholly different complexion on the case or a change in judicial outlook by a judicial decision, such as that of the House of Lords in Benham v Gambling, which changed the whole approach of the courts to the measure of damages for loss of expectation of life without actually changing the law. That was the position in Cumper v Pothecary.

The tenor of the examples given suggest that what is envisaged is some radical alteration in circumstances which would justify an offeror departing from the valuation it had placed on the case when making the offer it did.

A change in the subjective view of the offeror as to its prospects of success as a result of the way the case has panned out at trial would, in my judgment, not suffice, as the defendants accepted. An objective change in prospects as recognised the parties' mutual perceptions would, however, in their submission. It was recognised that the application during a trial for permission was always to be heard by someone other than the trial judge. That in itself is significant, because such a judge cannot form a view on the objective prospect of success in a case such as the present. That appeared to be recognised by the defendants, but it was said that the parties' change of position could be taken as evidence of such objective change in the prospects.

In Flynn v Scougall [2004] 1 WLR 3069, again at a time before 31.10(3) existed, a defendant applied within 21 days of making a Part 36 payment into court to withdraw or reduce the payment, and the claimant gave notice of acceptance of the payment. The Court of Appeal held that whether the notice of withdrawal was given before or after the notice of acceptance, it did not have the effect of automatically staying the notice of acceptance. Lord Justice May, with whom the other Lords Justices agreed, at paragraph 39 referred to the same considerations applying to the refusal of permission for acceptance as for withdrawal of the payment in. There had to be "a sufficient change of circumstances since the money was paid in to make it just that the defendants should have the opportunity of withdrawing or reducing the payment" in order to be consistent with the overriding objectives of the CPR.

On the facts there, a payment into court had been made by the defendants prior to receipt of their own expert report which concluded that the claim was worth less than the payment in and less than the expert report for the claimant had suggested. That difference between the experts was said to be nothing out of the ordinary, and the case came nowhere near the standards required by Cumper.

At paragraph 42, Lord Justice May said this:

Where a party chooses to make a Part 36 payment or offer, in the knowledge that evidence may emerge which is more favourable to it, the party must be taken to have assessed the potential upside and downside of further developments in the case when making the offer in the hope of securing an advantage in relation to costs should the offer not be accepted. The valuation put on the claimants' case is thus not readily to be altered.

In Capital Bank v Stickland [2005] 1 WLR 3914, where once again CPR 36.10(3) could not apply because it did not then exist, a defendant applied at the start of the trial to accept a claimant's Part 36 offer made some eight months earlier, well outside the 21 days constituting the relevant period, in today's terms, and the claimant opposed the application. The court said it would not seek to limit the discretion of the judge in relation to permission to accept an offer after expiry of the time allowed. Despite reluctance to rely on pre-CPR authorities, the court again referred to the full dictum of Lord Justice Goddard with approval and said that the first instance judge was entitled to rely on the lateness of the application, the defendant's pre-trial conduct in flouting court orders and the fact that new evidence at the time of the application showed that the defence was unsustainable.

The defendants further relied upon a decision by Mr Justice Coulson in the TCC in Sampla v Rushmoor Borough Council [2008] EWHC 2616. There a Part 36 offer was made by Mr Crowley and rejected by RBC some two months prior to trial of a contribution claim.

At the time the judge came to consider the matter, the only remaining parts of the trial to be completed were the closing submissions in defence and reply. At that stage RBC applied for permission to accept the Part 36 offer during the course of the trial and well outside the relevant period.

The judge refused such permission by reference to the test set out in Flynn. He said:

The judge there, in determining an application made outside the relevant period, took into account:

Whilst Sampla has been approved subsequently in relation to another part of the decision made by the judge, namely that a rejected Part 36 offer does not prevent a later acceptance, and also approved in recitation of the Cumper test, I do not consider that the parties' perceptions of the likely outcome of the trial is an adequate basis for finding a sufficient change of circumstance to make it unjust to hold a party to its offer, particularly when any acceptance is proffered in the relevant period. Nor do I consider that the parties' change of position in relation to offers made can constitute authoritative evidence of a material change in circumstances. Otherwise the very attempt to accept a Part 36 offer would be available evidence to deploy in that context.

There are in any event a number of distinguishing factors between the circumstances in which Mr Justice Coulson made his decision and this case, as was pointed out in argument by the claimants.

Whether or not Mr Justice Coulson was right or wrong in a case where the relevant period had expired, the decision can be of no application in the present case where the period has not expired, for reasons to which I shall come.

