Here we are again with the advent of deciding the implications of what constitutes a Part 36 offer under the Civil Procedural Rules (CPR).
To lay persons not familiar with this procedure, in the provisions of the CPR under under the provision of Part 36 where the opponent makes an offer to settle the claim say for compensation under the Part 36 of the CPR then that offer if not accepted, it must be kept secret from the Trial judge. The judge will then decide on the case and if the party who has not accepted the offer fails to obtain a more advantage settlement then that party has to pay the other sides costs. So it is important to ensure that solicitors who are advising their clients to make sure that if they advise to make a Part 36 offer to the opponent that it is pitched right to put them at a cost risk, and similarly careful advice must be provided by a solicitor to a client who receives a Part 36 offer.
The whole purpose of making a Part 36 offer is to stop unreasonable litigants having their day in court if several weeks, months or years ago, prior to a trial date the other party had make realistic attempts to settle the case. In those circumstances, the CPR Part 36 will ‘punish’ the litigant in legal costs if they fail to beat a Part 36 offer before trial.
However it is not always straight forward. So if a party beats a Part 36 offer by, say 1 p was it reasonable to incur say £100,000 in legal costs past the Part 36 offer? There are varying degrees of ‘success’ and over time there appears to be case law that just complicates what should be a simple procedure.
Is a Part 36 offer Genuine?
In the judgment of Sleaford Building Services Ltd v Isoplus Piping Systems Ltd [2023] EWHC 1643 (TCC), the court addressed the issue of a Part 36 offer made by the employer. The judge determined that the Part 36 offer was validly made but concluded that the Part 36 offer was not a genuine attempt to settle the matter.
The judge highlighted that the offer made by the employer did not involve a significant concession, as it required Sleaford to pay the entire amount decided by the adjudicator. Additionally, the concession on interest amounted to an offer comprising 99.99% of the decision sum. Based on these factors, the judge deemed it unjust to make an order under CPR 36.17(4), which would have entailed indemnity costs and an increased rate of interest.
Therefore, while the Part 36 offer was recognized as valid, it was not considered a genuine attempt to settle the proceedings by the court. This underscores the importance of making meaningful and realistic offers in accordance with CPR 36.17(5) when seeking to reach a settlement in legal disputes.
Another headache for solicitors to consider when deciding if a Part 36 offer is validly made and also enforceable.
Further reading on Part 36 offers
See Part 36 Law Society Gazette
