The Civil Procedure (Amendment) Rules 2021 (‘the CPAR’) introduces a new CPR 36.5(5) to clarify the issue on the expiration of a part 36 offer
Part 36 Offer:
A part 36 offer is a written offer to settle a matter and must state a period of not less than 21 days (the relevant period) during which the offer can be accepted. If the offer is not accepted during the relevant period and the other party does not beat the offer, then there will be a costs consequence.
Part 36 Offers constitute one of the most important tactical steps which parties can take during legal proceedings.
They provide a means of putting pressure on the other side to settle a case and of protecting, at least to some extent, your position on costs
The New Rule:
The CPAR 2021, which came into force on 6 April 2021, amends part 36 with the new rule 36.5(5).
With the new rule, the party making the offer can include the provision of interest to accrue after the expiration of the relevant period.
The new rule is as follows:
“36.5(5) A Part 36 offer to accept a sum of money may make provision for accrual of interest on such sum after the date specified in paragraph (4). If such an offer does not make any such provision, it shall be treated as inclusive of all interest up to the date of acceptance if it is later accepted”.
The new rule was brought in as a result of the Judgement in the court of appeal case of King v City of London [2019] EWCA Civ 2266. In this case, the court held that a part 36 offer that excludes interest is not a valid Part 36 offer as it would not comply with the CPR.
What does it now mean for you under the new rule?
Under the new rule, a party making an offer can draft the offer so that interest run after the end of the relevant period and will be compensated should there be any delay by the other party in accepting the offer outside the period.
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