30 October, 2014
Part 36 has reared its head again. It is probably best surmised by DJ Ackroyd's opening remarks in the case of Burrett v Mencap Limited (2014) Portsmouth County Court 'One would have thought that Part 36, having been in existence for many years now every possible wrinkle in it would be ironed out before now'.
In Burrett v Mencap Limited the Court was asked to specifically consider Rule 36.7 (which deals with time when a Part 36 offer is made) in the context of Rule 36.3 which explains when an offer may be varied).
The Defendant had made a Part 36 offer of £15000. However, following receipt of surveillance evidence the Defendant decided to vary the terms of the offer to £2500. The Claimant's representatives erroneously thought that they had at least 21 days to consider the terms of the varied offer and it was duly accepted within the 21 period. The Defendant contended that the relevant period for acceptance was that afforded by the first offer and that the rules allowed the Claimant no further time for consideration following variation of the offer, which in effect meant that the Claimant had no time to consider the terms of the varied offer without facing the consequences of late acceptance.
In a surprising Judgment (indeed even DJ Ackroyd commented that the Claimant's understanding 'would make good sense') the Judge found that he was constrained by the Rules and that the Rules were silent as to an extension of time when an offer is varied to be less advantageous. On that basis it followed that the original offer stood for the purpose of defining the relevant period and that the consequences applied from the expiry of the relevant period of the original Part 36 offer.
This Judgment shows that Part 36 remains as contentious area as ever, but perhaps more importantly, highlights the benefits of varying an earlier Part 36 which may 'trap' the Claimant even when the case has changed.
However, as a note of caution, varying the earlier Part 36 means that you lose the protection of Part 36 if the varied offer is not accepted and/or the Claimant beats the varied terms at Trial. Real consideration therefore needs to be given to every offer and in certain circumstances it will remain beneficial to keep an early Part 36 on the table rather than vary it.