Part 36 Offers - The Pitfalls

My name is Peter Costin Im a solicitor. And today I'm gonna be talking to you about Part 36 offers and pitfalls to avoid party certification of firmly encouraged to consider how best to settle the speeds and to use all the necessary tools available to them, including using Part 36 offers. Given the cost protection which flows from them, they have great importance. However, various criticisms have been made by practitioners and judges alike about various aspects of the rule. As a result, the Civil Procedure Rules Committee appointed a sub committee to review Part 36 which resulted in various amendments came into force in April 2015. It's not always necessary to make a formal part 36 offer. Seek your part. 36.22 provide set. Nothing in this section prevents the party making an offer to settle in whatever way that party chooses. But if the offer is not made in accordance with Rule 36.5, it will not have the consequences specified in this section. The rule contains a reminder that CPR Rule 44.2 requires the court to consider an offer to settle that does not have the courts consequences set out in this section in deciding what order to make about costs, where the consequences of a part 36 offer do not supply, that may be important to the claimant. Yes, it will not be the added certainty of deemed cost provisions and will also be significant if the offer or seeks to rely on the offer for cost purposes because away from part Part 36 there will be no automatic Consequences Office in litigation. Jamari for within the following categories I can offers Without prejudice offers and Part 36 Office First Open offers all those which made without the privilege associated with the Without prejudice rule. The advantage of making such an offer is that it can be used to demonstrate to the court that the offer or was acting reasonably in the proceedings. The disadvantage is that the terms of the offer may be disclosed. The court may influence the court's view on a party's position. There are a good source use when policy steel like their opposition of being overly optimistic about the outcome of the case, and there is virtually no possibility of the offer being better that trial seconds are called Bank Office Without Prejudice Office called On Coffers are also known as offers made without project of savers to costs, which usually contained in a letter marked with this phrase, meaning they may not be referred to in the main proceedings. But maybe on the matter of costs. While offers made on these terms will carry some weight with the court, and it comes to the decision of one costs, they do not carry the same consequences as Part 36. Office Without Prejudice offer cannot be with 30 on the issue of costs in the main proceedings or subsequently save for in a few exceptional circumstances. Both forms of without prejudice offers a useful if the parts he wants to make an offer to settle for some, which is inclusive, of course, on the level of the offer made in respect, of course, would probably be the factor which determines what the offer is made with full without prejudice, status, whether it is made without prejudice, save as to costs. And it is always very important to remember that in that phrase, without prejudice save as to costs. So that's the court will then consider the offer at the end of the proceedings when it comes to consider costs. Say what about Part 36 offers. Part 36 offers that these which were made in accordance with CPR 36.5, which will attract the consequences in respective costs and interest, set out in CPR 36.13 14 and 17. Making a Part 36 offer is one of the most important tactical steps a party contagion in the course of legal proceedings, so it's very important to get it right. Part 36 provides a means of putting pressure on your opponent. To settle the case to some extent provides you with protection respected urine costs if your opponent does not accept your Part 36 offer, and that party takes a significant risk as to costs and interest. This means that at the same time you must also give careful consideration to any part 36 office made by your opponent. You really need to consider Part 36 officer a lke stages of the litigation process, whether it be making one, accepting one, withdrawing one or revising one. It is a specific way in which the offer is made, which sets a Part 36 offer apart from any other offer to settle because of their technicalities. The Rules Relations Part 36 of historically being the subject of extensive case law. On the sixth of April 2015 the Civil Procedure Amendment Number eight rule brought into force a revised part. 36. It was intended to clarify, simplify and codify some of the most significant case law relating to CPR, Part 36 into the rules. In order to trigger the consequences of Part 36 the offer made must comply with CPR Part 36.5, which means that it must be made in writing. Make clear that the offer is made. Pursuits Part 36 specify the relevant period state whether it relates the whole of the claim to part of the claim or to an issue that arises in it, and, if so, to which part or issue we're making an offer on their spaces. It is important to exercise care to make sure the part of the claim or which particular issue the offer relates to is clearly defined. No homos state whether it includes any counterclaim counterclaim to treated its claims to the purposes apart. 