This is yet a further case on Part 36 and the perils of not complying strictly with its provisions. On 6 April 2007, Part 36 was completely rewritten. In this case when the claimant put forward their purported Part 36 letter it appeared that they did so with the old rules in mind although the letter was written on 24 September 2008. Their letter stated:
“…we are instructed to put forward the following offer, this offer is made pursuant to Part 36 of the CPR and remains open for acceptance for a period of 21 days, from your receipt of this offer letter, thereafter it can only be accepted if we agree the liability for costs or the Court gives permission..”
The court in this matter analysed some of the very many cases on Part 36. In particular they drew attention to the Gibbon authority where the court held that:
- Part 36 is a self-contained code. Parties are not bound to make use of the mechanism provided by Part 36, but if they wish to take advantage of the particular consequences for costs and other matters that flow from making a Part 36 offer, in relation to which the court’s discretion is much more confined, they must follow its requirements.
- Although basic concepts of offer and acceptance clearly underpin Part 36, it did not follow that Part 36 should be understood as incorporating all the rules of law governing the formation of contracts, some of which are very technical.
- As such the rejection of an offer did not make it incapable of subsequent acceptance. Part 36 allows a defendant or a claimant to decide whether to leave an offer open for acceptance or to withdraw it and make another offer later.
In the case of C v D, the court were concerned with a letter where the offer was open for 21 days from the date of that letter and the question was whether the offer lapsed after 21 days. In that case the court decided that:
- If a claimant wishes to make a time limited offer, in the sense that the offer is to lapse of its own accord at the end of a stipulated period, then such an offer cannot be a Part 36 offer.
- An offer presented as a Part 36 offer and otherwise complying with its form will not readily be interpreted in a way which would prevent it from being a Part 36 offer.
- If an offeror wishes to bring his Part 36 offer to an end, so that it cannot be accepted then he must serve a formal notice of withdrawal.
- A time limited offer does not comply with Part 36 and so when interpreting such an offer, it should be approached on the basis that the party making the offer and the party receiving it, appreciated that fact.
In the Huntley case, which was a claim for personal injuries, the offer was defective because it did not state the added requirement for personal injuries that any damages would take the form of periodical payments. The court held that it did not comply with Part 36, but awarded the same consequences under Part 44.3.4 (c) instead.
In Carillon the offer contained no time limits, but invited the offeree to respond within the next 7 days. The failure to spell out a 21 day period was an important omission because the time limits within Part 36 provide a time-table and also point out to the offeree the cost consequences of not complying.
In Shah the offer was open for acceptance for 21 days after receipt of the letter. Following C v D the Judge held that this did not prevent it from being a Part 36 offer, but since the letter offered predictive costs in line with the Road Traffic regime which were less generous than the costs which he would have been entitled under Part 36, the Judge held that it was not a Part 36 offer.
On the facts of this case, the court considered two questions concerning the offer letter:
- Whether it failed to comply with Part 36 (2) (b) because it did not on its face that it was intended to have the consequences of Part 36.
- Whether it was inconsistent with Part 36 because after 21 days it can only be accepted “if we agree the liability for costs or the court gives permission”.
Although the letter referred to Part 36 in two places including one in bold type, the court did not accept that it was a Part 36 offer because the provisions of Part 36. 2 state that if an offer is intended to have the costs consequences of Part 36 it must state on its face that it was intended to have the consequence of Part 36, which it did not do so. In addition, it was not clear that the claimant intended the letter to have the consequences of the new Part 36 as the offer was inconsistent with Part 36 and further the letter did not refer to all the consequences of Part 36.
Having decided that the offer letter was not compliant with Part 36.2 it was not strictly necessary to consider the second issue, but having heard arguments, the Judge decided that the offer did not remain open for acceptance after 21 days unless one of the conditions in specified were satisfied and therefore as a matter of construction the offer was not open for acceptance after 21 days and therefore was not a Part 36 offer.
It seems that the claimant intended to rely on Part 36, but because Part 36 was not followed strictly, the offer was held not to be compliant. This is another case which demonstrates how careful you must be when preparing Part 36 offers and how by breaching a technicality despite sometimes the very best of intentions a court may decide that the offer is not compliant. Part 36 featured as part of Lord Jackson’s review and led to a further CPR amendment to make it clear that in relation to any money claim or money element of a claim, when considering whether a judgment obtained is ‘more advantageous’ or ‘at least as advantageous’ this means better in money terms by any amount, however small. The other issue relating to Part 36 which is to be considered is where a defendant rejects a claimant’s offer, but fails to do better at trial, whether the claimant’s recovery should be enhanced by 10%. This could be the subject of further consultation. Clearly we have not reached the end of considering the impact of Part 36.
Norma Lee Thewlis v Groupama Insurance Company Limited [2012] EWCH 3 (TCC)