A revised version of Part 36 of the Civil Procedure Rules (‘CPR’) will apply to Part 36 offers made on or after 6 April 2015.
The provisions of Part 36 have been the subject of much criticism and also a number of judicial decisions in the last couple of years. This did not go unnoticed by the Committee of the CPR who set up a sub-committee to address the issues which had arisen. Part 36 is now to be amended with a view to consolidating the recent case law in this area and with a view to making the provisions fairer.
Some of the key changes include:
The amended Part 36 bestows the Court with the discretion to take into consideration whether a Part 36 offer is actually a genuine attempt to settle rather than a tactic employed to obtain the cost benefits of Part 36. For example if a Claimant makes a Part 36 offer which is very close to the value of the claim, the Court may decide that the offer was not a genuine offer to settle and will not allow the Defendant to be liable for Part 36 cost consequences.
The rules now provide that a Part 36 offer may be made in respect of a counterclaim or other additional claim. The effect of this is that a Defendant can be treated as having made a Claimant’s Part 36 offer in circumstances where there is a net payment to the Defendant.
Part 36 currently provides that a Part 36 offer which states that it is only open for acceptance for a limited amount of time is not a valid Part 36 offer. However, the new rules allow a Part 36 offer to be withdrawn automatically after the expiry of the relevant period. Therefore it is now possible to state in the Part 36 letter that the offer will expire after the relevant period and in these circumstances a second letter withdrawing the Part 36 offer would not be required.
The new rules seek to accommodate claims making use of split trials. Amended Part 36 provides that following a trial a Judge can be informed of whether a Part 36 offer was made in respect of any concluded issues but they cannot be informed of the actual details of any offer.
In circumstances where an offeror changes the terms of a Part 36 offer to make it more advantageous to the offeree, it is to be treated as a new offer rather than as a withdrawal of the original offer.
The new rules provide that when a Part 36 offer is accepted late, the court must order that the delaying party pays the costs for the period of the delay unless it would be unjust to do so – this is a restriction of the Court’s discretion as Part 36 currently provides that the delaying party pays the costs for the period of delay unless the court orders otherwise.
The new rules provide that where a party has failed to file a costs budget, the defaulting party’s recoverable costs for the purposes of Part 36 will be 50% of the costs that would otherwise be recoverable.
If you require further information on the new amendments to Part 36 of the CPR please contact a member of the Magrath LLP Litigation Team.