36. And so in cases which involve counterclaims guarantees need to express the state. Whether on offer includes the counterclaim. CPR Rule 36.7 confirms that a Part 36 offer can be made of any kind, and we made when served on the ovary service being governed by the terms of CPR. Part six. The phrase relevant period is used in reference to the requirement is that the period of time during which the offer may be accepted without penalty the relevant period can be as long as the parties agree, but must not be less than 21 days unless the offer is made less in 21 days before trial, in which case it runs until the end of the trial. There are no restrictions on the withdrawal of office during the relevant period, but conclusion of the period does not automatically mean that the offer is withdrawn. May learn along would be accepted following the 2015 revisions. Part 36.9 now provides the party conserve advanced natives to withdraw its offer or amend its terms. This, in essence, give parties the ability to make par 36 office available for acceptance for a limited time only. This does allow party to be more creative and strategic with their offers. The need to comply with the formalities apart 36 is paramount. The new rule addresses some of the technical point scoring that is referred to in past case law, where a party to litigation claimed that a Part 36 offer did not comply with the strict wording. For example, in the case of Through lists and group armor in 2012 under the new CPR, 36.51 Be Party only has to make it clear that the offer is made pursuant to Part 36 as opposed to the previous regime that demands the offer must state on its face, but it is intended to have the consequences of section one of Part 36. The changes were meant to make the formalities of a part that is exhaust less prescriptive, so the off only has to make it clear that the offer is made pursuant to Part 36 rather than to state that it is intended to have the consequences of Section one. However, case little that I will give into shows that within the revised rules of Part 36 the form of a part that his eggs offer is still as important as before. I should point out that there are specific rules regarding Part 36 offers made in personal injury claims. There are additional requirements set out in Part 36. I won't go into them for the purposes of this talk. Oh, no need even to do with whether or not investigation office could be improved or withdrawn very often. In Mitigation of Party makes an initial offer to see if those and that any appetite for supplement and then makes a further improved offer under seeker 36.9. In order to do this, the following must apply No notice of acceptance kind of being served. Written notice of the change of the terms must be served on the enhanced offer can then be made without the permission of the court. In terms of costs, the most important changes to CPR 36.95 which provides that where the offer or changes the terms of a part 36 offer to make it more advantageous. The offering such improved offer should be treated not as a withdrawal of the original offer, but the making of a new Part 36 offer on the improved terms. This means that you can have more than one part 36 offer on the table at any time, which could be used to parties. Tactical advantage. Given the consequences which way from the acceptance of an offer outside the relevant period. For example, if the claim it was to make a claim for breach of contract for £150,000 the defendant might believe that damages were overstated. The defendant can make immediate part 36 offer it £75,000 during the creation correspondence but phase and then increase it to £100,000 following service of the defense. If, say, at trial, the claimant was awarded £60,000. The defendant can refer to the first offer made very early on in the process and claiming hearts costs from that date in relation to withdrawing offers. It may be the case for legal or tactical reasons. Party wishes to withdraw a Part 36 offer against withdrawing office. It should be noted that notice of acceptance cannot have been served. Written notice must be given after expiry of the relevant period we offer can be withdrawn without permission of the cause. The offer may be withdrawn in accordance with its terms. Zico, 36.10 deals with the consequences that withdrawing the offer before the expiry of the relevant imitate around period. This means that parties can become more strategic and how they make offers by setting a date by which offer must be accepted or the other or the offer falls away. This could be a dangerous structurally, however, since the traditional cost protection would similarly fall away. However, in certain cases where pressure needs to be exerted on the other party, this provision may prove to be a very effective tool. It's worthwhile every litigator taking a quick look at the case of Hogan Newton. It was a recent case during the importance to acclimate of ensuring that every aspect of a claim is included in a Part 36 offer, and it also shows the dangers of failing to a draw a Part 36 offer. The decision in Hogan Newton is an important one. It shows the importance to a claimant in particular of a