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CPR 36: Essex County Council v UBB Waste

Does a Part 36 Offer Remain Valid if Served Late?

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CPR 36 Offers

A CPR 36 offer is governed by the Civil Procedure Rules, namely Part 36 of the same. CPR 36 sets out the formalities which should be considered when drafting Part 36 Offers to be proposed, and when accepting a Part 36 Offer. There are many benefits which can arise from reaching an agreement in a case by way of Part 36. Accepting a Part 36 Offer to settle will usually ensure that the Claimant is entitled to recover their costs on a standard basis for the claim up to the date of acceptance, and interest on those costs from the date of acceptance.

Pursuant to CPR 36.5, Part 36 Offers need to be made in writing and are required to state a period, which cannot be less than 21 days, whereby the Defendant will be liable for the Claimant’s costs. This period is referred to as the ‘relevant period’, and it is important because the benefits which come with a Part 36 Offer will only apply if the offer is accepted within the relevant period. If the offer is accepted after the relevant period has expired, it will follow that the Claimant will need to pay the Defendant’s costs from the expiry of the relevant period to the date of acceptance (or if the Claimant’s offer is accepted late, an Order will need to be entered to confirm the basis on which costs should be paid).

A CPR 36 offer can be used to settle part of the claim or the whole claim and is also used to take into amount any counterclaim on the case. 

It is worth noting that the Claimant’s failure to accept a CPR 36 offer also has consequences. An example of this is, if the Claimant does not receive a Judgment at Trial which is better than the Part 36 Offer made by a Defendant at an earlier date, then the Claimant will be liable for the Defendant’s costs from the date of expiry of the offer. See our recent article for further details around the consequences of rejecting a Part 36 Offer.

When a Part 36 offer is accepted, the Defendant is required to make payments as per the offer within 14 days of acceptance of the same.

 

Essex County Council v UBB Waste (Essex) Ltd (No.3 [2020] EWHC 2387 (TCC)

Within this case, a Part 36 Offer which was technically made the day after it was dated, was found to be compliant with CPR 36 as per the High Court’s ruling.

This was a high-value dispute regarding a mechanical, biological waste treatment plant. The Claimant in the matter sent a Part 36 Offer to the Defendant on 07 March 2019, at 4.45 pm. Rule 6.26 of the Civil Procedure Rules stated that if a document is served after 4.30 pm, then the date of service is deemed to be the following business day. In line with this rule, the Part 36 Offer was deemed to have been made on 08 March 2019, a day after it was dated.

The Defendant argued that the relevant period of 21 days should run from the date of the Part 36 Offer being 07 March 2019. Taking this into account, the Defendant argued that the offer gave a relevant period of less than 21 days as it was deemed served a day later than it had been dated. The Defendant, therefore, argued that the offer was not compliant with CPR 36.

The Claimant’s counter-argument was that the 21 days should run from the date which the offer was deemed served. The Claimant relied on the case of C v D [2011] EWCA Civ 646 and argued that when the Court is faced with two interpretations of an offer, it should favour the interpretation which deems the offer compliant with CPR 36.

Pepperall J held that, given the knowledge of the parties, it could be assumed that both parties would know that the letter was intended to be a Part 36 Offer and that Rule 36.5(1)(c) requires that a relevant period of not less than 21 days is stated in the offer.

The Part 36 offer stated ’21 days of the date of this letter’. The Judge held that the wording of this phrase was intended to be compliant with 36.5(1)(c); however, it was a mistake. Pepperall J went on to state that the parties would know that the offer was not deemed served until the next day.

When considering the case of C v D [2011] EWCA Civ 646, Pepperall J went on to decide that the offer was effective as it was ‘consistent with the clear intention to make a Part 36 Offer’.

Pepperall J also considered the Claimant’s argument that the non-compliance was de minimis, and as such, the Part 36 offer should be upheld as being effective. Pepperall J held that CPR 36.2(2) was clear, and the lack of compliance with a mandatory requirement of the rule would mean that the offer could not be treated as a Part 36 offer.

In their offer, the Claimant set out a clause which allowed the Defendant to raise issues with the effectiveness of the offer or its terms within seven days of the letter. Because the Defendant did not do so within seven days of the date of the letter, the Claimant argued estoppel. Pepperall J went on to state that estoppel should not play a part in Part 36 of the CPR and that CPR 36.2(2) was the answer to any estoppel argument.

Pepperall J concluded that the complexities and difficulties which many parties face with the effectiveness of Part 36 Offers could be avoided if the parties used form N242A to make offers as per the commentary in Civil Procedure (White Book) recommended at paragraph 36.5.2.

How Can ARC Costs Assist?

ARC Costs are an expert team of Costs Draftsman and Costs Lawyers who can assist with your costs recovery. We can prepare Bill of Costs and negotiate settlement of your costs with the opposing party. Furthermore, we can advise on Part 36 Offers to ensure you can obtain the full benefits which CPR 36 gives rise to. We also hold vast experience in disputing costs for the paying party by way of Points of Dispute and through negotiations. We can also assist and represent you at Detailed Assessment Proceedings. If you have a query you would like to discuss or require our assistance; please contact us on 01204 397 302 or info@arccosts.co.uk. Alternatively, you may complete our online contact form, and we will contact you to discuss your matter.

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