A recent High Court judgment has important practical implications for how offers are drafted under Part 36 of the Civil Procedure Rules (CPR) and for the possible costs consequences of offers previously made: C v D & D2 [2010] EWHC 2940 (Ch).

Key points:

  • The court has held that a “time-limited” offer (i.e. one which is open for acceptance for only a limited period) is not capable of being a valid Part 36 offer. Accordingly, such an offer will not carry the costs sanctions associated with Part 36, though it can still be taken into account by the court in exercising its discretion on costs.
  • An offer that is expressed to be “open for 21 days” may well be construed as a time-limited offer, even if the rest of the wording of the offer makes clear that the offer is intended to have the consequences of Part 36.
  • Up until 6 April 2007, Part 36 required that an offer was expressed to “remain open for acceptance” for 21 days. This wording has continued to be used in some instances, although the current requirement under rule 36.2 is to “specify a period of not less than 21 days within which the defendant will be liable for the claimant’s costs … if the offer is accepted”.

Practical implications:

  • Parties should not express Part 36 offers to be “open for” 21 days (or other period), but should use the up-to-date wording under Part 36.
  • If a party wishes to make a time-limited offer, it should be expressed as a “without prejudice save as to costs” (or Calderbank) offer rather than a Part 36 offer. Otherwise an opponent might seek to argue that, properly construed, the offer was not in fact intended to be time-limited and therefore could be accepted at any time (as was argued, though unsuccessfully, in the present case).
  • Any Part 36 offers made by either party since 6 April 2007 should be reviewed to see if wording has been used that would suggest the offer is time-limited and, if so, careful thought should be given to the implications.

We understand that permission has been given to appeal against this decision so will issue a further update in due course if the position changes.