Practical Examples Demonstrating Part 36 Rules and Consequences

Example 2

According to Rule 6.26, the offer is deemed served on second day after it was posted provided that day is a business day. If the day is not a business day, the day is the next business day-after.

In this case, Part 36 offer was posted first class to the offeree on 13 April. 14 April 20XX and 17 April 20XX are bank holidays and so they cannot be the day the offer was deemed served. Thus, it is 18 April 20XX which is the business day the offer is deemed served.

Based on the above, the relevant period starts from 18 April and ends on the 21st day, which is 8 May 20XX.

Example 3

Rule 36.13(4) and Rule 36.13(5) deal with the question in hand regarding acceptance of offer before trial, but after expiry of the relevant period.

Rule 36.13(4)(b) provides that in such kind of acceptance, the liability for costs will be per the agreement of the parties. If otherwise, the costs will be determined by the court.

As per Rule 36.13(5), in case the acceptance as provided under Rule 36.13(4)(b) where parties cannot reach to an agreement as to the costs, the court can order that the claimant be awarded costs up to the date of expiration of the relevant period.

The case of Finnegan v Frank Spiers [2018] EWHC 3064 (Ch) ruled that if a Part 36 offer is accepted within relevant period, the defendant cannot be ordered to pay a proportion of the claimants legal costs.

In the current case, since the defendant did not accept the offer within the relevant period, he is liable to pay the cost as per sub-rule 5.

As per Rule 36.13(5), the claimant must also pay the defendant costs from the expiration date to the acceptance date.

Example 4

Rule 36.17(1)(a) provides for when a claimant is successful in his claim but fails to obtain a judgment that is more advantageous than the Part 36 offer of the defendant.

The judgment must be compared with the terms of the offer. The judgment must be better in terms of money by any amount than the amount in the offer as stated by A Practical Approach to Civil Procedure (2019, Oxford University Press). The case of Macleish v Littlestone [2016] 1 WLR 3289 ruled that any admission of the part of the claim that is made otherwise is ignored.

In such a situation, Rule 36.17(1)(3) applies as to the cost consequence.

Rule 36.17(1)(3)(a) requires the court order that the defendant must be paid costs including recoverable pre-action costs covering from the expiration date of the relevant period.

Rule 36.17(1)(3)(b) will also require the court to order the defendant must also be paid interest on such costs.

Example 5

(i). Rule 36.17(4)(a) provides a base interest rate not exceeding 10% over the damages covering the period starting from the expiration date of the relevant period. This rate is applicable to the entire period from the relevant period until the date of judgment.

Rule 36.17(4)(a) provides discretion to the court to determine whether or not rate would be applicable to whole or part of the damages and some or all of the period. In this case, the court’s order has made the rate applicable to the whole amount and the entire period from the expiry of the relevant period to the date of the judgement.

While exercising its discretion, Rule 36.17(4)(5) requires the court to consider all the circumstances of the case while determining whether or not an order would be unjust. The factors include terms of the Part 36 offer; the stage in the proceedings when the offer was made; the period between the date of offer and the commencement of the trial, information accessible to the parties when the offer was made; and parties’ conduct considering the sharing of or refusal to give information to enable making or evaluating the offer; and genuineness of the offer to settle the proceedings.

In the current case, the Part 36 offer made by the claimant expired on 26 April 2020. The facts of the case do not show that when the offer was made the trial proceedings have started. This indicates there was a gap period between the date of offer and the commencement of the trial.

Given the circumstance, the rate of 10% will be applicable to the whole amount of damages and to the period from expiry of the relevant period to the date of judgment.

In this case, interest is also awarded under SCA 1981, the total rate of interest may not exceed 10% above base rate as per Rule 36.14(6). The enhanced rate is partly compensatory. A rate of 3% is typical relying on authority Sony/ATV Music Publishing LLC v WPMC Ltd [2017] EWHC 456 (Ch) and partly penal as stated by A Practical Approach to Civil Procedure (2019, Oxford University Press). If there is unreasonable behaviour, the rate may be to the full extent of 10% relying on the authority of OMV Petrom SA v Glencore International AG [2017] 1 WLR 3465.

(ii). This case is decided. There is no monetary award but damages of £615,000, as per Rule 36.17(4)(d)(ii).

The court will order an additional amount to the damages. Jackson Reforms, dated 1 April 2013 introduced the notion of additional amount. Its intention is to reward the claimant in real value for the successful Part 36 Offer, as stated by A Practical Approach to Civil Procedure (2019, Oxford University Press)

As per Rule 36.17(4)(d)(ii), the court will order that the claimant is entitled to 10% of the first £500,000, see Mohammed v Home Office [2018] 1 WLT 1780.

In addition to the 10%, As per Rule 36.17(4)(d)(ii), the court will order that the claimant is entitled 5% of any amount above this figure.

This additional amount is subject to the limit of £75,000.

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