In a recent article Robert Johnson explained the purpose, nature and potential effect of Part 36 Offers. In this article, he summarises recent changes to such offers.
In April 2008, a number of significant changes were made to the Rules governing Part 36 offers as summarised below.
1. A Defendant who wishes to make a Part 36 Offer in settlement now only needs to make an offer. The previous requirement that a payment into Court must also be made has been removed.
2. The previous rules provided that a Defendant’s offer could not be accepted without the permission of the court after the expiry of the relevant time limit. This is no longer the case and, although the Court’s permission for acceptance of an Offer is still required by the parties in certain circumstances, the Court’s permission is no longer required simply because the time limit for acceptance of the offer has expired.
3. If a Defendant’s Part 36 Offer is accepted, the Defendant has 14 days from acceptance to make the payment under the offer. If the Defendant does not make payment within the 14 day period, the Claimant may “immediately” enter Judgment against that party for the amount of the offer.
The intention of these changes is to improve the efficiency of the Part 36 mechanism. The amendments certainly simplify the Part 36 regime and represent yet a further example of the Court encouraging parties to a dispute to seek to resolve that dispute without having to commence legal proceedings or, if having commenced, without having to go all the way to trial.
However, not all the recent developments make life simpler. Previously it was relatively easy to determine whether or not a party had or had not achieved a better result at trial than any offer made or received. Quite simply, in a money claim, if the Claimant were awarded at trial £1 more than that which had been offered, that party would have been deemed to have achieved a better result. However, following Carver –v- BAA Plc [2008], it is now necessary for the Court to determine whether or not the parties had obtained a Judgment more advantageous than the offer. In doing so, the Court is entitled to look at all the circumstances of the case in determining where the balance of advantage lies. Thus, for example a party who rejects an offer of £10,000.00 on 1st January 2008 and then at trial obtains an award of £10,100.00, but in the meantime has incurred legal costs of in excess of £1,000.00 and of which only £700.00 is recoverable, will not be deemed to have achieved a more advantageous result. This is because when taking into account the irrecoverable element of his costs (i.e. £300.00), he has achieved less financially than he would have done had he accepted the offer in January 2008.
Whilst this change introduces an element of uncertainty, we at Healys feel that this is a price worth paying for the justice that it thereby enables. We feel that by giving the Court some discretion as to what constitutes something better than that which had been offered, a fairer result is more likely to be achieved than under the old system. We predict that it will also further promote settlement because of the further element of uncertainty and risk it introduces.
