A new version of Part 36 of the Civil Procedure Rules now applies to offers made on or after 6 April this year. Although much of Part 36 remains the same, it has been subject to several substantive changes and significant reordering. The greatest changes come in the following four areas:
1) High claimant offers – parties in certain areas of litigation will be familiar with claimants making Part 36 offers that are only very slightly less than the amount claimed. This can have significant costs implications but does not increase the likelihood of settlement. As a result, now when considering whether it would be unjust to make a costs order under the Part, the court may also consider ‘whether the offer was a genuine attempt to settle the proceedings’ (36.17(5)(e)). Although there is still clearly scope for argument on the issue, claimants will now be expected to make more than trivial concessions in order to benefit from Part 36.
2) Improved offers – 36.9(5) clarifies that an improved offer will not be treated as withdrawing the original offer, but is treated instead as a new offer.
3) Appeals – a new rule (36.4) has been included specifically to deal with the application of Part 36 to appeals. It clarifies that Part 36 offers may be made in relation to appeals and that those offers will apply only to the appeal.
4) Costs budgets – previously, a party that failed to file a costs budget in time was limited to court fees. Instead, under the new 36.23, a party will receive 50% of its assessed costs. It is hoped that this will encourage parties to settle by maintaining their exposure to costs, whilst still penalising late filing of costs budgets.
Other new rules concern automatically expiring offers (36.9(4)(b)), preliminary hearings (36.16(4)), counterclaims (36.2(3)), and late acceptance (36.14(5)).