Ensuring the validity of Part 36 offers – Essex County Council v UBB Waste (Essex) Ltd (No. 3) [2020] EWHC 2387 (TCC)

The High Court judgment in Essex County Council v UBB Waste (Essex) Ltd (No. 3) [2020] EWHC 2387 (TCC) considers a number of interesting costs issues. This article will focus on the intended Part 36 offer made by the receiving party and the judgment regarding the validity of the same.

The parties agreed that the local authority was successful in the substantive litigation and was therefore entitled to a costs order in its favour. There were, however, a number of issues in dispute, including whether an offer made by the receiving party in March 2019 complied with CPR 36.

In order to comply with the requirements of CPR 36 an offer must follow the form and content provisions set out at CPR 36.5 (1). Specifically, it must (a) be in writing, (b) make clear that it is made pursuant to CPR 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 or part of the claim and (e) whether it takes into account any counterclaim.

The offer in question, intending to comply with CPR 36.5 (1) (c), stated:

“If the Defendant accepts the offer within 21 days of the date of this letter (the ‘Relevant Period’), the Defendant will be liable for the Claimant’s costs of the Proceedings (including pre-action costs) up to the date on which written notice of acceptance of this Offer is received by the Claimant, in accordance with CPR 36.13.”

The key issue is the reference to the ‘date of this letter’. The offer was dated 7th March 2019 and was served by email at 4.54pm. It was therefore deemed served on 8th March 2019 (CPR 6.26).

The Defendant argued that, as the 21 days ran from the date of the letter (7th March), the relevant period expired only 20 days from service and the offer was therefore not compliant with the requirements of CPR 36.5 (1) (c).

The Claimant’s position was that the Court should construe the offer such that the 21 days ran from the date of deemed service as per C v. D [2011] EWCA Civ 646, [2012] 1 WLR 1962.

The judgment provides a detailed discussion of the approach to construction in respect of Part 36 offers and the preference to bring rational sense and consistency to the document as a whole. Mr Justice Pepperall concluded that, in the applicable context, the statement could be construed in either way, however, in accordance with C v D, it was preferable to construe the 21 days as running from 8th March which was “consistent with the clear intention to make a Part 36 offer and ensures that the offer is effective rather than ineffective”.

Whilst that concluded the issue, Mr Justice Pepperall went on to consider the position had the offer not been found to be compliant. Specifically, the Claimant’s ‘fallback’ arguments that any non-compliance was de minimis or that the Claimant could rely on estoppel.

In respect of de minimis errors, Mr Justice Pepperall concluded that Rule 36.3(2) is clear that an offer that does not comply with CPR 36.5 will not have CPR 36 consequences. The Court would, however, have the general discretion as to costs under CPR 44.

Similarly, as Part 36 is a self-contained procedural code, the rues of estoppel cannot be introduced. Again, the offer could be taken into consideration under CPR 44 but would not attract the advantages of CPR 36.

Mr Justice Peppernall concluded that the critical issue was one of construction and pointed out that similar difficulties could be avoided in future if parties used form N242A.

Points to take away

Part 36 offers need to fully comply with the mandatory requirements of CPR 36.5 to be effective. Where there is an ambiguity, the Court will prefer a construction that finds an intended Part 36 offer to be compliant, however, this should not be relied upon. If the Court is unable to make such a construction then estoppel and/or de minimis mistake will not assist in obtaining the advantages of CPR 36, such offers can only be taken into consideration under the general discretion under CPR 44.

When making (or indeed considering) Part 36 offers, practitioners should check the requirements carefully, if in doubt, use form N242A to avoid mistakes.

Helen Spalding is an Associate in the Costs and Litigation Funding Department at Clarion. You can contact her at helen.spalding@clarionsolicitors.com or on 0113 288 5639.

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