CHANGES TO PART 36 OFFERS

The Civil Procedure Amendment Rules (2021), which come into force on 6th April 2021, introduce a significant change to the Part 36 regime.

The basic premise of the part 36 regime is that if an offer is made which the other party rejects and fails to beat, e.g. the Claimant offers to settle for £30,000.00 and obtains a judgment at trial for £35,000.00, there will normally be certain consequences that arise which are positive for the party who made the offer.

The aim of Part 36 was simply to encourage the settlement of disputes without recourse to trial, thereby reducing the burden on the resources of the civil Courts.

A part 36 offer must be open for at least 21 days (CPR 36.5(1)(c) but it may be accepted after this period, if it is not withdrawn.

However, if an offer is accepted after the expiry of the stipulated period, then normally the accepting party will have to pay the costs that have accrued since the offer expired (CPR 36.15 (5)). The extent to which this rule acts as an incentive to accept offers in time, will depend on the amount of activity in the case in question.

The new rules state that:

“(5) A Part 36 offer to accept a sum of money may make provision for accrual of interest on such sum after the date specified in paragraph (4). If such an offer does not make any such provision, it shall be treated as inclusive of all interest up to the date of acceptance if it is later accepted.”

In other words the offeror may state in their offer, that further interest will accrue if the offer is not accepted within the deadline and by accepting it late, the offeree is agreeing to pay such further interest.

This will provide an incentive in all cases to accept an offer in time, rather than this incentive being specific to the case.

Despite its simple founding premise Part 36 has become extremely complicated. It contains 30 sub rules and a practice direction. The total number of pages that it occupies in volume one of the current White Book (without the new amendment) including the practice direction, is 39.

If you are confidently acting as a litigant in person but you receive a part 36 offer, or if you wish to consider making a party 36 offer, it may be sensible for you to seek advice from a direct access barrister.

The consequences of part 36 can be considerable, including an uplift on damages of 10% (subject to a cap of £75,000.) (CPR 36.17(4_(d), and costs being assessed at a more generous rate (which in some cases can equate to tens of thousands of pounds).