Effective as of 1 October 2011, the 57th update to the Civil Procedure Rules introduces a new Section 1A into CPR Part 36.14 to clarify the recent uncertainty as to what constitutes 'beating' a Part 36 offer.
The new provision states 'For the purposes of paragraph (1), in relation to any money claim or money element of a claim, ‘more advantageous’ means better in money terms by any amount, however small, and ‘at least as advantageous’ shall be construed accordingly'.
This was the original interpretation applied to Part 36 but in recent years the position has been much less clear following the judgment in Carver v BAA Plc where the claimant beat the defendant’s payment in by just £51.
The claimant and her solicitors assumed that this meant that there would be no costs penalties applied as the judgment was for a greater sum than the defendant's Part 36. However in the absence of a definition of what ‘more advantageous’ meant, the court decided that the claimant had failed 'to obtain a judgment more advantageous than [the] defendant’s Part 36 offer' pursuant to CPR Part 36.14(1)(a). The claimant did not therefore recover her costs from the time the original offer expired and was ordered to pay the defendant's costs for this period too. The claimant appealed but the judgment was upheld in the Court of Appeal.
This created significant uncertainty as to how to assess the risk of a defendant's Part 36 and what would be deemed a 'more advantageous' outcome.
The recent update removes that uncertainty with claimants and their advisers now being clear that achieving a judgment in excess of a defendant’s Part 36 offer, even if a very small amount will be interpreted as being 'more advantageous'.
We consider this to be an important clarification enabling clarity and proper risk assessment of Part 36 offers.