The Part 36 mechanism contained with the Civil Procedure Rules remains a crucial tool for solicitors who handle personal injury work. It enables claimants and defendants to put forward tactical offers regarding liability and quantum with resulting penalties for the opposing party should they fail to beat the offer.

The Civil Procedure Rules Committee has decided that changes need to be made and has published a revised version, which comes into effect on 6 April 2015.

This is not intended to be an exhaustive summary of the changes but rather an outline of some of the revisions.

Time limited offers

The current Part 36 rule does not allow for a time limited offer and, consequently, Part 36 cost sanctions for a party that fails to beat such an offer do not generally apply. A Part 36 offer can be withdrawn after expiry of 21 days by sending a separate notice but it is not automatically withdrawn after expiry of that time.

The new Part 36.9(4)(b), does allow a Part 36 offer to be automatically withdrawn after expiry of the relevant period in accordance with its terms.

Split trials

The new Part 36.16 allows the judge to be told of the existence of a Part 36 offer after judgment has been given on the preliminary issues. Depending on the issue decided, it may or may not be possible to disclose the full details of the offer.

Genuine offer to settle?

Here the case of AB v CD [2011] EWHC 602 (Ch) is relevant. Any claimant Part 36 offer should be a genuine effort to settle and clearly offer some form of significant concession. For example, in Huck v Robson [2002] EWCA Civ 398 a claimant’s offer for 95% of the value of the claim was considered valid although, arguably, this was a tactical manoeuvre rather than an attempt to settle.

Part 36 now addresses this issue further. It allows the court to take into account whether the offer was a genuine attempt to settle the proceedings and gives the court more flexibility when deciding whether it would be unjust to order the normal Part 36 costs consequences.

Counterclaims

The revised Part 36 (CPR 36.2(3)) states that a Part 36 offer may be made in respect of a counterclaim or other additional claim. It references CPR 20.2 and 20.3 which confirm that counterclaims and other additional claims are to be treated as claims.

This amendment will mean defendants with counterclaims may also benefit from more favourable costs consequences.

Appeals

The new CPR 36.4 sets out how the rule is to be applied in those circumstances and includes references to claimant/defendant and the comparison to appellant/respondent.

Improved offers

The new provision (at CPR 36.9(5)) means that, where an offeror changes the terms of an offer so that it becomes more advantageous to the offeree, it is to be considered a new offer and not a withdrawal of the original offer.

Late acceptance

In the circumstance of a Part 36 offer being accepted late, the court shall make the usual order “unless it would be unjust to do so”. A similar test will be applied by the court when considering whether to depart from the usual costs consequences where an opponent fails to beat a Part 36 offer at trial.

Costs budgets

A party that has failed to file a costs budget in time is only allowed to recover the court fees, nothing more. In those circumstances, it is difficult to see any incentive for the other side to settle or to be concerned regarding a Part 36 offer made by the defaulting party.

The new CPR 36.23 addresses this by providing that the defaulting party’s recoverable costs for the purposes of Part 36 will be 50% of the costs that would otherwise be recoverable and not be limited to court fees. This will only apply to the costs from expiry of the relevant period.

The following issues have also been clarified:

  • A party who has rejected an offer can change their mind later and accept the offer, provided it has not been withdrawn.
  • To be valid, the offer needs only to state it is made pursuant to Part 36. There is, therefore, now less likelihood that a Part 36 offer will fail on the basis of a technicality.
  • CPR 36.7 makes it clear that an offer can be made at any time to include pre-issue and that the claimant’s automatic entitlement to reasonably incurred costs includes pre-action costs.