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Substantial Changes to CPR Part 36 from 6 April 2015

13-March-2015
13-March-2015 17:57
in Procedure
by Lawrence Power

As chambers updates itself it updates you and guess what, it is one of litigations all timers Part 36. So here is a summary of what to expect.

Part 36 aims to encourage settlement between parties before trial, primarily by imposing cost sanctions on a party who declines an offer then subsequently fails to obtain a better result. It has now been substantially revised by the Civil Procedure (Amendment No 8) Rules 2014, with most of the new provisions applying to all such offers made on or after 6 April. These reforms represent a near complete rewrite of Part 36, adding new rules and clarifying several ambiguities, with the key changes as follows:

Time-limited offers: The new CPR 36.9(4)(b) allows an offer to be automatically withdrawn after the expiry of the relevant period, in accordance with the terms of the offer. This contrasts the current version which does not permit such time-limited offers as valid.

Split trials: Currently the existence of a Part 36 offer must not be revealed to the trial judge until the case has been decided. The new CPR 36.16 allows the judge to be told of the existence, but not the terms, of any offer after judgment has been given on the preliminary issues. Where the offer relates to issues already decided at preliminary hearing the terms can be disclosed.

Very high claimant offers: The revised CPR 36.17(5) provides for the court to consider “whether the offer was a genuine attempt to settle the proceedings” when deciding whether ordering costs would be unjust. This aims to prevent cost consequences arising where a Claimant makes an offer to settle for the whole or almost entire value of the claim, such a high offer is rejected, but the Claimant still goes on to succeed in full.

Counterclaims: CPR 36.2(3) follows CPR 20.2 and 20.3 in giving equal status to counterclaims, providing that offers can be made in respect of counterclaims or additional claims. Under the present rules this is subject to confusion and this change reinforces the ability of defendants to take advantage of the more favourable costs consequences of claimants’ Part 36 offers.

Appeals: The revised CPR 36.4 clarifies that references to the claimant/defendant will be treated as references to the appellant/respondent, the first time this has been specifically provided for.

Improved offers: CPR 36.9(5) states that where the terms of the offer are changed to make them more advantageous to the offeree, an improved offer shall be treated as a new Part 36 offer rather than the withdrawal of the original offer. This distinction means that cost consequences still apply to the older offer, since it has not been ‘withdrawn’.

Late acceptance: CPR 36.14(5) states that where a Part 36 offer is accepted late the court must make the usual order of the delaying party paying costs, unless it would be unjust to do so. This represents a narrowing of the courts current discretion.

Costs Budgets: Currently if a party fails to file a costs budget in time it is limited to only being able to recover court fees. Watch for this one as defendant insurers are trying this one out to stop claims! CPR 36.23 is less draconian, limiting recoverable costs to 50% of the possible costs that would be otherwise recoverable.

 

Lawrence Power

 

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