THE NEW PART 36: COMING TO YOUR PRACTICES SOON: PART 1

The “new” Part 36 comes into force on the 6th April 2015. Here I provide the first part a summary of the main chances.  To prevent any confusion this post only cites the new rules.

THERE IS NOW AN EXPRESS RFERENCE TO PART 36 BEING A SELF-CONTAINED PROCEDURAL CODE

The new Part 36.1 makes it clear that Part 36 is a self contained code, echoing, almost exactly, the wording in the case law.

“36.1.—(1) This Part contains a self-contained procedural code about offers to settle made
pursuant to the procedure set out in this Part (“Part 36 offers”).”

EXTENSION OF SECTION II OF PART 36

The rule is split up into two distinct parts.

1. Section I applies to all actions, except those that fall within the personal injury protocols.

2. Section II applies to the  RTA, PL and EL personal injury protocols.

The scope of Section II is set out.

“(3) Section II of this Part contains rules about offers to settle where the parties have
followed the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic
Accidents (“the RTA Protocol”) or the Pre-Action Protocol for Low Value Personal Injury
(Employers’ Liability and Public Liability) Claims (“the EL/PL Protocol”) and have started
proceedings under Part 8 in accordance with Practice Direction 8B.”

MAKING IT CLEAR THAT OFFERS CAN BE MADE OUTSIDE PART 36 AND STILL BE RELEVANT TO ISSUE OF COSTS

The rule makes it clear that it is open to a party to make offers in way they choose. However these will not have Part 36 costs consequences, although such offers can be considered under CPR 44.2.

“(2) Nothing in this Section prevents a party making an offer to settle in whatever way that
party chooses, but if the offer is not made in accordance with rule 36.5, it will not have the
consequences specified in this Section.
(Rule 44.2 requires the court to consider an offer to settle that does not have the costs
consequences set out in this Section in deciding what order to make about costs.)”

THE SCOPE OF PART 36

36.2.(3) sets out the extent of Part 36. It makes it clear that a Part 36 offer can extend to a counterclaim, additional claim, appeal and cross-appeal.

“(3) A Part 36 offer may be made in respect of the whole, or part of, or any issue that
arises in—
(a) a claim, counterclaim or other additional claim; or
(b) an appeal or cross-appeal from a decision made at a trial.
(Rules 20.2 and 20.3 provide that counterclaims and other additional claims are treated as
claims and that references to a claimant or a defendant include a party bringing or
defending an additional claim.)”

EXTENSION OF DEFINITIONS SECTION

There are some new definitions which were not in the previous rules. Including definitions of:

  • “trial”
  • when a case is “decided”
  • when a trial is “in progress”
  • “trial judge”
  • “relevant period”

Definitions
36.3. In this Section—
(a) the party who makes an offer is the “offeror”;
(b) the party to whom an offer is made is the “offeree”;
(c) a “trial” means any trial in a case whether it is a trial of all issues or a trial of
liability, quantum or some other issue in the case;
(d) a trial is “in progress” from the time when it starts until the time when judgment is
given or handed down;
(e) a case is “decided” when all issues in the case have been determined, whether at
one or more trials;
(f) “trial judge” includes the judge (if any) allocated in advance to conduct a trial; and
(g) “the relevant period” means—
(i) in the case of an offer made not less than 21 days before a trial, the period
specified under rule 36.5(1)(c) or such longer period as the parties agree;
(ii) otherwise, the period up to the end of such trial.

PART 36 AND APPEALS

The rule makes it clear that Part 36 offers can be made on appeals.  However an offer made in the initial action does not have Part 36 consequences. This reiterates the point that a new Part 36 offer must be made in relation to an appeal.

“Application of Part 36 to appeals

36.4.—(1) Except where a Part 36 offer is made in appeal proceedings, it shall have the
consequences set out in this Section only in relation to the costs of the proceedings in
respect of which it is made, and not in relation to the costs of any appeal from a decision in
those proceedings.
(2) Where a Part 36 offer is made in appeal proceedings, references in this Section to a
term in the first column below shall be treated, unless the context requires otherwise, as
references to the corresponding term in the second column—
Term Corresponding term
Claim Appeal
Counterclaim Cross-appeal 13
Case Appeal proceedings
Claimant Appellant
Defendant Respondent
Trial Appeal hearing
Trial judge Appeal judge”

FORM AND CONTENTS OF A PART 36 OFFER:DEEMED TO BE INCLUSIVE OF INTEREST

There is no substantive change in relation to the form and contents of a Part 36 offer. However there is a new provision which makes it clear that an offer is deemed to be inclusive of interest to the date of expiry of the offer.

“(4) A Part 36 offer which offers to pay or offers to accept a sum of money will be treated
as inclusive of all interest until—
(a) the date on which the period specified under rule 36.5(1)(c) expires; or
(b) if rule 36.5(2) applies, a date 21 days after the date the offer was made.”