It was accepted by the defendants that there was no way in which a judge who had not heard the 33 days of trial including 14 days of evidence from experts in economics could form a view on the ebb and flow of the prospects of success, and which the evidence from solicitors on both sides before me showed was the subject of serious dispute. Those are matters which fall to be determined by the trial judge on the basis of further hundreds of pages of written closing submissions which were submitted yesterday.

This action concerns the alleged anti-competitive effect of the Multilateral Interchange Fee, the MIF, paid by acquirers to issuers of debit/credit cards, and issues arise both under article 101(1) and article 101(3) TFEU.

The trial involves exploration of complex economic issues with the aid of expert evidence as such competition cases tend to do.

There is relevance, however, in the fact of other proceedings, because the MIF on cards has been the subject of debate amongst those concerned with anti-competitive practices in Europe for many years, going as far back as 2001, if not 1977. Relevant judgments on such or similar fees were issued:

This action was case managed with the others, by which I mean the MasterCard litigation, and fixed to take place in two phases. Phase 1, liability, to follow the Arcadia MasterCard trial in November 2016, with quantum to be determined jointly with other actions in June 2018 in a further very lengthy trial.

It was envisaged in case management of this action that judgment in the Arcadia MasterCard litigation would be likely to emerge during the course of this trial.

So far as this action is concerned, the total claim by all claimants was for some £890 million plus interest in respect of MIF paid since 2007.

Following extensive case management, (i) opening submissions in writing were delivered on 24 and 31 October 2016, respectively by the claimants and defendants; (ii) the trial judge was allocated two weeks of reading time commencing on 1 November; (iii) the defendants made their Part 36 offers to the claimants by letter of 7 November 2016; (iv) the oral opening speeches commenced before the trial judge on 14 November; (v) on 3 January 2017, during the Christmas adjournment, the defendants sent a further letter.

The 7 November letter included the following:

The 3 January letter included the following:
“We refer to or letter of 7 November 2016 which put forward an offer (the “Offer”) in accordance with CPR Part 36 on behalf of all the Visa Defendants to settle the Claimants’ claims in the Proceedings (the “Claims”). As you are aware, the Visa Defendants have always been confident of the merits of their defences to the Claims. They have nonetheless been willing to seek to agree a reasonable commercial settlement of the Claims, and made the Offer in that spirit. The Visa Defendants have, however, reviewed their position in relation to the Offer following the expiry of the 21-day minimum period for acceptance on 28 November 2016.… In these circumstances, and whilst the Visa Defendants are prepared to consider any further commercial proposals which your clients may wish to make, they consider the Offer to be overly generous and are no longer prepared to keep it open for acceptance. Accordingly, we hereby notify you under CPR 36.9(2) that the Offer is withdrawn with immediate effect. Notwithstanding the withdrawal of the Offer, the Visa Defendants will invite the Court to exercise its discretion to treat the Offer as having the costs consequences identified in Section 1 of Part 36 of the CPR (as described in our letter of 7 November 2016).”

This letter rested on the misconception that the relevant period was 21 days from the date of the defendants' offer on 7 November. Because the relevant period ran until the end of the trial by reason of the date of the offer, that was not the case. This was pointed out by the claimants in a letter of 9 January 2017. The defendants, in a reply of 11 January, rejected that contention, but the letter went on to say that any purported acceptance of the offer prior to conclusion of the phase 1 trial required the permission of the court. In that respect, the letter was correct.

The letter then said that, having given notice of immediate withdrawal of the offer in the light of change of circumstances, the defendants' intention would be, so far as necessary, to resist permission being granted by the court for any purported acceptance of the offer.

On 25 January 2017, following the conclusion of the expert evidence in the trial before the judge, the draft judgment of Mr Justice Popplewell in the Arcadia MasterCard action was sent out to the lawyers acting for the Arcadia claimants, Marks & Spencer, Sainsbury's and Visa, as well as those acting for MasterCard. There was of course a strict embargo upon that judgment, and clients could not be told of its contents before formal hand-down, which was scheduled for 30 January.

According to the evidence of Mr Sanders, before receiving that draft embargoed judgment, he, as the solicitor acting for the defendants, had obtained conditional instructions that if the judgment was seen to be favourable to the defendants in its case against the claimants, he would write to the claimants as soon as the judgment was formally handed down on 30 January stating that the judgment provided further justification for withdrawal of the Part 36 offer.

