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Part 36 offer – includes interest

Part 36 is a provision of the CPR which is intended to encourage parties to settle disputes without going to trial. A Part 36 offer made by either the claimant or defendant is a tactical step designed to convince the opposing party to settle the claim. If the Part 36 offer is not accepted, the party refusing it risks being made liable to pay more in interest and/or costs on a judgment than if no offer had been made.

The CA has considered a case on the validity of Part 36 offers – this is important for practitioners because the HC has previously handed down differing interpretations, so some clarity was needed.

The case involved an agreed consent order settling a claim by the appellant in which costs were expressed to be assessed if not agreed on standard basis. The bill of costs was served on the appellant’s behalf and a settlement offer was made. This was expressed to be a Part 36 offer and stated that: ‘The claimant hereby offers to accept £50,000 in full and final settlement of the costs detailed within the bill only. The offer is made pursuant to CPR 36. The offer is open for 21 days from deemed service of this letter. The offer relates to the whole of the claim for costs within the bill and takes into account any counterclaim but excludes interest’.

The CA held that a Part 36 offer cannot generally exclude interest. They further held that an offer exclusive of interest cannot be a valid Part 36 offer even if made in respect of detailed assessment proceedings. Thus, the offer made by the claimant was not compliant with the CPR.

Interestingly Arnold LJ only reached this conclusion ‘reluctantly’ and suggested that the issue merits consideration by the CPR Committee. See King v City of London Corporation [2019] EWCA Civ 2266 and reported on www.bailii.org.

 

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