“Part 36 – An advisor to Lord Justice Jackson gives guidance to the self-contained code which is said to be playing a key part in changes to today’s legal landscape.”
Last week PIC proudly hosted an event at St. John’s Chambers in Bristol to mark the successful launch of our South West Office. The event was attended by key members of the industry including local solicitors to listen to notable speakers in the form of Professor Dominic Regan, Darren Lewis, Barrister at St. John’s Chambers and PIC’s very own Reuben Glynn.
Professor Dominic Regan, a qualified solicitor who acted as an advisor to Lord Justice Jackson on the recent overhaul of costs budgeting and management, addressed the audience on issues relating to CPR Part 36 and the changes made to the Rules earlier in the year.
In the Professor’s own words, “The law of costs is trickier now than ever before. Get it wrong and you risk getting paid nothing, it is as simple as that. Wise guidance is of the utmost importance.”
Here, we dissect the issues discussed at our vital costs seminar about the changes made and the crucial importance of the timing and clarity of claimant entitlement when making a Part 36 Offer, a key change in the legal landscape today.
As has always been the case, CPR Part 36 was conceived to ensure accelerated settlement whilst at the same time encouraging offers. Keeping this in mind, the first reform occurred at CPR 36.1 (1) which states: “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).” This merely orders the case of Gibbon-v-Manchester City Council (conjoined with Blower-v-Reeves) (2010) 1 WLR 2081 – and holds that CPR Part 36 is a procedural mechanism uninfluenced by the law of contract.
Professor Regan discussed that consequently; a Party may accept a Part 36 Offer despite having earlier rejected that very same offer. Therefore this falls to the Party making the Part 36 Offer to unequivocally withdraw that offer in writing if they do not want the same offer to be accepted at a later date – as that offer can be accepted years later.
We look to a statement from Lord Justice Ward in Shovelar-v-Lane (2012) 1 WLR 637 that Part 36 is a separate self-contained code and must be applied as such. Ward goes to say that: “If the offer is one to which the costs consequences under Part 36 apply, then it cannot be taken into account under Part 44 because, although CPR 44.3(4)(c) requires the court to have regard to ‘any payment into court of admissible offer to settle’, those words are qualified by the words which follow namely ‘ which is not an offer to which costs consequences under Part 36 apply”. In essence, this means that Part 36 Offer outdoes CPR Part 44.
Further to Lord Justice Ward’s point we move to CPR Part 36.2(3) which declares that a Part 36 offer may be made in respect of the whole, or part of, any issue that arises in:
- A claim, counterclaim or other additional claim;
- An appeal or cross appeal from a decision made at a trial.
CPR Part 36.3 defines a Trial as: “(d) a trial is ‘in progress’ from the time when it starts until the time when judgement is given or handed down.”
However, it should be noted though that pursuant to CPR Part 36.4 and the decision reached in the case of KR and others-v-Bryn Alyn Community (Holdings) Ltd (in liquidation) and another  EWCA Civ 85, the offer does not survive into an appeal. It is critical that during an appeal a fresh offer must be made.
The recent case of Shaw-v-Merthyr Tydfil (2014) EWCA Civ 1678 confirms CPR Part 36.5, which now does away with the need for a Part 36 Offer to state that it is intended to have the consequences of CPR Part 36, but all the other requirements do remain.
Whilst seeking to accelerate settlement and encourage offers of settlement, it is clear that one may put considerable pressure upon an Offeree by making and withdrawing a Part 36 Offer at the same time. This course of action effectively cautions the Offeree that the Part 36 Offer made will not remain on the table indefinitely and that, should the same not be accepted by a certain period, the same will be considered withdrawn. This means pursuant to CPR Part 36.17(7)(a) upon automatic withdrawal the Offeror no longer has the protection afforded by CPR Part 36.
Further to this, we understand that withdrawing a Part 36 Offer within the relevant period is now subject to the new CPR Part 36.10 – requiring the Offeror to serve Notice of Withdrawal within 7 days of the Offeree serving Notice of Acceptance. However, pursuant to CPR 36.10 (3) if the withdrawal or variation is in the interests of justice, the Court may grant such permission.
We must note, of course that CPR 36.9(5) allows improved Part 36 Offers to be treated as a new offer, but less attractive offers do not initiate a fresh period.
What if we accept an offer out of time? CPR Part 36.13(5) deals with accepting a Part 36 Offer outside of the time restriction, which has been varied so as to force the court to;
- Award costs in favour of the Offeree up to the date upon which the relevant period expired;
- Award costs in favour of the Offeror from the date of expiry of the relevant period up to the date of acceptance, unless the Court considers it unjust to do so.
The case of Kunaku-v-Barclays Bank (2010) EWCA Civ 1035 demonstrates the above situation – the claimant representing himself sued the bank which was legally represented. Mr Kumaku did not accept the bank’s offer to settle of £35,000. Four months later the bank repeated the offer, which at the time was still open for acceptance. He did accept the offer, only to find the bank asked him for costs since he had accepted out of time. The court described the claimant as a person “who has in the course of this litigation obviously learnt a lot about the law”, but held that Mr Kumaku would have not appreciated the costs consequences of accepting late, thus the defendant should have drawn this to his attention when it restated the offer – meaning that it would not let the bank have costs against him.
That said, CPR 36.17(5)(e), allows the Court to make any relevant costs based upon;
- The terms of the offer,
- 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,
- The information available to the parties at the time when the offer was made,
- The conduct of the parties with regard to the giving or refusal to give information for the purposes of enabling the offer to be made or evaluated,
- More importantly; whether the offer was a genuine attempt to settle the proceedings.
We learn, therefore, it is vitally important when making a Part 36 Offer that it is made early as good, sensible, meaningful and protective Part 36 Offers do, pursuant to CPR Part 36.17(4)(d), entitle the Claimant to recover a further 10% of the first £500,000 of damages awarded and, subject to the limit of £75,000, 5% of any amount above that figure.
Our Costs Lawyer and Manager of the South West Office, John Plunkett, has a considerable number of case law relating to Part 36 Offers available upon request. Please do not hesitate to contact John directly if you have any queries regarding the above at email@example.com