Changes to Part 36 offers

Changes to Part 36 offers were made under the Civil Procedure (Amendment No 8) Rules 2015, applying to all Part 36 offers made on or after 6 April 2015. A Part 36 offer is an offer made by a claimant or defendant to encourage settlement of the claim before trial. Such offers impose costs sanctions on a party who rejects a Part 36 offer but fails to obtain a better result at trial.

Time limited offers
Under the previous rules, a time limited offer, ie an offer published for acceptance for only a limited time, was not a valid Part 36 offer and so did not attract the costs consequences of Part 36 offers. CPR 36.9(4)(b) now enables time limited Part 36 offers to be made, which would be automatically withdrawn on expiry of the relevant period, if not accepted. However, under CPR 36.17(7) the Part 36 costs consequences do not apply after the offer has been withdrawn.

Part 36 offers and split trials
Under the previous rules, a Part 36 offer should not be disdraft to the trial judge until the case had been decided. In split trials this meant that following judgment on a preliminary issue, the Court would have to decide whether or not to make a costs order concerning the preliminary issue without knowing whether a Part 36 offer had been made. CPR 36.16 now allows the Judge to be made aware of the existence of a Part 36 offer after judgment has been given on the preliminary issue, but the terms of the offer would not be made known, except in limited circumstances.

Very high claimant offers
CPR 36.17(5)(e) deals with the situation where a claimant makes a Part 36 offer for all or almost all of the entire sum sought. Under the old rules, the costs consequences of a Part 36 offer apply where the claimant obtains judgment that is at least as advantageous as the claimant’s own Part 36 offer, ie, if the claimant matches or beats their offer. This enabled a claimant to make an offer to settle for the whole amount of their claim and yet still benefit from the costs consequences of a Part 36 offer if they succeeded to recover the whole amount at trial.

When deciding whether it would be unjust to order Part 36 costs, the new rule requires the Court to take into account whether an offer was a genuine attempt to settle.

Very high claimant offers, where the claimant makes very little concession, will now require the Court to consider whether the offer was such a genuine attempt to settle, before deciding whether to order the usual Part 36 costs.

Counterclaims and Part 36 offers CPR 36.2(3) clarifies that Part 36 offers can be made in respect of a counterclaim or additional claim, enabling defendants to take advantage of the more favourable costs consequences of part 36 offers.

Appeals and Part 36 offers
CPR 36.4 clarifies the application of Part 36 offer in appeals. Improved offers CPR 36.9(5) provides that where an offeror changes the terms of an offer to make it more advantageous to the offeree, the improved offer shall be treated as a new Part 36 offer rather than a withdrawal of the original offer. Part 36 costs consequences will therefore still apply to the older offer, since it has not been withdrawn.

Late acceptance of Part 36 offers
CPR 36.14(5) provides that where a Part 36 offer is accepted late, the Court must make the usual order of the delaying party paying the costs for the period of the delay, unless it would be unjust to do so. This narrows the Court’s current discretion.

Costs budgets and Part 36 offers
If a party fails to file a costs budget on time under CPR 3.14 they are treated as having filed a budget limited to only the court fees. If that party then makes a Part 36 offer, there is little incentive for their opponent to settle as the costs risks if they fail to beat that offer are minimal.

The new CPR 36.23 provides that if a party fails to file a costs budget on time, the defaulting party’s recoverable costs, for the purposes of Part 36, will be 50% of the costs otherwise recoverable from expiry of the relevant offer period.

Lyn Gibbons specialises in personal injury claims. If you would like to ask Lyn a question about an offer in a personal injury claim you can contact Lyn on 01622 680422.

This content is correct at time of publication