Part_36_reprieved?

The efficacy of the Civil Procedure Rules 1998 (CPR) part 36 was put under threat by Petrotrade v Texaco (2000) The Times 14 June (see...The efficacy of the Civil Procedure Rules 1998 (CPR) part 36 was put under threat by Petrotrade v Texaco (2000) The Times 14 June (see Benchmarks, 22 June 2000).

This case decided that because of the wide discretion conferred on judges by CPR rule 44.3, some doubt was thrown on whether part 36 had any really useful application in civil litigation disputes.

Nice but not as goodThe matter rested there until November when the Court of Appeal heard the case of Amber v Stacey [2000] All ER (D) 1829, (2000) LTL, 15 November, CA.

On the face of it, this was a straightforward case for the cost of building works.

Within a short period after an invoice had been presented by the claimant for payment by the defendant, the claimant commenced proceedings and within a few days after that the defendant made a written offer to settle the claim.

That offer was refused and the proceedings continued.

Several months later the defendant paid a sum into court which was less than the original offer but was in accordance with part 36.

At trial the claimant recovered less than the payment in.

The decision which gave rise to the appeal was that of the recorder to award costs to the defendant not only from the date of payment in but from the date of the original and higher offer.This did not impress the Court of Appeal.

Perhaps mindful of a perceived weakness creeping into part 36, the court decided to enter into a public relations exercise on behalf of the beleaguered rule.

The judges stated, in no uncertain terms, that a part 36 payment in was much more preferable than a mere written offer in that it offered greater clarity and certainty about the genuineness of the offer and the offerors ability to actually pay the amount of the offer; clarified whether the offer was opened or without prejudice; and stated the terms on which settlement was being proposed.But here is the rub: they could not leave it there.

Having blown up the part 36 balloon they then, perhaps unwittingly, promptly took a pin to it.

Repeating the view expressed in Petrotrade, they said that the the written offer was a relevant factor in respect of the courts wide discretion as to costs under CPR rule 44.3.

Instead, therefore, of limiting the costs back to the date of the payment-in, they allowed half of the defendants costs from the date of the written offer to the date of payment in and thereafter costs in full.A success story butSo where does this leave part 36? It is seen as one of the success stories of the new rules.

Prior to the 26 April 1999, in order to bring in the relevant cost penalties which existed at the time, an offer in civil matters was simply not good enough there had to be a payment into court.

It had not gone unnoticed that the offer letter, often known as the Calderbank offer, had existed quite successfully for years in family ancillary relief matters, where payment in was not possible.

Carrying that over into the new civil procedures was straightforward but something else was needed not only to entice defendants to make meaningful offers and payments into court but, much more innovating, to encourage claimants to make offers themselves.A claimant could go the full length of proceedings without having to respond to a defendants payment into court and take his chances on the outcome.

Now, if the claimant makes an offer he only has to beat the defendants offer in order to qualify for the extra bonus of penalty interest on costs and damages and indemnity costs, at the courts discretion.

As previously stated, this has undoubtedly led to an increase in proper offers, payments in and counter-offers and so to an increase in the settlement of cases which is what it was designed to achieve.

However, it would appear that many defendants have a problem with actually turning an offer into a payment into court.

The problem may be with the actual paying in of the money as a physical act and not the worry that, once it has been paid in, the extra penalty provisions of part 36 may apply if it is not enough.

The answer may be somewhat more radical make part 36 apply to offers in the same way as it does to payments in.

The difficulty there is that claimants like to know that the money is available for them to get their hands on should they succeed and a mere offer will not be worth the paper it is written on if the offeror is or becomes insolvent.

Payment into court must be made a more attractive proposition for the defendant.

At the moment, its only attraction depends on whether the amount is enough either to satisfy the claimant or to beat any award the claimant receives at trial.

Perhaps the answer is to impose an extra penalty on a claimant who fails to beat a payment in, in the same way that an extra penalty is imposed on a defendant who has not paid in enough.

Contract law still aliveIn the meantime, part 36 has not remained out of the law reports.

In Hubert Scammell & Ors v Margaret Dicker [2000] All ER (D) 2438, (2000) LTL, 21 December, the Court Of Appeal confirmed that a part 36 offer should be treated in the same way as a contractual offer and can be withdrawn at any time prior to acceptance.District Judge Stephen Gerlis sits at Barnet County Court