PART 36 LIABILITY OFFERS ON DAY ONE
I deal with this in my new book relating to Personal Injury Small Claims and Fixed Costs etc. To order one click here .
Part 36 is a freestanding provision and a Part 36 offer can be made at any time in any case, provided that it is not a small claim, as Part 36 has no application in the small claims track – see CPR 27.2(1) (g).
Section II of Part 36 specifically deals with matters in the portals and the relevant rules are CPR 36.24 to CPR 36.30.
However CPR 36.24(2) provides that that section only applies once the stage 3 procedure in the portal has been engaged and Part 8 proceedings issued. That Section makes a Part 36 offer compulsory in stage 3.
Until stage 3 is engaged section I of Part 36 applies as section I is only excluded by section II once stage 3 is reached.
Clearly if liability is in issue then stage 3 will not be reached as the matter drops out of the portal.
Consequently a Part 36 offer on liability can be made in every case at the outset and there is no need to wait until the matter reaches stage 3, when a Part 36 offer on quantum is compulsory and nor is there any need to wait until the matter drops out of the portal.
“(1) A Part 36 offer may be made at any time, including before the commencement of proceedings.”
The court must apply the costs consequences of Part 36 unless it would be unjust to do so and, in considering whether it would be unjust, the court must take into account all of the circumstances of the case, including whether the offer was a genuine attempt to settle the proceedings (CPR 36.17(5) (e)).
That is the reason why I suggest making a 95%/5% offer on liability as some courts have held that by making a 100%/0% offer there is no genuine attempt to settle the proceedings as no concession is being offered.
Obviously the client’s permission to make such an offer must be obtained as if it is accepted then damages will be 5% less than the full value of the claim. However in a personal injury matter, or indeed in any type of claim where there are general damages, these are not capable of precise quantification in any event and few lawyers would advise a client in any circumstances to reject a defendant’s offer that amounted to 95% of the full value of the claim.
If a claimant making such an offer matches or beats that offer then the client gets a 10% uplift on damages and thus those damages rise to 110%.
In a personal injury matter involving insurance it is important to check that there will be no effect on the client’s no claims bonus by the 5% concession.
Such an agreement does not cause the matter to drop out of the portal. That only occurs when the defendant alleges contributory negligence. An agreement to accept 95% of what damages are awarded is not a concession of contributory negligence; it is a sensible commercial arrangement and the whole purpose of the portal process, and Part 36, is to limit the matters that remain in issue.
A claimant successful at trial on a 100% basis clearly beats the Part 36 offer and gets indemnity costs and a 10% uplift on all damages and the position is the same if judgment is entered.
What has not yet been determined is whether a claimant in such a position gets indemnity costs on late acceptance by a defendant of a claimant’s Part 36 offer.
It is clear the courts have a discretion to order indemnity costs and indeed has that general discretion of whether or not a Part 36 offer has been made.
What is needed now is a decision of the High Court or the Court of Appeal giving guidance as to how that discretion should be exercised on late acceptance by a defendant.
I deal with all of this at great length in my blog – Part 36: Does a Claimant get Indemnity Costs on Late Acceptance?