Part 36 offers and detailed assessments

Part 36 of the Civil Procedure Rules has been around since the initial implementation of the Woolf Reforms in 1999 but has been more heavily amended and redrafted than perhaps any other section of the rules.

The introduction of part 36 offers into detailed assessment proceedings occurred as one of the Jackson reforms a few years ago. Despite the passage of time and the use  of part 36 offers it remains surprisingly common for lawyers to make mistakes when putting part 36 offers, rendering their attempts to either settle a case or obtain part 36 benefits nugatory.

The starting point is to consider the formality requirements of the rules when drafting part 36 offers. There is an easy way to cheat. A court form has been produced, which enables a party to ensure that they are making an effective part 36 offer. It can be found here:

An oddity is that in dozens of detailed assessment proceedings that I have conducted for both receiving and paying parties, the number of times that I have seen that form used can be counted on the fingers of one hand.

It may be that  lawyers are adventurous souls who prefer the challenge of drafting their own offers. Or there may be some other reason.

If an offeror wishes to draft their own offer, then it becomes incumbent to consider how that should be done, by reference to the rules. In the context of costs, the starting point must be to consider the provisions of rule 47.20(4)-(7) which modifies the usual rules for part 36 to take account of the context of detailed assessment proceedings:

(4) The provisions of Part 36 apply to the costs of detailed assessment proceedings with the following modifications –

(a) ‘claimant’ refers to ‘receiving party’ and ‘defendant’ refers to ‘paying party’;

(b) ‘trial’ refers to ‘detailed assessment hearing’;

(c) a detailed assessment hearing is “in progress” from the time when it starts until the bill of costs has been assessed or agreed;

(d) for rule 36.14(7) substitute “If such sum is not paid within 14 days of acceptance of the offer, or such other period as has been agreed, the receiving party may apply for a final costs certificate for the unpaid sum.”;

(e) a reference to ‘judgment being entered’ is to the completion of the detailed assessment, and references to a ‘judgment’ being advantageous or otherwise are to the outcome of the detailed assessment.

(5) The court will usually summarily assess the costs of detailed assessment proceedings at the conclusion of those proceedings.

(6) Unless the court otherwise orders, interest on the costs of detailed assessment proceedings will run from the date of default, interim or final costs certificate, as the case may be.

(7) For the purposes of rule 36.17, detailed assessment proceedings are to be regarded as an independent claim.

When drafting an effective part 36 offer it must comply with the following requirements. Rule 36.5 states:

(1) A Part 36 offer must—

(a) be in writing;

(b) make clear that it is made pursuant to Part 36;

(c) specify a period of not less than 21 days within which the defendant will be liable for the claimant’s costs in accordance with rule 36.13 or 36.20 if the offer is accepted;

(d) state whether it relates to the whole of the claim or to part of it or to an issue that arises in it and if so to which part or issue; and

(e) state whether it takes into account any counterclaim.

(Rule 36.7 makes provision for when a Part 36 offer is made.)

(2) Paragraph (1)(c) does not apply if the offer is made less than 21 days before the start of a trial.

(3) In appropriate cases, a Part 36 offer must contain such further information as is required by rule 36.18 (personal injury claims for future pecuniary loss), rule 36.19 (offer to settle a claim for provisional damages), and rule 36.22 (deduction of benefits).

(4) A Part 36 offer which offers to pay or offers to accept a sum of money will be treated as inclusive of all interest until—

(a) the date on which the period specified under rule 36.5(1)(c) expires; or

(b) if rule 36.5(2) applies, a date 21 days after the date the offer was made.

It is then important to note what you can offer, if a paying party in rule 36.6

(1) Subject to rules 36.18(3) and 36.19(1), a Part 36 offer by a defendant to pay a sum of money in settlement of a claim must be an offer to pay a single sum of money.

(2) A defendant’s offer that includes an offer to pay all or part of the sum at a date later than 14 days following the date of acceptance will not be treated as a Part 36 offer unless the offeree accepts the offer.

So the rules are clear: there has to be a specific single sum, inclusive of interest to the point 21 days after the part 36 offer is served. A surprising number of offers do not deal with interest appropriately.

Part 36 offers are formal documents: they attract the application of the rules on service:

(1) A Part 36 offer may be made at any time, including before the commencement of proceedings.

(2) A Part 36 offer is made when it is served on the offeree.

(Part 6 provides detailed rules about service of documents.)

Equally the acceptance of a part 36 offer must be by way of service:

(1) A Part 36 offer is accepted by serving written notice of acceptance on the offeror.

(2) Subject to paragraphs (3) and (4) and to rule 36.12, a Part 36 offer may be accepted at any time (whether or not the offeree has subsequently made a different offer), unless it has already been withdrawn.

It still remains the case that although lawyers are happy to use email, to correspond about a case, many firms do not accept the service of documents (including part 36 offers) by email.

It follows that any part 36 offer to be effective, must be served in accordance with the rules of service. The simplest thing to do, is to send it by post.

For service by email to be effective the requirements of Practice Direction 6A must be met:

4.1  Subject to the provisions of rule 6.23(5) and (6), where a document is to be served by fax or other electronic means –

(1) the party who is to be served or the solicitor acting for that party must previously have indicated in writing to the party serving –

(a) that the party to be served or the solicitor is willing to accept service by fax or other electronic means; and

(b) the fax number, e-mail address or other electronic identification to which it must be sent; and

(2) the following are to be taken as sufficient written indications for the purposes of paragraph 4.1(1) –

(a) a fax number set out on the writing paper of the solicitor acting for the party to be served;

(b) an e-mail address set out on the writing paper of the solicitor acting for the party to be served but only where it is stated that the e-mail address may be used for service; or

(c) a fax number, e-mail address or electronic identification set out on a statement of case or a response to a claim filed with the court.

4.2  Where a party intends to serve a document by electronic means (other than by fax) that party must first ask the party who is to be served whether there are any limitations to the recipient’s agreement to accept service by such means (for example, the format in which documents are to be sent and the maximum size of attachments that may be received).

4.3  Where a document is served by electronic means, the party serving the document need not in addition send or deliver a hard copy.

The continued reference within the rules to fax machines is, in a sense bizarre. As the old joke runs, a solicitor was asked why he did not have a fax number: he replied that there were no fax machines where he worked: asked where that was, he replied “the twenty first century.”

If a part 36 offer is defectively served, or indeed the acceptance is defectively served, then there remains scope to ask the costs judge for an order under rule 3.10 CPR to cure the defective service. A useful example of a case where this was successfully done albeit not in the context of a detailed assessment, is that of Thompson v Reeve and MIB Master Yoxall QBD 20th March 2017.

Although I act for both receiving and paying parties in detailed assessments, in the last four assessments I have undertaken for receiving parties where they have beaten their own part 36 offers, on two occasions the offers were defective for various reasons in their drafting and service, and thus did not bite.

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