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Part 36 Offers.

This is attractive for claimants because of the reward regime, the deemed costs order under CPR 36.10 and the right to enter judgment for the amount accepted if it is not paid within 14 days of acceptance. Just because an offer is badged as a Part 36 one, it does not follow that it will validly constitute a Part 36 proposal. The essential ingredients are that it is written, is declared to have intended Part 36 consequences, specifies a relevant period of not less than 21 days and, if limited, shall identify to which part of the claim it is so confined to cover.

Gibbon v Manchester City Council and Blower v Reeves. The former decides that Part 36 is a procedural mechanism and is not influenced by the law of contract. Consequently, a defendant who had rejected a Part 36 offer was entitled, months later, to accept the offer. Note the professional negligence angle here for claimants and defendants alike. If you are going to withdraw an offer say so, unequivocally, in writing. Note that there is a significant difference between withdrawing an offer and reducing it. Imagine you are a defendant who offered £100,000 but later you decide that you should only offer £75,000. The claimant at trial is awarded £60,000. By reducing your offer you maintain costs protection, albeit only for the lower sum. Were you to withdraw your offer and then make a fresh one for £75,000 protection in the past is thrown away and you are only able to rely on the new offer just made.

If a Part 36 offer is accepted, the claim will be stayed. In the case of acceptance of a Part 36 offer which relates to the whole claim the stay will be on the terms of the offer.

If a Part 36 offer which relates to part only of the claim is accepted:

  • (1)     the claim will be stayed as to that part on the terms of the offer; and
  • (2)     unless the parties have agreed costs, the liability for costs is to be decided by the court.

If the approval of the court is required before a settlement can be binding, any stay which would otherwise arise on the acceptance of a Part 36 offer will take effect only when that approval has been given. Any stay arising under these provisions will not affect the power of the court to enforce the terms of a Part 36 offer or to deal with any question of costs (including interest on costs) relating to the proceedings.

The new CPR Pt 36 changes the rules in relation to disclosure to the court of a Part 36 offer.

The general rules under the new CPR 36.13 (1) and (2) are:

  • (1)     A Part 36 offer will be treated as ‘without prejudice save as to costs’; but
  • (2)     … the fact that a Part 36 offer has been made must not be communicated to the trial judge (if any) allocated in advance to conduct the trial until the case has been decided.

CPR 36.13(1) means that the terms of the offer are privileged from disclosure to the court, but the existence of the offer is not. (See Walker v Wilsher.) And thus at an interlocutory hearing the court can be told of the existence of, but not the terms of, a Part 36 offer.