city of ensuring that every aspect of the claim is included in a part 36 offer and also shows the dangers of failing to withdraw a Part 36 offer. In this case, the client was injured in a road traffic accident and also had a higher claim in February 2013 claimants. This has made a part 36 offer £1600 in front of a settlement to this client. The company left also referred to the offer being for the whole of our clients crying. In March 2014 The personal injury aspect of the claim was settled some of £650 projections with any seat in March 2016 and the claim was put over £125,000 because of the higher claim. The defendants listed noted that the claim is offered never being withdrawn when therefore accepted the offer. They then applied for a declaration that the claim of being compromised on appeal the claiming attempted to argue that the offer made was not a Part 36 offer did not have all the wording required. The judge rejected argument the reference in the letter to seeking the full sanctions available under CPR Card 36 was sufficient. It could be read as being part of a valid part 36 offer. The judge also rejected an argument. Settle into the claim. Revoked a Part 36 offer. That's the offer. It never being withdrawn on. The conclusion that the offer was opened was more consistent with the overriding objective. The cost consequences on our acceptance of a Part 36 offer. Well name they set out in CPR real 36.13. There's a deemed costal down to CPR 36 the 360.13 1 where an offer is accepted within the relevant period, subject to the exception sound. Zeke Overall 36.12 13 2 and four I would like to draw your attention. Teoh Important Case T sent Murphy, which was handed down very recently in 2018. This is a personal injury claims in which the quarter they are allowed an appeal against in order but acclaimed. Accepting apart that example Late should pay costs, um, much earlier Dayton. That sets out in the rules that the court held that the defendant had name all of the matters that made the offer, there was no good reason to part two departing from the normal principles. Essentially, it's a case where the climate was injured in a riding accident. Andi Condition Teoh breaking a right arm, she alleged you developed obsessive compulsive disorder. What she felt todo in statements was to reveal that she had been involved in running a franchise in a play group involving Messi play workshops for Children, The claimants instructed aside capture when certain structure psychiatric expert He made no mention of this activity. The defendant found out about the play group and inform the climate sisters. He then served 1/3 witness statements on behalf of the claimant, trying to explain it away on the places that her O. C. D had in fact sabotaged the franchise well. The defendant then obtained a psychiatric reports and also it made a part 36 offer. Following that for over £350,000. Time for acceptance of the offer expired. The climate didn't accept it. It was then that the defendant was given permission to instruct the new psychiatrist. That may be a factor in the claimants accepting the offer of course of appeal. I returned the decision at first instance, but the defendant being misled I'm making in order for the claimant to play the defendant's costs from an early a period when the misleading had begun. I made a more conventional costs order essentially, in this case, the Court of Appeal applying the default costume even though the claimants material non disclosure could properly be described as dishonest moving on them. Teoh the issue off Stay CPR Rule 36.14 years. Another effects of accepting a Part 36 offer with the claim being stayed on the terms of the offer. CPR Rule 36 went 15 deals with the acceptance of an offer made by one or more, but not all defendants cost consequences. Following judgment. Secret rule 36 points 17 deals with situation where judgment is entered. Neither the claimant fails to obtain a judgment more advantageous, and defendants, part 36 offer well. Judgment against defense is at least is advantageous. The claim, just the proposals contained in the part that is six offer the rule provides in relation to any money claim the term more advantageous means better in money terms by any amount, however small, as does at least as advantageous many that monetary offers air to be compared strictly based on value, and neither party can see costs protection on the basis that their offer was in the air mess. However, this is subject to the provisions of the offer must be a genuine attempt, just sexual proceedings, which I will deal with later. The rule provides for an additional amount payable to the claim into a secured judgment. At least it advantageous as their offer. But 10% of damages up to a ceiling of £75,000. Rule 36 points 17 or say provides for other benefits of indemnity costs and enhanced interest. Oh, no deal with the issue of cynical offers, fancies or sometimes make offers, which is set. That's such a level that they would never be accepted by the other side. And this has attracted a lot of case law in the past, with parties claiming that the automatic consequence of Part 36 should not follow in second senses where they could never be except expected to accept the offer made the changes to part 36.7 team or an attempt to address this with Part 36 points 17 4 b now allowing a court to take into consideration whether an offer was a genuine attempt to settle the proceedings when considering whether to apply the automatic consequences Apart. 