Changes To Part 36 And How It Will Affect You

Posted on Friday, March 6th, 2015

Tom Brocklebank                                  A picure of Suzanne Foster a Law costs draftsman at Paramount Legal Costs Ltd

 

 

 

 

From 6 April 2015, changes to the current Part 36 rules will come into force, with important implications for lawyers and the legal profession.  Below is an outline of what the new Part 36 will look like and its effects on day-to-day practice.

Counterclaims

The new Part 36 clarifies the position with regard to counterclaims.  Until now, there has been uncertainty as to how to obtain the protection offered by Part 36 where the proceedings in question relate to a counterclaim (see F & C Alternative Investments v Barthelemy [2012] EWCA Civ 843, in which the Court of Appeal held that the consequences of Part 36 cannot be applied to offers which fall outside the scope of Part 36).  The new rules make the position clear, stating that a Part 36 Offer may be made in respect of a claim, counterclaim or other additional claim.

Appeals

The position with regard to appeals is also dealt with under the new rules, stating that a Part 36 Offer may be made in appeal proceedings and that any references to ‘Claimant’ and ‘Defendant’ will be treated as references to ‘Appellant’ and ‘Respondent’, as appropriate.

Intention of consequences of offer

Attempts have also been made to reduce the uncertainty caused by the current requirement that a Part 36 Offer must state on its face that it is intended to have the consequences of Part 36 – something which is sometimes overlooked in day to day practice.  Under the new rules, it will be sufficient that the offer ‘make clear that it is made pursuant to Part 36’ (CPR 36.5(1)).  It is hoped that this will reduce uncertainty – although it is likely that litigation will follow, addressing the question of when it is ‘clear’ that an offer is made pursuant to Part 36.

Time-limited offers

Under the current rules, it is not possible for a Part 36 Offer to be withdrawn automatically after a period of 21 days but it is possible for a Part 36 Offer to be withdrawn after 21 days by notifying the other party of the withdrawal, which has often been considered to be unduly onerous on the offeror.  However, this will be addressed under the new rules, which will make it possible for a Part 36 Offer to be withdrawn automatically after the expiry of the relevant period (CPR 36.9(4)(b)), although this will need to be expressly stated when making the offer.

Costs consequences

Under the new Part 36 rules, the Court must now consider whether the offer made was actually a genuine attempt to settle the case.  However, it may still be difficult for a defeated party to show that the offer they failed to beat was really a genuine one (Huck v Robson [2002] EWCA Civ 398).

Costs Budgets

Ever since the post-Jackson modification of CPR, Solicitors and Costs Draftsmen have dealt with an ever increasing number of Costs Budgets.  The perils faced were highlighted in the much publicised case surrounding Andrew Mitchell and the ‘Plebgate’ saga, in which Mr Mitchell’s Solicitors failed to serve a Costs Budget.  In this scenario, the party is treated as having served a Budget limited to Court fees alone (CPR 3.14).  Given this situation, there was no incentive for the opponent to make a Part 36 Offer due to the hugely reduced costs risk.  The new CPR 36.23 aims to allow a party to recover 50% of their costs, assessed from the date of the expiry of the relevant period for acceptance, should they make an effective Part 36 Offer. 

Split Trial

Under the current rules, the Trial Judge is not aware of any offer at all until the case has been settled in full – see the case of Ted Baker Plc v AXA Insurance Plc [2012] EWHC 1779, which highlighted the issues.  Under the new rules, a Judge may be informed of any Part 36 Offer which relates solely to a settled issue, along with the terms of said offer.  However, the Judge cannot be told about the terms of any other Part 36 Offers which relate to non-settled issues, although they can be informed of the existence of those offers.  Therefore, Part 36 Offers in relation to liability, for example, may become more frequent where a split trial is likely, in order to maximise costs. 

Should you wish to discuss the above or any other costs matters, please do not hesitate to contact Suzanne on 01228 815397 or Tom on 01228 815394, or via email by clicking on their name.

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