A Part 36 offer is a written offer to settle which must specify a period of no less than 21 days ("the relevant period") during which it can be accepted. If it is not accepted within the relevant period and the other party does not beat that offer then there will be costs consequences.
Part 36 offers are widely utilised as a tactical step during legal proceedings in seeking to settle disputes without the need to proceed to Trial even in circumstances were proceedings have not yet been issued. They can be made by either the Claimant or Defendant at any stage in the legal proceedings.
The Civil Procedure (Amendment) Rules 2021 ('the CPAR 2021') introduces a new Civil Procedure Rule 36.5(5) to clarify the issue of interest after the expiry of Part 36 offers. The new rule which came into force on 6 April 2021 enables the party making an offer to include provision for interest to accrue after the expiry of the relevant period.
CPR 36.5(5) states:
"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".
The new rule was brought in as a result of the case of King v City of London [2019] EWCA Civ 2266 where the Court of Appeal held that a Part 36 offer that excludes interest is not a valid Part 36 offer as it would not be compliant with the CPR. It found that interest is ancillary to a claim.
Legal Representatives should therefore include provisions for interest to accrue if the offer is accepted late and an offer which excludes interest will not be a valid Part 36 offer as per recent case law.
Part 36 offer are also valid if served by email which was the case in London Trocadero (2015) LLP v Picturehouse Cinemas Ltd & Ors [2021] EWHC 3103 (Ch). It was held that CPR 3.10 applied (which provides the Court the power to remedy the defect where there has been an error of procedure) and the Claimant's Part 36 offer was still valid despite the Defendant not confirming they would accept service by email. This case highlights that Part 36 offers ought not to be ignored even if the party believes it was not served correctly given the Court's power pursuant to CPR 3.10 although, caution ought to be taken to ensure service is effected properly.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
