Keep part 36 offers simple by using form, judge urges

Pepperall: Simple answers

A High Court judge has told parties making part 36 offers that if they simply used form N242A “much of the difficulty” the scheme has caused litigants over the years would be avoided.

Mr Justice Pepperall made the plea after deciding that a part 36 offer that was technically made the day after it was dated was compliant with the rules, but that – were he wrong – neither the rule of de minimis nor estoppel could save it.

In Essex County Council v UBB Waste (Essex) Ltd (No3) [2020] EWHC 2387 (TCC), the claimant sent a part 36 offer at 4.54pm on 7 March 2019. As it was sent after 4.30pm, it was deemed by rule 6.26 to have been served on the following day.

Part 36 provides that offers are made when they are served and so the defendant argued that the only proper construction of the letter was that the 21 days ran from 7 March. Thus, because the offer was not made until the following day, the offer failed to specify a relevant period of not less than 21 days.

Pepperall J declined to construe the offer letter divorced from its proper context. He said a reasonable person having all the background knowledge available to the parties would know the letter was intended to be a part 36 offer and that the statement in the letter that the relevant period ran for “21 days of the date of this letter” was intended to comply with the rule. 19.

The judge continued that the statement on the relevant period could “feasibly and reasonably” be construed as meaning either that the 21 days ran from the date of the letter – in which case a mistake was made and the offer did not comply – or that the 21 days ran from the date when the offer was made.

He concluded: “In accordance with the reasoning in C v D [[2011] EWCA Civ 646], I prefer the latter construction since it is consistent with the clear intention to make a part 36 offer and ensures that the offer is effective rather than ineffective. Accordingly, I reject UBB’s argument that the offer letter was not compliant with part 36.”

The judge went on nonetheless to consider the claimant’s fallback arguments that any non-compliance was de minimis and that the court should, in any event, treat the offer as a part 36 offer, and UBB was estopped from now relying upon any defect in the offer.

Rule 36.2(2) was clear that failure to comply with one of the mandatory requirements set out in rule 36.5 meant it could not be treated as a part 36 offer, said Pepperall J.

It could, however, be taken into account when exercising the general discretion as to costs under part 44.

The offer letter required the defendant to ask any questions or raise issues of non-compliance within seven days, saying the claimant would rely on silence to preclude the defendant from attempting to avoid the adverse costs consequences of part 36.

The defendant did not raise any issues, having not identified the service point when replying on 25 March to reject the offer.

But Pepperall J rejected the attempt to bring estoppel into the part 36 regime, saying this would breach the core principle that part 36 is a self-contained procedural code. Further, rule 36.2(2) was “a complete answer to the estoppel argument”.

He continued: “I consider that, as a matter of policy, the responsibility for ensuring that an offer is compliant with part 36 should lie squarely upon the offeror and his lawyers. There are two very simple answers to the unrelenting stream of cases which, as Coulson LJ observed in King, litter the law reports in which parties seek to obtain the benefits of Part 36 despite making non-compliant offers:

“(a) As has been repeatedly stressed by the Court of Appeal and as the rules clearly explain, there is no problem with a party making an offer outside part 36. Such offers will be taken into consideration under part 44 but will not gain the special advantages of part 36.

“(b) As the commentary in Civil Procedure (the White Book) makes clear at paragraph 36.5.2, much of the difficulty would be avoided if parties would only use form N242A to make their offers.”

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