Further recent decisions have sought to clarify Part 36 in relation to time limited offers, the status of pre-action Part 36 offers and the identity of the “successful party” in litigated matters where Part 36 offers have been made but not accepted.
In Shah v Elliot5 the county court considered a time-limited offer purporting to be a Part 36 offer. As in the case of C v D6, covered in our previous Update, the court held that a time-limited offer cannot constitute a valid Part 36 offer, although the court will endeavour to construe an offer clearly intended to be compliant with Part 36 so as to be valid. As in C v D, the “time-limited” offer here was still construed as a valid Part 36 offer, as the other constituent elements of the offer meant that the “reasonable solicitor” would have construed it as a valid Part 36 offer.
In KT v Bruce7, the High Court ruled that the reference in CPR 36.10 to “proceedings” includes pre-action costs. In principle, pre-action offers should be treated the same as post-issue Part 36 offers, even where a pre-action Part 36 offer had been accepted before the commencement of proceedings. However, it is unclear how this decision sits with the decision in Udogaranya v Nwagw8, covered in our previous Update, where the court held that a pre-action offer should make specific reference to the treatment of pre-action costs, otherwise they would not be covered by CPR 36.10 (although these costs may be recoverable under the court’s general discretion under CPR 44.3). There still exists ambiguity, particularly as the decision in KT means that “proceedings” has a different meaning in CPR 36.10 from that in CPR36.3, where it clearly refers to post-issue proceedings.
Finally, Lord Justice Jackson provided more clarification on Part 36 in Fox v Foundation Piling Limited9. First, where both parties have made optimistic Part 36 offers (that is, where a claimant fails to beat its own offer, but beats the defendant’s offer), it is the claimant that should be viewed as the “successful party” under CPR 44.3. Secondly, while the starting point is that a “successful party” will recover all of its costs from the other side, the court may then consider other issues and circumstances before settling on a final costs figure. Finally, Jackson LJ confirmed that the effect of Carver v BAA10, which stated that considerations beyond mere monetary value should be taken into account when considering whether one party has beaten another’s Part 36 offer, will be reversed by a new CPR 36.14(1A) from 1 October 2011.