Putting the discretion back in Part 36

Most lawyers involved in litigation will all be acutely alive to the additional value of Part 36 offers being made after 1 April 2013.

18 October 2013

Most lawyers involved in litigation will all be acutely alive to the additional value of Part 36 offers being made after 1 April 2013 and the ‘default’ tactical position that any pre-April Part 36 offers should really be have been remade by now to take account of those benefits.  

The benefits of the new Part 36 include an uplift of damages (or costs in a non-money claim) for a claimant who beats his offer (capped at £75,000). Hence a claimant’s successful Part 36 offer can have the following consequences:

  • Indemnity costs from the date it should have been accepted.
  • Up to base + 10% interest on such costs.
  • Up to base + 10% interest on damages.
  • Standard costs up to date offer should have been accepted.
  • Up to £75,000 uplift on damages.

All this is however discretionary. One reasoned case on using that discretion is Feltham v Bouskell. In that case, Hollander J seemed to be in a rather miserable mood, and considered that the 10% over base rates were included in the CPR at a time when interest rates were rather frothier than they are now. On the basis that such a rate would be ‘penal’ he only allowed an uplift of 3.5% over base. It is interesting to consider what he thought the point of Part 36 rates is – arguably it is intended to be penal to convince people to accept offers.

Anyway, the underlying fact may be that the Part 36 offer was made late, the claimant disclosed evidence late and may have been rather shoddy in complying with the court process and timetable. Hollander disallowed the uplift (in his discretion) on the basis of such misdemeanours and may also have kept the interest rates low for the same reason.

It is fair to say, however, that the active exercise of discretion around Part 36 offers does rather suggest that judges are now seeing this form of offer as ‘standard’ and Calderbank offers as subsidiary and only really justifiable in circumstances where Part 36 is not available. If Part 36 could be used, you should probably consider why you are making a Calderbank and whether the judges will take it seriously.

Key points to take away:

  • (Particularly for a Claimant) Part 36 is standard and contains additional benefits so you should use it if you can.
  • Part 36 remedies are discretionary and judges may pick and choose which of the benefits to allow in their discretion.
  • Judges are likely to use that discretion to punish you if you could be criticised for any compliance with court process rules or timings.

Ian Tucker comments on emerging law from a disputes and litigation perspective.

Key contact

David Hall

David Hall Partner

  • Dispute Resolution
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  • Business Crime and Regulatory Investigations

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