Kerry Underwood

ACCEPTING A PART 36 OFFER DURING TRIAL

with 4 comments


I am organizing, chairing, and speaking at a Part 36 Conference in Central London on Tuesday 14 November with Ben Williams QC and David Pilling. For more information, or to book, click here.

CPR 36.11(3)(d) states that the court’s permission is required to accept a Part 36 offer once a trial is in progress.

In Houghton (Stanley) v P.B.Donoghue (Haulage & Plant Hire Ltd and Others) [2017] EWHC 1738 (CH)

the Chancery Division of the High Court refused to allow a party to accept an outstanding Part 36 offer during the trial.

During the course of litigation the Defendant had made an unwithdrawn Part 36 offer of £360,000.00.

After two days of evidence at the trial, the Claimant applied for permission to accept that Part 36 offer and the Defendant objected.

The judge said:

“I think that the philosophy exists that where a Claimant decides to take his chances with the trial and then repents of his earlier decision to turn down the offer of settlement because the trial, he thinks, is going less well or more badly than predicted, that the court will often take the view that it is not right to give permission to impose a settlement on the reluctant Defendant.”

The court here reviewed the authorities in coming to that conclusion and in particular considered the cases of:

  • Capital Bank Plc v Stickland [2005] 1 WLR 3914;

 

 

 

Although those authorities were given under earlier versions of Part 36, the principles remained the same.

Here the judge said that what he was being asked to do was to impose upon the Defendant a liability to pay £360,000.00, which he was no longer willing to do because it had asked the court to refuse permission.

The Defendant now wished to take its chances with the trial continuing, so the court is imposing a result, imposing a settlement which is not a voluntary settlement any longer.

It is clear that the rules require the court’s permission in such circumstances.

However, the Defendant’s remedy is to withdraw the offer.

In circumstances such as this, the Defendant is eating its cake and still having it, in that it can argue the case, prevent the Claimant from accepting the offer, but still get the very significant costs benefit if the Claimant fails to beat that offer.

The law needs reviewing in this area.

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Written by kerryunderwood

October 10, 2017 at 8:54 am

Posted in Uncategorized

4 Responses

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  1. Would it not be possible, in the circumstances where the Court has refused permission for a party to accept another party’s Part 36 offer during Trial, for that Part 36 offer to then be considered, for all intents an purposes, withdrawn? Or to impose a requirement for a party to withdraw a Part 36 offer for which the Court has refused permission for the other party to accept during Trial?

    I suppose there would be an issue with this in the circumstance where the relevant period of a Part 36 offer had not yet expired (and so the Part 36 could not be withdrawn), but would there be any other issues with this suggestion?

    Paul

    October 10, 2017 at 10:05 am

    • Paul

      Yes, it would be possible for Part 36 to provide that a Part 36 offer is deemed withdrawn if the court refuses the other party permission to accept, but it does not do so.

      CPR 36.10 deals with the issue of withdrawing Part 36 offer, where the time for acceptance has not yet expired.

      CPR 36.5(1)(c) provides that a Part 36 offer must specify a period of not less than 21 days within which the Defendant will be liable for the Claimant’s costs in accordance with Rule 36.13 or 36.20 if the offer is accepted, but that provision does not apply if the offer is made less than 21 days before the start of a trial, and so an offeror has it within their power to avoid a Part 36 offer remaining open during trial.

      Kerry

      kerryunderwood

      October 19, 2017 at 9:56 am

  2. So long as the same costs consequences apply if D withdraws then withdrawal is an option but if it ain’t broke (which it isn’t) don’t try to fix it. C could have accepted the offer the day before Trial but was poorly advised or took a chance which failed. Wonder if any of your blogs will ever be defendant bias?

    David

    October 10, 2017 at 1:59 pm

    • David

      Why should a Defendant be able to leave its offer open, so as to get the costs consequences, but with a Claimant unable to accept it?

      Please see my reply to Paul setting out the law and showing that a Defendant can avoid a Claimant being able to accept the offer once the trial has started.

      I note your comment as to whether any of my blogs will ever be Defendant biased.

      I hope that I am not biased to anyone – see for example my recent blogs – SOLICITORS ORDERED TO PAY COSTS OF FALSE CLAIM and CLINICAL NEGLIGENCE AND ATE PREMIUMS: A SUITABLE CASE FOR TREATMENT.

      The latter one is inevitably attracting comments saying I am biased against claimants, so, like the BBC, I guess I am getting it right 

      Kerry

      kerryunderwood

      October 19, 2017 at 9:56 am


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