36. This is recently considered in the case of Jockey Club Racecourse Limited and will not Dickson Construction LTD. In this case, the court claiming brought proceedings against defendant respected the design and construction of a new grandstander Epsom Racecourse. The climate made a Part 36 offer to accept liability for 95% of the damages to be assessed. The defendant did not accept this offer in the relevant period, but just before the pre trial review conceded liability, the claimant applied for indemnity costs on the defendant's failure to accept a Part 36 offer. The defendant argued this was not a genuine part. 36 offer. The judge found that the offer of settlement for 95% what's a violent part 36 offer, saying that so whilst it was hardly generous, it could not be described as well take and they give so the judge awarded the claimant indemnity costs mandate four months after the offer rather than that. Then, at the end of the relevant period, this situation arose again in the case off J M X in this case, the claim it made a Part 36 offer to accept 90% of the damages. The relevant period for the offer came to an end one working day before the trial on liability began, caught them found in favor of the claimant and so the defendant failed to beat the claimant suffer. In this case, the defendant argued, it would be unjust, double the claim that the part 36 cost consequences I indemnity costs and hearts interest, plus the additional amount of up to 75% calculates just 10% of the 1st £500,000 of ordered in 5% of the next 500,000. It's case was the offer was not a genuine attempt to settle the claim because it did not reflect any realistic assessment of the risks of litigation, did not explain my own. Your 10% discount was being offered for settlement. Mr Justice Foskett rejected this argument, describing it as one which could hardly ever succeed for the court to determine an appropriate discounts. Reflected litigation with risks will require many trial in the post trial situation. It was an exercise that should not ordinarily be carried out. He noted that it would be open to the offer or to explain the reasons for giving only a small discount, but expressed doubt as to whether this would assist the settlement process in must most cases. Mr Justice Foskett said the offer was to be regarded as a genuine offer of settlement so that the normal part 36 offers I'm consequences applied. So if you are a defendant in the claim it makes a 90% or 95% Part 36 offer don't to seem that it can be ignored without consequences. The part 36 cost consequences may well apply if the claims succeeds in full elimination. Teoh cost budgets, for example. It's accepted that where a party fails to file a cost budget, its recovery of costs is limited to court for use only have a part 36.23 now provides when it comes to applying the automatic cost consequences apart 36 to a party you fail to file the cost budget in time that parties would cover ability. Really, that will be limited to 50% of the costs otherwise recoverable, not just limited to court fees. So if a party fails to file a cost budget in time and it's penalized, the new prevision provides a means of making a more substantial recovery of costs that would otherwise be possible. Elimination Teoh Pre issue offers. I would just briefly look at the changes made Teoh part 36.7 and 36.13 in respective offers made pre issue under the previous regime. They used to be someone certainty in respect to the cost consequences of Prius C offers, which were accepted before the commencement of proceedings. This one was because the old part 36.10 provided that the claim it would be entitled to the costs of the proceedings up to the date on which the offer was accepted. The changes seek to clarify this division, providing that an offer could be made pre issue on the claimants. Automatic entitlement to recently incurred costs includes pre action costs about 36.4 deals with situations on appeals. It provides that except where a part 36 offer is made in appeal proceedings, it shall have the consequences set out in this section only in relation to the costs of the proceedings in respect of which it is made, not in relation to the cost of any appeal from a decision in these proceedings. The result is an extension of Part 36 to apply to appeals in the event of an appeal the parties will need to consider repeating offer is made in the proceedings under Appeal Swallows Office made specifically for the purposes of the appeal in cost cases on detailed assessment C Car Rule 47.20 although not need not expressly referred to in CPR. Part 36 adopts the Part 36 procedure, including cost consequences for office to settle in detailed assessment proceedings. Clarification. It's always possible to seek clarification of a part 36 offer CPR Rule 36 point Take deals with clarification. If a request for clarifications refused, it is open to party to apply for an order for clarification. There is little guidance on the circumstances in which a request for clarification is justified under the rule or when a court