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News and Opinion from Edward Harte LLP

Legal News from Edward Harte LLP – 30th October 2015

Offers in Civil Proceedings

The use of Part 36 Offers in Civil Proceedings either during pre-action correspondence or after the claim has been issued is common practice.  If the successful party beats their Part 36 Offer; i.e. the Claimant makes an offer for £10,000.00 and at trial is awarded £15,000.00 the Defendant will be liable to pay the Claimant’s costs from 21 days after the offer was made up to and including trial on an indemnity basis.  If the Defendant makes an offer to pay £10,000.00 to the Claimant and is ordered to pay £5,000.00 at trial then the Claimant would be liable to pay the Defendant’s cost from 21 days after the date that the offer was made up to and including trial on an indemnity basis.  There are other benefits, such as parties are able to recover interest on costs and damages at up to 10% above base rate.  In addition, you are able to claim an uplift in damages which effectively means a party has the windfall of extra damages which they would otherwise not have been entitled to.

Changes were made to Part 36 of the Civil Procedure Rules, which took effect from 06 April 2015.  There were as follows:

1.   It was confirmed that Part 36 is a self-contained procedural code and falls outside the law of contract.

2.   You are now permitted to put a time limit within the offer by which it must be accepted.  This time limit would not take effect during the first 21 days after the offer was made.

3.  If no time limit is recorded in the offer then the offer remains open to acceptance until it is formally withdrawn by the Offeror.

4.  You can now make Part 36 Offers to settle just part of a claim.

5.  A trial is defined as any trial in a case whether it is a trial of all issues or a trial of liability, quantum or some other issue in the case.  This therefore now covers cases where there are split trials.

6.  Further examples of the specific refining of definitions are set out in CPR 36.3

7.  A Part 36 Offer may, during the course of proceedings, only apply to the costs of those proceedings during which it  was made and not in relation to the costs of any appeal.  A Part 36 Offer no longer has to state that it is to have Part 36 consequences.  Even if that is not expressly stated within the offer then it will still amount to a valid offer.

8.  If any party makes an improved offer then in accordance with Part 36 this is considered to be a new and separate offer and unless either offer has formally been withdrawn then they both remain open to acceptance.

9.  Where a Part 36 Offer is accepted late, unless the Court considers it unjust to do so, the Court must make the usual Order i.e costs.

10.  If there is a split trial and only part of the case has been determined then any Part 36 Offer that relates to those elements can no longer be accepted.  However, any existing offers dealing with the remaining issues yet to be determined can be accepted, albeit not earlier than 7 clear days after the Judgment arising from the split trial.  This enables the Offeror to have the opportunity to withdraw that offer if necessary.

11. Parties are now able to reveal at the end of a split trial that a Part 36 offer has been made in respect of the issue which has already been determined.

11.  The Court, when considering whether to make the usual cost Order arising out of Part 36, will now need to consider whether the offer was a genuine attempt to settle proceedings.

12.  Finally, in the event that a party has failed to file and serve a costs budget and the Court will not grant relief from sanctions i.e. they can only now claim Court Fees from that point onwards, that party can put in a Part 36 Offer and if successful they will be entitled to claim 50% of their costs from the relevant period.

If you have any queries please contact our Civil Litigation team on enquiries@edward-harte.co.uk or 01273 662750.