PRE-ACTION OFFERS AND DATE WHEN OFFER IS MADE

Part 36.7 makes it clear that an offer can be made at any time, including before proceedings have begun. An offer is made when it is served on the offeree.

“Time when a Part 36 offer is made
36.7.—(1) A Part 36 offer may be made at any time, including before the commencement
of proceedings.
(2) A Part 36 offer is made when it is served on the offeree.
(Part 6 provides detailed rules about service of documents.)”

CLARIFYING, WITHDRAWING AND CHANGING THE TERMS OF OFFERS

This is a new  heading before 36.8 (the old heading read “clarification of a Part 36 offer”.  The new rule sets out express terms for withdrawing.

CLARIFYING THE TERMS OF AN OFFER

There is a slight change in the wording but no major change to the effect.

“Clarification of a Part 36 offer
36.8.—(1) The offeree may, within 7 days of a Part 36 offer being made, request the
offeror to clarify the offer. 14
(2) If the offeror does not give the clarification requested under paragraph (1) within 7
days of receiving the request, the offeree may, unless the trial has started, apply for an order
that the offeror do so.
(Part 23 contains provisions about making an application to the court.)
(3) If the court makes an order under paragraph (2), it must specify the date when the Part
36 offer is to be treated as having been made.”

WITHDRAWING OR CHANGING THE TERMS OF A PART 36 OFFER GENERALLY

There are now express rules which deal with withdrawing or changing an offer. The important point here is that where an attempt is made to vary an offer in terms which is more advantageous to the recipient of the offer this is not treated as a variation but as a brand new Part 36 offer.

“36.9.—(1) A Part 36 offer can only be withdrawn, or its terms changed, if the offeree has

not previously served notice of acceptance.
(2) The offeror withdraws the offer or changes its terms by serving written notice of the
withdrawal or change of terms on the offeree.
(Rule 36.17(7) deals with the costs consequences following judgment of an offer which is
withdrawn.)
(3) Subject to rule 36.10, such notice of withdrawal or change of terms takes effect when
it is served on the offeree.
(Rule 36.10 makes provision about when permission is required to withdraw or change the
terms of an offer before the expiry of the relevant period.)
(4) Subject to paragraph (1), after expiry of the relevant period—
(a) the offeror may withdraw the offer or change its terms without the permission of
the court; or
(b) the offer may be automatically withdrawn in accordance with its terms.
(5) Where the offeror changes the terms of a Part 36 offer to make it more advantageous
to the offeree—
(a) such improved offer shall be treated, not as the withdrawal of the original offer;
but as the making of a new Part 36 offer on the improved terms; and
(b) subject to rule 36.5(2), the period specified under rule 36.5(1)(c) shall be 21 days
or such longer period (if any) identified in the written notice referred to in
paragraph (2).”

WITHDRAWING OR CHANGING THE TERMS OF A PART 36 OFFER BEFORE THE EXPIRY OF THE RELEVANT PERIOD

An offer can only be withdrawn within the offer period with the permission of the court. Then only if the court is satisfied there should be a change of circumstances and that it is in the interests of justice to give permission.

“36.10.—(1) Subject to rule 36.9(1), this rule applies where the offeror serves notice before expiry of the relevant period of withdrawal of the offer or change of its terms to be less advantageous to the offeree.

(2) Where this rule applies—
(a) if the offeree has not served notice of acceptance of the original offer by the expiry
of the relevant period, the offeror’s notice has effect on the expiry of that period;
and
(b) if the offeree serves notice of acceptance of the original offer before the expiry of
the relevant period, that acceptance has effect unless the offeror applies to the court
for permission to withdraw the offer or to change its terms—
(i) within 7 days of the offeree’s notice of acceptance; or
(ii) if earlier, before the first day of trial.
(3) On an application under paragraph (2)(b), the court may give permission for the
original offer to be withdrawn or its terms changed if satisfied that there has been a change
of circumstances since the making of the original offer and that it is in the interests of
justice to give permission”

ACCEPTANCE OF A PART 36 OFFER

The rules as to acceptance have not changed. The express provision in the old rules that a Part 36 offer could not be accepted after the end of a trial but before judgment is handed down is changed so that the court’s permission is required to accept a Part 36 offer when “a trial is in progress”.  Here we have to go back to the definition section above

“a trial is “in progress” from the time when it starts until the time when judgment is
given or handed down”.

36.11.—(1) A Part 36 offer is accepted by serving written notice of acceptance on the offeror.