will grant in order that it's likely the orders will be rare. Requested clarification can, on the last, provide valuable additional information in relation to an offer where an offer always willing to provide that information when the awful refuses a request For further information about the Part 36 offer, the failure may be used in relation to subsequent disputes on costs that seems to be no in two cases on Part 36 Andi just briefly there with a couple off them say first, the matter of sugar hearts creep Andi A. J Insurance. This is 1/4 of people case in which return the first instant decision which had ordered the claimant to pay the defendant's costs the period following the defendant's part 36 offer, even though the claiming to beat in the offer by about 10% the first instance, judge treated the offers if it contained separate offers rather than being single indivisible one. The quarter appeal allowed the appeal, completing the judge of being mistaken, treating a part 36 offers as containing Parisian to settle a specific that have claimed for a certain sum when the offer would not be made. On that basis, it also confirmed that the claiming of beating the defendant's off about considerable. Someone pointed out that there was no longer a near miss rule. Hertel and Saunders is a case. Highlights need to comply with the requirements of Part 36 in order to ensure that are not for attracts the benefits of the rule. It's a case of guarding declaration for a partnership, and the author was said to be in settlement of the proposed claim by amendment for an account based on agreement. The offer was accepted and the claimant sorting off in order for their costs. The court found that it wasn't a valid part 36 offer that's the prepares claim is not part of the claim on the offer was made, so the offer did not meet the requirements being that the often estate, whether it relates the whole of the claim was a part of it or to an issue which arises in it and if so, which part or issue. There are a line off cases all stressing the need for compliance with rules on form and contact might make part when making Part 36 offers. The courts generally reinforce the need to comply with the wording, uh, required under CPR 36. Andi for the cost consequences to follow a set out for failure to beat Part 36. Offer a man or a con acceptance of a Part 36 offer. And that can only be in the interests of certainty. Say, for example, in the case off patients and Turner, the defendant, made an offer to settle the claimants claim for specific performance. The offer was apron for acceptance to 21 days, after which it would lapse. It said. Nothing respect the cost consequences of accepting the offer. About a week before trial, the defendant repeated the terms, the offering, the claiming tax acted. The judge recognized the offer was not compliant with Part 36 but nonetheless sort of the defendant was to bear the claimants costs up to the end of the relevant period. The claimant appealed the decision, and the quarter appeal allowed it highlighting the floors in the defendant's offer, including the fact that first off, it made no reference to costs. The court therefore substituted its own view, which was that the climate was entitled to cost up to the end of the relevant period of the first offer, and after that date each party was to bear its own costs in barrel. And Clifford, the claimant, was awarded damages of £5000 in a privacy clay. Despite the fact that claimed has succeeded in its claim, the defendant argued the claim actually order to pay some of its costs. There's agreement failed to beat the defendant's offer £5000 1st reasonable costs of up to £5000 made under without prejudice, save as to costs spaces. The court held that the claim it was entitled to reasonable costs in spite of the offer is at the time the offer was made, the claimants cost one in excess of £5000 which meant the offer was inadequate. The judge stated that in order to obtain the cost protection, that defendant should have offered to pay the claim, it's reasonable cost to be assessed as would have been the case of the offer being made under Part 36. I will not today do with the cases off James and James Ballard, Um and Sussex Partnership NHS trust, synergy, lifestyle and camo and as there isn't sufficient time, survives it to say that the courts are laced depart from the strict interpretation on application off CPR Part 36. To summarize that for Park, 36 offers not the only form of offer which can be made in the course of proceedings are taken into account by the courts On the matter of costs. However, offers which comply with Part 36 Germany carry automatic cost consequences, increasing predictability and allowing parties to make strong offers, which incentivize their opponents to settle in order to amount to a part 36 offer on offer, letter must comply with relevant formal requirements. A Part 36 offer could be close to 90 to 95% of the claim. Part 36 could be used in spit trials. By making separate offers, it must take into account interest. Part 36 could be used in cost proceedings. Payment on account can reduce an offer, and earlier office can be see preceded by later offers. Similarly, earlier offers can continue to have effect even when a new offer is made. Thank you very much.