Whether relevant period starts again if the terms of a Part 36 offer are changed
A Part 36 offer remains open for acceptance until it is withdrawn. However, the rules also allow for a Part 36 offer to be changed, rather than withdrawn. The rules are silent, though, as to whether the “relevant period” (ie the amount of time the offeree has to accept an offer) starts to run again once an offer has been changed, or whether the relevant period set out in the original offer still applies. This is especially important where a defendant offer has been made. That is because Part 36 provides that (where an offer is accepted after the end of the relevant period) the defendant will pay the claimant’s costs of the proceedings up to the expiry date of the relevant period and thereafter the claimant (as the offeree) will pay the costs of the defendant (as the offeror) from the expiry date of the relevant period to the date of acceptance (unless the court orders otherwise).
Here, a defendant offer was made in July and the relevant period was stated to be 21 days. The offer was neither accepted nor withdrawn. Six months later, the terms of the offer were changed by the defendant. Ackroyd DJ considered the purpose of allowing Part 36 offers to be changed. He saw “good sense” in allowing a claimant additional time to reflect on a changed Part 36 offer. However, he was ultimately guided by the fact that the rules were silent as to any extension of the time for acceptance, despite the draughtsmen having had an opportunity to specify this. He therefore concluded that that the relevant period did not renew following a change to the terms of a Part 36 offer and “the time that is given in that original offer is the one that applies”.
COMMENT: This is an interesting decision for defendants. Had the defendant’s original Part 36 offer been withdrawn and a new (and different) offer made 6 months later, the defendant would not have been entitled to its costs incurred over the intervening period between the two offers. Defendants might therefore consider that this case encourages them not to withdraw offers but instead to alter their terms, when their position in the underlying litigation changes. However, that is a potentially risky strategy, since if the defendant’s position in the underlying litigation improves, it would be open for a claimant to still accept the original offer before it is withdrawn or changed.