In 2007 changes to Part 36 left some areas of uncertainty. Do the new changes tackle these issues?

Before the April 2015 changes came into effect, Part 36 had remained unchanged since April 2007. Both the 2007 and 2015 changes were intended to codify some of the common law principles that developed in relation to Part 36, yet the 2007 rules were criticised for creating confusion rather than clarity.

This article examines how the 2015 changes have removed some of this confusion and how the key changes address some of the old concerns. In particular, this article will examine withdrawing or changing the terms of a Part 36 offer.

The Sunset Clause

The 2007 rules allowed an offeree to accept a Part 36 offer, not withdrawn or changed, at any time after expiry of the relevant period without permission from the court. This validated the acceptance of an offer as far as twelve months from the date it was made (Fitzpatrick contractors limited v Tyco Fire & Integrated solutions (UK) Limited (No3) [2009] EWCH 274 (TCC)). As a result many parties began to specify a date by which the offer must be accepted (known as a 'sunset clause') to put pressure on the other side to accept sooner.

However, as only change or withdrawal could invalidate an offer, it became unclear whether beyond the sunset date, the offer, not having been changed or withdrawn, ought to be treated as capable of acceptance. C v. D [2011] EWCA Civ 646 (one of many cases which sought to clarify the 2007 changes) diminished much of this uncertainty and it was held that a sunset clause providing for automatic withdrawal at a certain date would invalidate a Part 36 offer. This created a clear but inflexible rule.

The 2015 rules change this. Under a new rule 36.9(4)(b) an offer may be automatically withdrawn in accordance with its terms; the offer then expires. Therefore, the sunset offer is a valid offer and parties are free to set deadlines on their settlement. Offerors' should, however, bare in mind that an expired offer will not attract the cost consequences of an offer which remains open, even if it beats the award ultimately made at trial (new CPR 36.17(7)).

Withdrawing or changing offers within the relevant period

The old rule required the offeror to obtain the permission of the Court to withdraw an offer during the "Relevant Period" (21 days after service of the offer).

Under the new rule (CPR 36.10(2)(a)), so long as the offer has not been accepted, an offeror can serve notice to withdraw an offer within the Relevant Period, or alter it to make it less advantageous to the offeree. The notice will only take effect after the expiry of the Relevant Period.

New CPR 36.10(2)(b) provides that where an offeree seeks to accept the original offer after the notice of withdrawal or variation, but before the expiry of the Relevant Period, the offeror must apply to the court for permission to withdraw or vary it.

Conclusion

The new rules apply to Part 36 offers made on or after 6 April 2015. The changes are not dramatic, yet it can be said with some certainty, have worked to rationalize and clarify how Part 36 works.