When is a Part 36 offer not a Part 36 offer?
Costs Aware Autumn 2019
One of the key parts of civil litigation is the ability to make offers to settle. These offers broadly fall into two distinct types, a Calderbank offer and a Part 36 offer. The Calderbank offer allows a party to specify whatever terms or conditions that they desire. The Part 36, however, does not.
Part 36 of the Civil Procedure Rules has been described by the Court of Appeal in Bricklayer Limited v Reeves as a self-contained code which is technical and therefore needs to be read and carefully applied.
This has been recently considered in the case of Knight & Anor v Knight & Ors  EWHC 1545 (Ch) where the claimant made an offer stated to be made under Part 36 but which terms that it was.
It stated that if the claimant succeeded in obtaining a greater result at trial then the claimant would seek costs on the indemnity basis, interest at a rate not exceeding 10% above base rate together with the additional sum set out in CPR 36.17(4) (d). It is of note that the defendant challenged the offer and stated that the same was not as a Part 36 offer.
Following trial where the claimant was successful, the claimant stated that as they had beaten the offer they were entitled to the benefits of Part 36.17, including the 10% uplift. The defendant stated that as the offer included an offer for costs it was not a Part 36 offer, as previously indicated and as such they were not entitled to such benefits.
The Court following the Court of Appeal decisions of Mitchell v James and French v Groupama Insurance Co Ltd, held that the offer made was not a valid Part 36 offer. The Court held that the Court of Appeal decisions were binding and that no terms as to costs should be included in a Part 36 offer.
The claimant had relied on the case of Proctor & Gamble Co v Svenska Celluslosa AB SCA where Hildyard J allowed the Part 36 benefits when the offer had referred to a costs provision. In this case, HHJ Matthews stated that it was notable that neither Mitchell nor French were cited before Hildyard J and as such the decision in Proctor was not binding on him.
The clear distinction continues. If you wish to make an offer that includes costs, the offer must be made as a Calderbank offer. If you wish to make an offer which if beaten may allow for the benefits in Part 36.17, the offer cannot include any terms as to costs.
In detailed assessment proceedings, we have found that Calderbank offers provide certainty and closure if accepted. The key factor in making any offer is ensuring that the same is timely and legally compliant so that it can be relied upon when seeking costs if it is not beaten upon assessment.
For more information, please contact Gareth Jones, Solicitor