The judgment was handed down on 30 January at 9.30. At 9.37 the defendants' solicitors emailed a further letter purporting to withdraw the offer. That letter stated:

The claimants' solicitors, on 31 January, wrote asking for details of the alleged change in circumstance, but received no reply. Also on 31 January, all the claimants except Argos wrote a letter to the defendants notifying acceptance of the Part 36 offers. On 1 February Argos did likewise. On 1 and 2 February, the claimants issued applications supported by witness statements seeking the court's permission to do so. The applications also sought an order that the defendants pay the claimants' costs up to the date of acceptance, pursuant to CPR 36.13(4)(a).

On 6 February the defendants applied to the court for permission to withdraw the Part 36 offer, supported by Mr Sanders' witness statement in which he set out the changed circumstances on which the defendants wished to rely and adhering to the defendants' previously stated position that the application for permission to withdraw was unnecessary.

I have already stated that the reason for the provision of the relevant period, as that in which notice of acceptance has an effect on costs, is so that the offeree has time to consider the results of the offer free from any pressure that the offer could be withdrawn at any moment.

The period of 21 days must have been considered as a sufficient time for an offeree to evaluate its position and make a decision whether or not to accept in the ordinary way.

The provision extending the relevant period to the duration of the trial where the Part 36 offer was made less than 21 days prior to trial makes no reference to the length of the trial which, as I have already said, could be short or long. In a short trial, it could have the effect of allowing a shorter period than 21 days; in a long trial, a much longer period. The question arises as to whether that is a matter to which the court should have regard when considering the grant of permission to accept or withdraw the offer in the context of the interests of justice.

The defendants' case is succinctly summarised at paragraphs 4 to 10 of their skeleton:

I am prepared to accept that, although not spelt out in the letters purporting to withdraw the offers, the defendants identified the course of the trial itself as a material change of circumstances by saying that in their view the claim would fail on the evidence that had been heard. I also accept that in the letter of 30 January the decision of Mr Justice Popplewell was put forward as another relevant change in circumstances and as a change in legal outlook.

There are here, to my mind, a number of factors which have to be borne in mind.

One, this is large scale litigation between sophisticated commercial enterprises represented by teams of specialist lawyers versed in the field of competition law.

Two, the litigation is complex and dependent to a significant extent on the evidence of experts in economics and the view that is taken of them by the judge.

Three, the sums of money involved for all claimants were very large, with the possibility of a judgment for £890 million plus interest and costs or a judgment in favour of the defendants, where the costs of the parties together apparently amount to some £80 million.

Four, the parties must be taken to know and understand the provisions of CPR Part 36 and the effect of offers made thereunder.

Five, when making a Part 36 offer of £64m (of which £35.6m relates to the Claimants), seven days before the oral opening of the trial, the defendants must have made an informed evaluation of their prospects of success and the risks involved in the litigation, and as to how the evidence which they had already seen by that stage in writing might come out at the trial.

Six, in making that assessment, the defendants must be taken to have considered the lengthy opening written submissions of the parties made on 24 and 31 October, and evaluated the written expert evidence adduced by the parties, all of which was available to them, and assessed how that might stand up under cross-examination and how that might affect the submissions made and the view of the judge.

Seven, they must also be taken to have understood the significance of the relevant period running whilst the trial was in progress when making such an offer. They must be taken to have appreciated that, subject to the court finding some change of circumstance that made it unjust for that offer to be accepted, or which justified their withdrawal of it, it was open to the claimants to accept it with the permission of the court at any time before judgment in the trial.

Eight, they must also be taken to have appreciated that if the court gave permission to accept the Part 36 offer during the course of the trial, cost consequences did not automatically follow in the same way as they would if the offer had been made and accepted within the relevant period before trial where the court's permission was not required. Under CPR 36.11(4) where a court gives permission for an offer to be accepted during trial, the court has to make an order in respect of costs, and the court has the wider discretion that it usually has.

The defendants adduced a lengthy statement from Mr Sanders in which he set out the defendants' perception that the prospects of success had been radically changed since the opening of the trial and in particular by the cross-examination of the claimants' expert. It is also suggested that the fact that the Claimants are now prepared to accept the £35.6m offer in respect of their share of a claim for £890m speaks for itself, as to the change in prospects as perceived by both parties. The evidence of Mr Sinclair does not accept this on the part of the claimants, and makes a number of points about the failings in the expert evidence of the defendants' experts.

