Kerry Underwood

NON-PART 36 OFFER CAN BE ACCEPTED AFTER TRIAL STARTS

with 2 comments


The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

These principles, and the whole issue of Qualified One-Way Costs Shifting, is dealt with in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available from me here for £15.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

MEF v St George’s Healthcare NHS Trust [2020] EWHC 1300 (QB)

a High Court Judge, sitting with an Assessor held that a Calderbank offer, as compared with a Part 36 offer, did not lapse once the hearing started, and consequently could be accepted without the court’s permission part way through the hearing when it was clear that things were not going well for the recipient of the offer, who had become unlikely to recover as much at court as was on offer.

The court pointed out that the party making the offer could have withdrawn it, or time limited it – a so-called time-bomb offer, or made the offer under Part 36 of the Civil Procedure Rules, whereby the court’s permission is requested to accept an offer once the hearing has started.

Here, straightforward contractual principles applied and an unwithdrawn, non-time limited offer remains capable of acceptance.

In this case, the paying party made a non-Part 36 offer to settle costs for £440,000 “subject to the agreement of the Defendant’s costs of Detailed Assessment incurred since that date.”

The court held that that wording did not require a specific figure of costs to be agreed, but rather that it established the defendant’s entitlement to costs, to be assessed if not agreed, in the usual way.

By the end of the second day of a three day hearing the bill of costs had already been reduced to below £440,000, and just before the end of the second day the receiving party emailed the paying party and accepted the offer, but the paying party argued that it was too late.

The Master held that the detailed assessment proceedings had been compromised and that the matter was subject to common law principles of offer and acceptance.

As there was no time limit placed on acceptance of the offer, it had been properly accepted, and it could not be assumed that the common law principles stopped at the door of the court.

Indeed that is not the position under Part 36; rather Part 36 requires the court’s permission to accept a Part 36 offer once the trial has started.

On appeal here, the High Court held that the Master had not expressly applied the contractual principle of an offer lapsing after a reasonable time, but nevertheless on the facts of this case the offer had not lapsed and was thus capable of acceptance.

A non-time limited Calderbank offer is likely always to be held to be capable of acceptance before the conclusion of a detailed assessment.

There remains open the issue as to what extent, if any, withdrawing the offer, or time limiting it, would reduce the limited costs protection afforded in respect of a non-Part  36 offer, under CPR 44.2(4)(c) which requires a court to have regard to all the circumstances, including any admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply.

 

Comment

A correct and sensible decision.

It is beyond me as to why parties so frequently avoid Part 36.

Any party which fails to use Part 36 will suffer the consequences.

Written by kerryunderwood

June 2, 2020 at 3:51 pm

Posted in Uncategorized

2 Responses

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  1. There are actually good reasons why a paying party in detailed assessment proceedings would wish to avoid making a Part 36 offer: https://www.gwslaw.co.uk/2013/03/part-36-offers-in-detailed-assessment-proceedings/ . Paying parties will usually want to make costs inclusive offers that are not permitted under Part 36.

    Simon Gibbs

    June 2, 2020 at 6:06 pm

    • Simon

      I agree that the rigidity of Part 36 does not work well in detailed assessment proceedings and I would prefer some form of fixed costs for all detailed assessment proceedings, related to the amount in dispute and the stage of settlement etc.

      Kerry

      kerryunderwood

      June 8, 2020 at 12:32 pm


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