Part 36 Offers and the amended discount rate - beware of the rules for service - DAC Beachcroft

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Part 36 Offers and the amended discount rate - beware of the rules for service

Published 31 August 2017

The impact of the amended discount rate which was reduced from 2.5% to -0.75% on 20 March 2017 is widely felt, not least regarding the practical issues facing parties who have made or received Part 36 offers prior to the Lord Chancellor's announcement.

The recent High Court case of Thompson v Reeve (2017), a personal injury clam arising out of a road traffic accident, illustrates that parties have been quick to recognise that offers already on the table may leave them exposed.

On 28 February 2017, the day following the Lord Chancellor's announcement of the reduction of the discount rate, the Claimant's solicitors sent an email to the Defendant's solicitors seeking to withdraw their Part 36 offer previously made in August 2016. The email from the Claimant's solicitors sought to withdraw all previous Part 36 offers in accordance with CPR 36.9 (2). Notwithstanding the email of 28 February 2017, the Defendant accepted the previous Part 36 offer by fax and by DX on 2 March 2017.

It was the Defendant's case that the Claimant's withdrawal of their Part 36 offer was not valid given that it had been made by email and, in accordance with CPR 6.20(1)(d) service by email is only permitted where the receiving party has indicated in writing that they are willing to accept service by email, which had not occurred in this case.

The Claimant made an immediate application to seek:

  1. Permission to withdraw the Part 36 offer; and
  2. An order that the Claimant's offer is deemed to have been withdrawn on 28 February 2017.

The Claimant accepted that service of the notice of withdrawal by email was not in accordance with CPR 6.20 (service of documents other than the claim form). However, the Claimant submitted that CPR 3.10 may be applied, so that service of the notice of withdrawal can be treated as valid, (CPR 3.10 provides the Court with a general power to rectify matters where there has been an error of procedure such as a failure to comply with a rule or practice direction).

The Defendant argued that Part 36 is a self-contained code and submitted that Rule 3.10 cannot be used in the context of Part 36.

The Defendant's arguments were rejected and it was held that Rule 3.10 has a wide effect and could be invoked to cure the defect in this matter. Whilst it was accepted that Part 36 is a self-contained code, it was also noted by the Master serving the judgement that "it is not completely freestanding" and that an Order could be made under Rule 3.10, particularly as the Defendant had actually received the withdrawal notice and gave the Defendant all the information necessary.

Accordingly, it was ordered pursuant to Rule 3.10 that the date for service of the Claimant's notice of withdrawal should be treated as having occurred on 28 February 2017 i.e. that the error of serving by email is remedied; the Master added that "it would not be just or consistent with the overriding objective that a technical breach of the rules should impede the proper assessment of damages in this case".

The Claimant was therefore deemed to have withdrawn the Part 36 offer by way of the email sent on 28 February 2017. The Defendant will now be faced with a much more expensive claim.

The case also served to illustrate that knowledge of the rules of service is key. The Defendant relied on the case of Sutton Jigsaw Transport Ltd v Croydon London Borough Council [2013] EWHC 874 (QB) which concerned an application by the Claimant pursuant to CPR 36l(9)(3) for permission to accept the Defendant's Part 36 offer made shortly before the start of trial. During the course of the trial, the Claimant's Counsel gave the Defendant's Counsel a written note accepting the Defendant's Part 36 offer. Shortly afterwards, the Defendant withdrew its Part 36 offer. It was held that the notice of acceptance, by way of a handwritten note handed to Counsel, was not validly served as it had not been sent to the Defendant's address for service.

The case of Thompson demonstrates that existing Part 36 offers either made or received should be reviewed carefully in the light of the change in the discount rate. 

Authors

Hannah Eccles

Hannah Eccles

Winchester

+44 (0)1962 70 5523

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