William Dean reviews two new Part 36 cases

Articles | Tue 12th Jul, 2016

Two new judgments dealing with Part 36 offers are reviewed by William Dean.

TITMUS v GENERAL MOTORS UK LTD

High Court; Elisabeth Laing J.; 7th July 2016; unreported

Can the court use its general case management powers to extend the time in which a sum is to be paid after a Part 36 offer is accepted? No.

Facts

The Claimant sued the Defendant for having exposed the Claimant’s late husband to asbestos at work. The Defendant made a Part 36 offer on 21st July 2015. The 21-day period expired on 11th August 2015 and the Claimant accepted on 25th May 2016.

The offer having been accepted out of time, the Claimant was entitled to her costs up to 11th August 2015; the Defendant was entitled to its costs thereafter.

By rule 36.14(6), “where a Part 36 offer that is or includes an offer to pay or accept a single sum of money is accepted, that sum must be paid to the claimant within 14 days of the date of … acceptance”.

Arguments

The Defendant applied for an extension of time to pay the settlement sum because it had yet to receive adequate information about the Claimant’s ability to pay its costs. It argued that the court had a general discretion as to costs under rule 44.2 and the Part 3 case management powers included a power to “extend or shorten the time for compliance with any rule”, except “where th[e] Rules provide otherwise”: rule 3.1(2)(a).

The Claimant argued that Part 36 was a self-contained code so the exception in rule 3.1(2) applied. She also said that she had the ability to pay the Defendant’s costs in any event.

Outcome

There is no power under rule 3.1(2)(a) to extend the time in rule 36.14(6).

Part 36 is a self-contained code. The certainty it provides is important in order to facilitate settlements; that certainty would be undermined if it were possible to use Part 3 to extend the time for payment.

Further, rule 36.14(6) explicitly provides for the only circumstances in which the period for payment may be longer than 14 days: “[u]nless the parties agree otherwise in writing”; therefore the exception in rule 3.1(2) (“where th[e] Rules provide otherwise”) applies.

PURRUNSING v A’COURT & CO. (A FIRM) & ANOTHER

High Court (Ch. D.); H.H.J. Pelling Q.C.; 1st July 2016; [2016] EWHC 1528 (Ch)

When determining whether a party has obtained a judgment which is at least as advantageous as his or her Part 36 offer, should a deduction be made from the offer sum in order to account for interest which would have accrued before the date of judgment? No.

Facts

On 20th May 2015, the Claimant made a Part 36 offer of £516,000.

At trial he recovered £518,983.01 (including interest). Judgment was handed down on 14th April 2016.

Arguments

The Claimant argued that he was entitled to enhanced costs from the end of the 21-day period (10th June 2015).

The Defendant argued that it was not correct to compare the offer sum and the sum awarded at trial. Rather, in order to determine whether the judgment sum was “at least as advantageous to the claimant as the proposals contained in a claimant’s Part 36 offer”, the court should take into account the fact that time (309 days) had elapsed between the end of the 21-day period and the date of judgment.

The Defendant argued that in order to do so the court should “deduct 309 days[‘] interest from the judgment sum (inclusive of interest) in order to test whether the claimant has done better than the offer”. The judge having determined that 3 per cent. was the correct interest rate, the Defendant submitted that the figure against which the outcome at trial should be compared was £507,046.30.

Outcome

The Defendant’s approach was wrong. If it were correct, “whether an offer from a claiming party should be accepted by a defending party would depend not on an analysis of liability in respect of the claim but what in many cases will be entirely unpredictable namely the date when a trial takes place and what is perhaps even more unpredictable, when judgment will be handed down.”

The judge held that it was “in the highest degree unlikely” that the intention behind Part 36 was to have the applicability of enhanced costs dependent upon an “entirely random” event such as the date judgment is handed down. He noted that an order for enhanced costs is draconian and certainty is important.

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