Part 36 offers are a specific type of formal offer, which if used correctly, can act an excellent tool within litigation to facilitate a settlement.
Part 36 offers are governed by Part 36 of the Civil Procedure Rules 1998. These are self-contained provisions meaning that if an offer is a valid Part 36 offer, the consequences automatically apply, and external factors are not relevant.
When making a Part 36 offer, care needs to be taken to ensure that the terms of the offer are correct. If an incorrect offer is made, you cannot rely upon the doctrine of mistake to remedy the error.
A recent case in the Liverpool County Court provides an excellent example of the problems caused by an incorrect Part 36 offer being made and why it is so important that care is taken when drafting an offer.
In this case, the Claimant submitted medical evidence and made a Part 36 offer to settle the claim prior to the commencement of proceedings for £0.00. This was accompanied by a letter confirming the offer was made in accordance with and was intended to have the consequences of Part 36 of the Civil Procedure Rules. The letter went on to set out various heads of loss for general damages and special damages but reiterated that the Claimant would “accept the inclusive sum of £0.00 in full and final settlement.” The letter further set out that the offer related to “the whole of the Claimant’s claim” and was “made on the basis that liability is agreed 100% in the Claimant’s favour.”
The Defendant accepted the offer and the claim was settled.
The Claimant’s solicitor then attempted to re-send the Part 36 offer, amending the amount of the offer to reflect the amount that the earlier Part 36 offer was intended to put forward.
The Claimant was however prevented from doing so pursuant to CPR 36.9(1) which states “A Part 36 offer can only be withdrawn, or its terms changed, if the offeree has not previously served notice of acceptance.”
The Claimant’s solicitors went on to issue proceedings as the Defendant maintained their position that the claim had been concluded. The Claimant argued that no concluded agreement was reached and that the offer of £0.00 was a mistake.
Solicitors for the Defendant issued an application to strike out the Claimant’s claim as an abuse of process on the basis that the claim had been validly compromised and the common law doctrine of unilateral mistake did not apply to Part 36 offers.
The application was heard by District Judge Metcalf in the Liverpool County Court. It was held that a valid Part 36 offer had been made and accepted. CPR 36.1 states: “This Part contains a self-contained procedural code about offers to settle made pursuant to the procedure set out in this Part.’ The Defendant relied upon principles in Draper v Newport which set out that the doctrine of mistake could not be imported into a portal case as the portal rules comprised a self-contained code.
It was found that the claimant could not establish that the defendant was aware of the mistake, the offer was clearly expressed in straightforward terms, the claimant was represented by experienced solicitors who would not be expected to make such a fundamental mistake and the claimant did benefit from the offer because it provided for payment of costs and disbursements.
It was held that Part 36 was a self-contained code and there is no rule allowing a compliant Part 36 offer to be set aside on the basis of mistake. The Claimant’s claim was therefore struck out and QOCS was disapplied resulting in a costs order.
This case acts as an important reminder that Part 36 offers should be made with precision and care. A valid part 36 offer cannot simply be set aside by reliance upon a mistake having been made.
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