In a simple case like Sampla I can see that it might just be open to the court to take a view on the merits of the claim and defences and how those merits have changed radically in the course of a trial and to consider that a material circumstance, certainly in a case where the relevant period has expired. In a case of the complexity of the current action where the relevant period is still current, there is no realistic prospect of a judge who has heard none of the evidence forming any informed view on that subject. As Mr Sinclair says, there has been some 33 days of submissions and evidence in the trial, with some 3,600 pages of written expert evidence alone, excluding the extensive exhibits to that evidence. There is a further four weeks of the trial to run.

There is no way in which I could attempt to form an intelligent view as to a change in circumstances constituted by the way in which the trial has panned out thus far, and thus predict the trial judge's conclusion on the basis that he has heard and which I have not.

These matters always come before a judge other than the trial judge, for obvious reasons, which suggests that very process envisaged is an unlikely one for the court to be able to take into account.

The decision of Mr Justice Popplewell in the Arcadia MasterCard litigation was reached after a lengthy trial involving a different group of defendants with different MIFs. It is a first instance decision which may be the subject of appeal, and I understand permission to appeal is being sought. It is one of three decisions in this area, as I have already mentioned, the others being the decision of the European Court and the CAT decision. Each is a decision on its own facts made by different tribunals, none of which constitute binding precedent, let alone res judicata for the current action.

I do not see how it can be said that the judgment of Mr Justice Popplewell on which the defendants rely has changed the legal landscape. It is not as if the Supreme Court has enunciated a new principle which did not exist at the date of the offer but of which cognisance has now to be taken.

The counterfactual used by Mr Justice Popplewell differs from that in the EU and CAT cases. The judge has made a number of findings of fact and one of law which are said to be very helpful to the defendants if transposed into the current litigation. Whether regard is had to levels of MIF for article 101(1) or article 101(3) purposes and the effect of them or their exemptability, the fact remains that the litigation falls to be determined by a different judge on different evidence, and however persuasive Mr Justice Popplewell's findings may be, particularly in relation to an expert whose evidence is common to both actions, the trial judge may think differently.

Again, I can form no effective view on that, despite the efforts made in evidence and argument to persuade me otherwise. Just as I am in no position to say that the prospects of success have been radically altered by the course of the trial so as to constitute a sufficient change in circumstances to make it unjust for the claimants to accept the offer, so too I cannot say that the decision of Mr Justice Popplewell is of that character.

In my judgment, neither of these circumstances constitute features of the kind to which Cumper v Pothecary refer and to which the terms of 36.10(3) require.

Furthermore, as is pointed out by the claimants, the parties knew that the decision from Mr Justice Popplewell would likely be forthcoming during the course of the trial. The defendants insisted on going ahead with the trial rather than waiting to see its effect. They wanted to take the risk of that decision being either helpful or unhelpful to them, and of its emergence during the course of the trial.

In its skeleton argument, the claimants say in relation to the first limb of change of circumstances that none of Mr Sanders' perceptions come close to amounting to the discovery of new evidence which put a "wholly different complexion on the case", and nothing which has been suggested subsequently could constitute a "change in circumstances". All that had happened was that the evidence in the trial had been heard and Mr Sanders' view of the merits had changed in the light of that evidence. His view was a subjective view and his perceptions were heavily disputed, as appeared from Mr Sinclair's witness statement.

In relation to the second limb and the change in legal outlook, the claimants said this:

I consider that the claimants' argument overstates the position by setting out those requirements, but to change the "legal landscape" there must be some other court decision of the kind in Benham v Gambling which, as a matter of inevitability or near inevitability, beyond argument means that the claim could not succeed to the tune of the payment in, so that it would be unjust to hold the defendant to the order.

This would almost certainly have to be a decision of a higher court which was binding and probably that of the Supreme Court settling the position on a general basis for some time to come on a fundamental point adverse to the claimant which disposes of the claim or at least a significant or relevant portion of it.

The "true" counterfactual which Mr Justice Popplewell took into account treated the MIFs of rivals to MasterCard such as Visa as a given, whether legal or not, which differs from the decision of the CAT in the Sainsbury's/MasterCard litigation. Furthermore, he found that the MasterCard and Visa schemes were not materially identical.

I am prepared to assume for the purposes of argument that the Popplewell judgment, if applied to the current action, would be beneficial or even highly beneficial to the defendants, but I cannot assume that such application would take place. That, as I have said, depends on the trial judge, not on me.

