Part 36 – offer to pay by instalments

A party to proceedings (usually the defendant / paying party) may sometimes want to make an offer to pay the settlement sum by instalments. Whilst this is possible to do by Part 36, it does have an effect on the effect of the offer.

CPR 36.6(2) provides that a defendant’s Part 36 offer which offers to pay “all or part of the sum at a date later than 14 days following acceptance of the offer will not be treated as a Part 36 offer unless the offeree accepts”. The effect of this rule is that where a defendant makes an offer to pay by instalments:-

  1. If it is accepted then it will be treated in the usual way as a Part 36 offer. Therefore, Part 36.13 will apply (the defendant will pay the claimant’s costs up to acceptance, payment must be within 14 days etc);
  2. If it is not accepted and the defendant goes on to beat it, then CPR 36.17 will not apply.

It is important to note that this rule only applies to defendants’ part 36 offers – a claimant may make a Part 36 offer to accept payments by instalment and it will be treated as a Part 36 offer in the usual way.

The rules do appear to create a lacuna where a claimant makes a Part 36 offer including payments by instalments but where the offer includes a counterclaim or adverse claim. I am not aware of any existing authority on this point; it is likely that this is because this only affects a very small number of claims. In my view, it is likely that the court would construe such an offer as being a claimant’s offer for the purpose of CPR 36.6(2) unless it related solely to a counterclaim, in which case I think that it would be treated as being a defendant’s offer in accordance with CPR 20.2(2)(b).

Matthew Rose is a Solicitor on the Costs team at Clarion Solicitors. Contact him at matthew.rose@clarionsolicitors.com or on 0113 222 3248.