CLARIFICATION OF A PART 36 OFFER HAS A MAJOR EFFECT ON COSTS

CPR 36.8 STATES “(1) The offeree may, within 7 days of a Part 36 offer being made, request the offeror to clarify the offer”.  In Bailes -v- Bloom (23/11/2015, Simler J QBD)* the fact that clarification had been provided had a major impact upon the order for costs.

KEY POINTS

  • A Part 36 offer had to be read in conjunction with clarification that was given.
  • The defendant had made a Part 36 offer which was higher than the Part 36 offer which the claimant had later made and which had been accepted.
  • It was unreasonable for the defendant to pay costs beyond 21 days after its first offer.

PRACTICE POINTS

  • If there is an ambiguity in the terms of  a Part 36 offer it is wise to seek clarification.
  • The overall effect of a Part 36 offer may well be read in conjunction with any clarification given.

THE CASE

  • Prior to the issue of proceedings the defendant made a Part 36 offer of £200,000.
  • The offer letter said it “did not take into account any counterclaim.”
  • The claimant sought clarification and the defendant stated that it did not intend to bring a counterclaim.
  • The claimant rejected the offer and issued proceedings.
  • The defendant filed a defence and counterclaimed for a declaration as to what was said in the defence was correct.
  • The claimant then served a Part 36 offer that it would accept £185,000.
  • This offer was accepted by the defendant out of time.
  • When the issue of costs was before the Master she declined to order that the claimant pay the defendant’s costs from 21 days after the defendant’s offer.

ON APPEAL

  • The subsequent clarification of the offer by the defendant was something that had to be taken into account.
  • After the defendant had given clarification of the offer the claimant had all the information needed to understand the valuation.
  • The defendant had invoked the protection of Part 36 at an early stage to avoid costs.
  • The claimant had made a lower offer and had chosen not to accept the earlier offer.
  • It was unjust for the defendant to pay costs past the 21 day period following its first Part 36 offer.

*Reported on Lawtel. This post comes from the Lawtel summary.

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