In any event, the claimants say that the judge made a legal finding that was different from legal findings of the CAT but more favourable to the applicants than that made by the CAT, and that the judge's finding of fact made in the light of his ruling on the law was that the two schemes were not materially identical, which was unfavourable to the claimants, but that that finding is inadmissible in the instant proceedings and irrelevant to the application because of the principle in Hollington v Hewthorn.

Furthermore, the claimants submit that it would be contrary to the interests of justice to allow the defendants to withdraw the offer in circumstances where the offer was made in the clear knowledge that the MasterCard judgment would be received before the offers expired at the end of the relevant period.

The issue of the timing of the arrival of the MasterCard judgment was canvassed before the court on at least three occasions before the Part 36 offer was made, in June and July and October 2016 at various case management hearings. It was at those hearings that, contrary to the submission of the claimants that the trial ought to await the decision of Mr Justice Popplewell, the defendants contended that it should go ahead.

Anomalously on 21 December at a further case management discussion shortly before the Christmas adjournment, counsel for the defendants said this about the expected judgment of Mr Justice Popplewell:

That statement contrasts with the approach taken on this application by the defendants.

As for the attempt to accept the £35.6m offer speaking for itself as to the mutuality of the parties' appreciation of the changed prospects and the timing of the notice of acceptance as demonstrating that, I cannot again form a view as to how prospects were seen at the time of the offer by either party. A realistic assessment by the claimants at that stage might have resulted in the conclusion that the claimants would beat the offer of £36.5m but not to the tune of anything like the 890 million claimed. I have no idea what their thinking was. I am not entitled to see without prejudice correspondence showing offers and counteroffers, and can proceed solely on the basis of the Part 36 offer and the notices of acceptance and withdrawal served in relation to it. How much one party or the other has changed their subjective view is an irrelevance, though I have seen witness statements which tell me that the parties see things very differently. I can form no view as to whether their joint perception is that the claim cannot succeed to the tune of £36.5m or anything like it.

As to the question of the timing of the notice of acceptance, it of course followed the judgment of Mr Justice Popplewell, but it also followed the attempt to withdraw the Part 36 offer. The motivation and rationale for the claimants' acceptance is not something that I can or am prepared to explore.

The complaint is made, and this complaint lay at the heart of much of what was said by the defendants, was that unless the court rules in the favour of defendants in the present case, the claimants get a free ride for all of the trial costs up to the moment of acceptance. Instead of a 21-day period to consider the position, the offeree could have four months in the present case until just before judgment is given to assess the position and watch with equanimity the prospect of success ebbing and flowing at each stage of the evidence and argument without any risk as to costs at all. If the claimants' contentions were correct, the defendants said, a Part 36 offer made shortly before or during the trial would give the offeree a "one-way bet" on the further course of the trial, barring some unforeseeable event which the claimants accepted could constitute changed circumstances.

The court's permission is required both for acceptance of an offer during trial and withdrawal of an offer in the relevant period, so that there is plainly some limit upon that.

Moreover, the question of costs can be seen as raising different issues from the question of the court's permission to accept an offer, since the court has a discretion on allowing acceptance in relation to that issue of costs.

I see nothing unjust about the defendants being held to the offer that was made on the basis of their evaluation of the CAT decision, the submission of the parties and the extensive evidence adduced some seven days before the oral opening. With professional advisers they made such an offer with their eyes wide open to the possibility that it might work out well or it might work out badly, depending on how the evidence emerged, depending on what Mr Justice Popplewell decided, and how that might affect the trial judge in his decision-making. These are the kind of variables which arise in litigation generally, and I see no change of circumstances of the kind envisaged by CPR 36.10(3) or Cumper, Flynn or the other authorities which would drive me to conclude that there was any injustice in allowing acceptance of the offer in itself, particularly as I have a more general discretion in relation to costs.

The fact that the claimants have had three months to consider the Part 36 offer rather than the 21 days which would have been the position if the offer had been made sufficiently far in advance of trial is a function of the lateness of the defendants' offer. That is why the relevant period extends to the end of the trial. In my judgment it does not impact per se on the decision I have to make in relation to permission to accept the offer because the parties are still in the relevant period.

The free ride point does, however, impact on the costs order which, if I give permission to accept the offer, I have to make under the terms of 36.11(4). I conclude that there has been no sufficient change of circumstances to render it unjust that the defendants should be held to the Part 36 offer they made in the full knowledge of the situation which then existed. They were in a position to assess their prospects of success and doubtless did so, taking the risk that the evidence which they had seen might or might not stand up.

Grown up parties take their own counsel and make their own decisions as to what offers should be made in litigation of this kind; they weigh and take the risks that are inherent in the Part 36 code and I apply that code with my paramount concern in the interests of justice.

