Court of Appeal rules that payment made after Part 36 offer reduced the amount of the offer

In August 2015, the defendant made a Part 36 offer to pay the claimant £15,000. The defendant subsequently paid the claimant £10,000 and the issue in this case was whether that payment reduced the Part 36 offer to £5,000 (and so the claimant had beaten the offer at trial – if the Part 36 offer was not reduced, the defendant would have beaten the offer). At first instance, the judge held that the offer had been reduced and the defendant appealed. The Court of Appeal has now dismissed that appeal.

Reference was made to the earlier Court of Appeal decision of Littlestone v Macleish, in which the Court of Appeal held that a part payment made by the defendant following an admission of liability had been made as part payment of the amount of the Part 36 offer and the payment and the offer should not be aggregated. In reaching that decision, the Court of Appeal said that, if it was necessary to decide the point, it differed from Moore-Bick LJ's obiter views on this issue in Gibbon v Manchester City Council.

In this case, the defendant sought to distinguish the position from that in Macleish on the basis that that case had been limited to cases of admissions or where the offeror made it clear that a payment was intended to reduce the Part 36 offer. That argument was rejected by the Court of Appeal, which held that Macleish applied to cases involving any payment of account of a claim: "where such a payment is made, there is a presumption of law that it is also on account of the earlier Part 36 offer". Thus the payment will reduce the Part 36 offer unless the payer, either at the time of payment or promptly thereafter, makes it clear that the payment is not intended to reduce the amount of an earlier Part 36 offer.