Part 36 offer made less than 21 days before trial not affected by later change of date

A judge was wrong to rule that a part 36 offer was not made less than 21 days before trial because the trial was then adjourned and commenced months later, the High Court has ruled.

Mr Justice Andrew Baker said the key was the position at the time the offer was made.

In Reader v SPIE Ltd & Anor [2021] EWHC 1221 (QB), the defendant made a part 36 offer for £10,000 plus costs less than 21 days before trial.

Its solicitors said that if the claimant did not accept it, and the defendant went on to win at trial, “we will ask the court to use its wide discretion under CPR 44.2 to make a costs order in our client’s favour in accordance with part 36 principles, and to abridge the Relevant Period for the purposes of part 36 to 14 days from the date of this letter.”

In the event, the trial was delayed by 13 months and SPIE won a trial, beating its offer. His Honour John Hand QC, sitting as a deputy circuit judge, held that the offer was not “made less than 21 days before the start of a trial” – as required by CPR 36.5(2) – because of the subsequent delay. It then had to conform to CPR 36.5(1)(c) and, since it was common ground that it did not, no question arose of applying the part 36 consequences.

SPIE was granted permission to appeal the finding that the offer was not a valid part 36 offer pursuant to CPR 36.5.

Andrew Baker J held that the judge erred in law. He said: “The judge recorded the contrary argument of Mr Martin (as he was then) for SPIE as being that ‘the validity of the offer must be considered at the time that the offer was made. What is at issue under CPR part 36.5(1)(c) is the question whether or not CPR part 36.17(4) will apply’. I respectfully agree with both parts of that submission.

“As regards this aspect of the part 36 regime, whether CPR 36.17(4) will apply is governed by CPR 36.17(7)(c), and it plainly refers back to CPR 36.3(g) and 36.5(2).”

He continued that HHJ Hand was wrong to suggest that this interpretation involved re-writing CPR 36.5(2): “The CPR 36.5(1)(c) requirement to state a period (except where the offer is made less than 21 days before trial) is fundamental to the part 36 regime because it defines (with that exception) the ‘relevant period’ and that is a basic concept with an importance, and operative effects, from the moment the offer is made and throughout the remaining life of the proceedings.

“It is therefore not a question of adding to or re-writing the language of CPR 36.5(2), it is simply a matter of recognising that the subject matter of CPR 36.5 is the required content, and effect, of an offer, if it is to be a part 36 offer, when the offer is made.

“The insuperable difficulty with the judge’s construction of CPR 36.5(2) is that it requires an offer, if it is to satisfy CPR 36.5(1) so as to be a part 36 offer, to specify a period under CPR 36.5(1)(c) where no one applying their mind to CPR 36.5(1)/(2) when drafting the offer would conclude that that was required.”

The relevant period was not abridged by the trial court – indeed, no application to do so was made – and Andrew Baker J said he was not prepared to exercise now in favour of SPIE a discretion to abridge the relevant period, or to remit the case to the judge for him to consider whether to do so.

“My conclusion on SPIE’s appeal is that although the judge was wrong to accept the argument that CPR 36.5(2) did not apply to the 2017 offer, the decision he reached that part 36 consequences did not attend SPIE’s having bettered that offer by the result achieved at trial was correct. I shall therefore dismiss SPIE’s appeal.”

Dale Martin QC (instructed by Mayer Brown) for the defendant. David Cavender QC (instructed by JMW Solicitors) for the third party.

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Published date
27 May 2021

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