Even at this stage settlement is to be encouraged. Late acceptance of an offer is better than no acceptance, with the pursuit of the trial to judgment, four weeks' more work, a month or more of judgment writing time for the judge, and a lengthy possible quantum hearing in June 2018.

For these reasons, the claimants' application succeeds in relation to acceptance of the offer, and the defendants' application fails.

The claimants are therefore entitled to accept the Part 36 offer today, and I will treat their notice of acceptance as effective today, unless the defendants can make any sensible submissions as to why I should not do so.

I do not, however, see that the claimants are entitled to all their costs up to the date of acceptance of the Part 36 offer because, even allowing for all the pressures of trial, I do not consider that a party needs three months to consider whether or not to accept an offer, or that the CPR envisages an offeree having a free ride on costs for such a period whilst it watches the ebb and flow of the action.

The point that the defendants make is a good one as to the "one-way bet" in this context. I consider that I should assess the point at which the claimants could reasonably have been expected to respond to the offer made on 7 November, bearing in mind as I do that the relevant period is still running, but that the court's permission was always going to be required and a determination of this kind would inevitably arise if the offer was not accepted in the seven days prior to the beginning of trial.

Just as the defendants took a view as to the prospects of success on 7 November, it seems to me just that the claimants should take a view within a reasonable time of the offer being made on the basis of the position that obtained then or in the time during which it was reasonable for them to consider the offer, rather than waiting to see how things panned out in order to accept the offer at a later stage, at least where the question of costs is concerned.

Given the passing of seven days prior to the trial and the ordinary 21-day time limit, I see no reason why the claimants should not have adequately assessed the position as matters then stood by 28 November 2016, which is in fact the very date to which the offer letter referred.

I do not consider that there is any material difference in these proceedings between 21 days allowed for consideration in the period prior to trial and 21 days in the trial itself. It's not been suggested that the claimants needed more time to make an assessment of the offer made on 7 November 2016. The claimants have a large team of lawyers who were well able to assess and advise on the offer made. Whilst the claimants were entitled to rely on the relevant period as the time when the offer was open for acceptance, subject to consent of the court, they were not entitled to a free ride on costs whilst they watched the ebb and flow of the case and decided at a late stage, after much expenditure on costs, that the offer should be accepted.

There is some limited guidance in CPR 36.13(4) and (5). CPR 36.13(4)(a) simply provides that the court must determine the issue of costs where an offeree accepts an offer made less than 21 days before the start of trial, but 36.13(4)(b) provides for the situation where such an offer is accepted after expiry of the relevant period.

In that situation, 36.13(5) provides that unless it is unjust to do so, the offeree should be awarded costs up to the date when the relevant period expired, but should pay the offeror's costs for the period from the date of expiry of the relevant period to the date of acceptance.

It is right that the relevant period is still running and so to that extent that rule is of course not directly applicable. But the court's discretion on costs to be exercised judicially where costs are concerned can take into account the fact that the claimants must have deliberately chosen not to accept the offer whilst they watched how the proceedings progressed. They should not, in all justice, be allowed to do so with impunity in relation to the issue of costs; they should not have a free ride.

CPR 36.17(5) specifically informs the court that it must take into account when considering whether it is unjust to award costs on this basis under 36.13(4) and (5) all the circumstances of the case, including the terms of the Part 36 offer, the stage in proceedings when any such offer was made, and in particular how long before trial it was made, the information available to parties at that stage, and the conduct of the parties in giving or refusing to give information which would enable the offer to be evaluated, as well as whether the offer was itself genuine in its attempt to settle the proceedings.

These factors are relevant here, although the relevant period has not expired, because 21 days was, in my judgment, sufficient for the claimant to consider and evaluate the offer and thereafter took the opportunity to see how the trial went when it had all the information it needed, just as the defendant had all the information it needed, to evaluate the prospects of success before most, if not all, of the evidence was tested.

In such circumstances I consider that the claimants should be awarded their costs of the action other than those of these applications, up to 28 November 2016 on the standard basis, but should pay the costs of the defendants from that date to this, the date when I have given permission for the offer to be accepted.

As to the costs of the applications before me, I have heard no argument from the parties and ought to allow for that, but my untutored but considered view, without the benefit of such submissions, is that the claimants who have succeeded in obtaining permission to accept the offer but have had to pay a price for the lateness of that acceptance, should receive 50% of their costs on the standard basis.