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Variation of a Part 36 offer: the effect on costs protection

22-December-2014
22-December-2014 19:38
in Procedure
by Hannah Laithwaite

It is not often that chambers blog lower court decisions but this County Court judgment considered an important procedural point. In Burrett v Mencap (Northampton CC, 14/05/2014), a personal injury claim brought against the claimant’s employer, Mencap, District Judge Ackroyd had to determine a novel point of law regarding Part 36 offers.

The question was whether, on variation of a Part 36 offer, the time for acceptance was fixed by the original offer or whether a fresh period of time began to run from the date that notice of the variation was served.

In July 2013, Mencap made a valid Part 36 offer to the claimant of £15,000 including CRU which was not accepted but remained “on the table”. In January 2014, after obtaining favourable medical and surveillance evidence, Mencap specifically varied the terms of its earlier offer to £2,500 plus CRU. The CRU position was under appeal making the value of the offers to the claimant not entirely clear, however, Mencap took the view that the offer, as varied, was “less advantageous” within the meaning of Pt.36.3(6).

The purpose behind CPR 36.3(6), as the District Judge noted, was to allow a defendant to revise its position in light of evidence or another procedural development which highlighted that the case against it was weaker than previously considered. It permits a meaningful re-valuation of the claim’s worth.

Unsurprisingly, the claimant contended that the “relevant period” for the purpose of Part 36 expired 21 days after the January 2014 offer and thus asked for her costs up to this date. Conversely, Mencap submitted that the “relevant period” was not refreshed when the notice of variation was served on the claimant such that it was only liable for the claimant’s costs up to 21 days after the original July 2013 offer was made.

The District Judge examined Part 36 but found no authority within it which permitted him to conclude that there was an implied entitlement to the relevant period being renewed for the claimant at the point of the variation, here in January 2014. Part 36 was entirely silent in regards to any extension, renewal or replacement of the time for acceptance. He concluded that the terms of the original offer, including the original time period specified for acceptance, applied.

One clear result of this decision is that defendants will now almost always wish to reduce an earlier offer by way of an express variation rather than by withdrawing and making a new offer. The judgment is only expected to extend to cases where the variation results in a less advantageous Part 36 offer as it would be a surprising result if Part 36 was held to permit a defendant to vary, so as to increase a Part 36 offer, and thereafter benefit from the costs protection obtained in connection with the original offer. Any wider interpretation would allow a tactical play by defendants in regards to settlement and costs protection which is clearly not in line with the spirit of Part 36.

The case reaffirms the need to evaluate and handle decisions relating to Part 36 with the utmost care.

 

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