(2) Subject to paragraphs (3) and (4) and to rule 36.12, a Part 36 offer may be accepted at
any time (whether or not the offeree has subsequently made a different offer), unless it has
already been withdrawn.
(Rule 21.10 deals with compromise, etc. by or on behalf of a child or protected party.)
(Rules 36.9 and 36.10 deal with withdrawal of Part 36 offers.)
(3) The court’s permission is required to accept a Part 36 offer where—
(a) rule 36.15(4) applies;
(b) rule 36.22(3)(b) applies, the relevant period has expired and further deductible
amounts have been paid to the claimant since the date of the offer;
(c) an apportionment is required under rule 41.3A; or
(d) a trial is in progress.
(Rule 36.15 deals with offers by some but not all of multiple defendants.)
(Rule 36.22 defines “deductible amounts”.)
(Rule 41.3A requires an apportionment in proceedings under the Fatal Accidents Act
1976(a) and Law Reform (Miscellaneous Provisions) Act 1934(b).)
(4) Where the court gives permission under paragraph (3), unless all the parties have
agreed costs, the court must make an order dealing with costs, and may order that the costs
consequences set out in rule 36.13 apply.”

ACCEPTANCE OF A PART 36 OFFER IN A SPLIT TRIAL CASE

When there has been a split trial, but judgment has not yet been obtained, a Part 36 offer cannot be accepted until 7 days after judgment is handed down.

“36.12.—(1) This rule applies in any case where there has been a trial but the case has not
been decided within the meaning of rule 36.3.
(2) Any Part 36 offer which relates only to parts of the claim or issues that have already
been decided can no longer be accepted.
(3) Subject to paragraph (2) and unless the parties agree, any other Part 36 offer cannot be
accepted earlier than 7 clear days after judgment is given or handed down in such trial.”

COSTS CONSEQUENCES OF ACCEPTANCE OF A PART 36 OFFER

There are some important changes here.

  • An express reference to a party being entitled to “recoverable pre-action costs”.
  • The express provision that where a Part 36 offer is accepted late the court must, unless it is unjust to do so, order the “claimant” [in both old and new rules] is entitled to the costs up to the date of expiry of the relevant period and the offeror entitled to costs thereafter.
  • This is a general presumption that can be overturned if the court considers it unjust to do so and by referring to the matter in 36.17(5).

“36.13.—(1) Subject to paragraphs (2) and (4) and to rule 36.20, where a Part 36 offer is
accepted within the relevant period the claimant will be entitled to the costs of the
proceedings (including their recoverable pre-action costs) up to the date on which notice of
acceptance was served on the offeror.
(Rule 36.20 makes provision for the costs consequences of accepting a Part 36 offer in
certain personal injury claims where the claim no longer proceeds under the RTA or EL/PL
Protocol.)
(2) Where—
(a) a defendant’s Part 36 offer relates to part only of the claim; and
(b) at the time of serving notice of acceptance within the relevant period the claimant
abandons the balance of the claim,

the claimant will only be entitled to the costs of such part of the claim unless the court
orders otherwise.
(3) Except where the recoverable costs are fixed by these Rules, costs under paragraphs
(1) and (2) are to be assessed on the standard basis if the amount of costs is not agreed.
(Rule 44.3(2) explains the standard basis for the assessment of costs.)
(Rule 44.9 contains provisions about when a costs order is deemed to have been made and
applying for an order under section 194(3) of the Legal Services Act 2007(a).)
(Part 45 provides for fixed costs in certain classes of case.)
(4) Where—
(a) a Part 36 offer which was made less than 21 days before the start of a trial is
accepted; or
(b) a Part 36 offer which relates to the whole of the claim is accepted after expiry of
the relevant period; or
(c) subject to paragraph (2), a Part 36 offer which does not relate to the whole of the
claim is accepted at any time,
the liability for costs must be determined by the court unless the parties have agreed the
costs.
(5) Where paragraph (4)(b) applies but the parties cannot agree the liability for costs, the
court must, unless it considers it unjust to do so, order that—
(a) the claimant be awarded costs up to the date on which the relevant period expired;
and
(b) the offeree do pay the offeror’s costs for the period from the date of expiry of the
relevant period to the date of acceptance.
(6) In considering whether it would be unjust to make the orders specified in paragraph
(5), the court must take into account all the circumstances of the case including the matters
listed in rule 36.17(5).
(7) The claimant’s costs include any costs incurred in dealing with the defendant’s
counterclaim if the Part 36 offer states that it takes it into account.”

(CPR 36.17.5: FOR YOUR REFERENCE)

(“5) In considering whether it would be unjust to make the orders referred to in paragraphs
(3) and (4), the court must take into account all the circumstances of the case including—
(a) the terms of any Part 36 offer;
(b) the stage in the proceedings when any Part 36 offer was made, including in
particular how long before the trial started the offer was made;
(c) the information available to the parties at the time when the Part 36 offer was
made;
(d) the conduct of the parties with regard to the giving of or refusal to give information
for the purposes of enabling the offer to be made or evaluated; and
(e) whether the offer was a genuine attempt to settle the proceedings.”

 

 

One comment

  1. Anonymous · · Reply

    The new 36.13(5) does intend ‘claimant’ and not ‘offeree’. If the claimant makes an offer which the defendant accepts out of time, it is the claimant who gets costs until the date of expiry, not the defendant/offeree.

    It is a shame that the imbalance in this rule was not addressed such that claimants get indemnity costs from the date of expiry in the scenario above. There is no real detriment to a defendant in accepting an offer late.

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