In recent months we have seen a number of interesting judgments relating to Part 36 of the Civil Procedure Rules. Part 36 encourages parties to settle their litigation by imposing unfavourable costs and interest consequences in the event that a party (whether claimant or defendant) refuses its opponent's Part 36 offer to settle but then fails to achieve a better result at trial.
The most significant of these, in the joined appeals of Gibbon v Manchester City Council and LG Blower Specialist Bricklayer Limited v Reeves [2010] EWCA Civ 726, was handed down on 25 June. The Court of Appeal held that, contrary to the usual principles of contract law, an offer to settle made under Part 36 may remain open for acceptance even if it has previously been rejected or the offeror has made a subsequent offer in different terms. As a result of this decision, parties need to review any Part 36 offers previously made which they no longer wish to keep on the table. If there is any uncertainty, offers should be expressly withdrawn or varied.
This judgment also sought to limit the effect of Carver v BAA, the much criticised 2008 decision in which the Court of Appeal introduced a broad interpretation of whether a judgment is "more advantageous" than a defendant's Part 36 offer. In the present case the court said that, in evaluating whether a claimant obtained a judgment "more advantageous" than a defendant's Part 36 offer, obtaining judgment for an amount greater than the offer is likely to outweigh all other factors. For more information see our e-bulletin dated 29 June 2010.
Kunaka v Barclays Bank, an unreported decision of the Court of Appeal on 16 July, illustrates the need for caution in dealing with unrepresented parties in the context of Part 36 offers. In this case the claimant, who was a litigant in person, accepted a Part 36 offer after expiry of the relevant period for acceptance. In such circumstances, unless the court orders otherwise, the offeree will be liable for the offeror's costs for the period of its delay in accepting the offer. Here, however, the Court of Appeal assessed the fairness of the situation and decided that the claimant should not be liable for the defendant's costs for the period of delay, bearing in mind that the claimant was unrepresented and that the defendant had reminded the claimant that the offer remained open for acceptance but without spelling out the usual consequences of late acceptance.
Walsh v Singh [2010] EWHC 1167 (Ch), a judgment of HHJ Purle QC (sitting as a High Court judge) handed down in March, is a reminder that the court has a discretion to disapply the usual Part 36 costs consequences based on the justice of the case. In considering whether it would be unjust to make the usual costs order, the court will take into account "all the circumstances of the case" which, the judge held, includes the broader conduct of the parties. Here, although the claimant failed to beat the defendant's Part 36 offer, the judge made no order as to costs in light of the defendant's "disgraceful behaviour" in seeking to rely on material obtained using "spyware" on a laptop the claimant was using, his unjustified attempts to portray her as mentally unstable, and his general conduct of the trial including giving untruthful evidence.
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