A reflection on the proper construction of CPR 36 offers, changes to the rules, and service
Updates
Once you have read this article you may find further information relevant to preparing Part 36 offers here:-
Changes to Interest on CPR 36 offers effective from 1 April 2021
Part 36 and Offers to pay by instalments
What happens when the offeree doesn’t have the money to pay?
When will the court say it is “unjust” to award the consequences of CPR 36?
Does a Part 36 offer have to include interest?
How does a Payment on Account affect a Part 36 offer?
Constructing a Part 36 offer
Pursuant to the judgment in Gibbon v Manchester City Council[i] and Carillion v PHI Group[ii], an offer which does not comply with the form requirements of CPR 36.5 will not have the automatic costs consequences of a CPR 36 offer. The court will, of course, be able to take into account the fact of the offer when determining the appropriate costs order to make, however the very purpose of making a CPR 36 offer is to obtain the benefit of the automatic costs consequences which it provides. Furthermore it is doubtful that, upon finding that an offer did not comply with CPR 36, the court could award the costs consequences of CPR 36 ‘in any event’ as there is no other statutory mechanism by which a court could award, for example, an uplift on damages or costs as prescribed by CPR 36.17.
It is therefore of critical importance that offers comply with the form requirements of CPR 36.5.
Changes to the Rules after April 2013
Under the old rules, an offer which was intended to have the costs consequences of CPR 36 needed to provide that the defendant (or paying party) would be liable to pay the claimant’s (or receiving party’s) costs pursuant to CPR 36.10.
It is important to note that this has now changed, and CPR 36.5(1)(c) states that the offer must state that the defendant will be liable for costs in accordance with rule 36.13 (or 36.20 in the case of claims which no longer continue under the RTA or EL/PL protocols).
It is therefore extremely important that firms check their precedent documents to ensure that they are updated to refer to the new rule. The consequence of failing to do so could be that the court will find that the offer is not a valid CPR 36 offer and therefore does not have the intended consequences.
The Relevant Period
CPR 36.5(1)(c) also states that a CPR 36 offer must specify a period of not less than 21 days (‘the Relevant Period’) within which the defendant would be liable to pay the claimant’s costs.
As the rules of service apply to CPR 36 offers[iii], the 21 day period can begin only on the date on which the offer is served. An offer which states that the Relevant Period will expire ’21 days from the date of this letter’, or ’21 days from your receipt of this letter’ [iv] will be held to be defective. Furthermore, when calculating the Relevant Period it is necessary to consider the ‘clear day’ rule[v], and thus the 21 day period cannot include the date of service of the offer itself.
For example, an offer letter sent by 1st class post on 1st June 2015 (a Monday) would be deemed served on 2nd June 2015 (a Tuesday)[vi], the first day of the Relevant Period will therefore be on 3rd June 2015 (a Wednesday) and the last day will be on 24th June 2015 (a Wednesday). The party in receipt of the CPR 36 offer will therefore be able to accept the offer within the Relevant Period so long as Notice of Acceptance is deemed served on or before 24th June 2015.
Methods of Service
Both a CPR 36 offer and Notice of Acceptance must be served by one of the methods set out in CPR 6.20. An important point to note, therefore, is that a CPR 36 offer cannot be made or accepted by email unless the party to whom the offer or acceptance is being sent has agreed to accept service by that method in accordance with CPR 6 PD 4.1(1), in other words that that party has given written notice that it will accept service by that method.
You can find out more about our services here or you can contact the Costs Team at CivilCosts@clarionsolicitors.com
[i] [2010] EWCA Civ 726
[ii] [2011] EWHC 1581 (TCC)
[iii] CPR 36.7(2)
[iv] Thewlis v Groupama Insurance Co Ltd. [2012] EWHC 3 (TCC)
[v] CPR 2.8(3)
[vi] CPR 6.20
