The existing Part 36 of the Civil Procedure Rules (CPR) will be replaced on 6 April 2007 with a completely new CPR 36 setting out the rules for making offers of settlement. The principle change, and one which was surprisingly not foreshadowed in the consultation paper on Part 36, is the abolition of payments into court.

Under the present Part 36, a defendant who wishes to settle a money claim must make a payment into court. During the past few years, this rule has been subject to exceptions devised by initially by NHS Trusts and subsequently extended with the approval of the courts with the effect that any defendant who is deemed to be “good for the money” can make a Part 36 offer instead of a payment into court. The abolition of payments into court will not be of much significance to organisations which were already able to avoid the present requirement because they were obviously “good for the money”. But for those defendants of less self-evident size and solvency, the new rule is excellent news. Where they would have had problems proving that they were “good for the money” and so unable to avoid making a payment in, they will now be able to hold on to the funds in question where their offer is rejected instead of having to leave the money in court until the end of the action. Under the new regime, if a defendant makes an offer which is accepted and then fails to pay the sum in question within 14 days, the claimant will be entitled to enter judgment and the defendant will lose the costs protection the offer would normally achieve.