Offer excluding interest not a valid part 36 offer

Offer not a valid Part 36 offer.

His Honour Judge Own QC in the County Court at Nottingham has held that an offer which was intended to be a Part 36 offer but which excluded interest was not in fact a Par5t 36 offer and could not have Part 36 consequences.

In Potter v SM Hair Salon [2016], the claimant made an offer to settle in the detailed assessment proceedings.

Part 36 applies to detailed assessment proceedings as modified by CPR 47.20. The offer was labelled as a Part 36 offer but excluded interest on the costs.

Part 36 says an offer must be made in accordance with CPR 36.5, which provides among other things that the offer will be treated as inclusive of interest to the end of the relevant period. The offer was not accepted and the case proceeded to provisional assessment.

The claimant did better than her offer. She sought the Part 36 consequences of 10% extra and indemnity costs etc. The district judge at first instance awarded those consequences on the papers on the basis that the offer had been beaten. He did not address the issue of whether the offer was valid.

On appeal, the court accepted that the offer was incompatible with the Part 36 scheme. There was no modification in CPR 47.20 that allowed costs offer to exclude interest. PD47 para 19 did not mandate it either, it simply required the interest position to be clear from the offer.

Offers in detailed assessment proceedings are often made exclusive of interest. That is the way CPR 47.19 offers used to be made before the Jackson reforms. Practitioners should note the position is different under Part 36.

Taylor Rose acted for the successful appellant.

For more information, contact our Peterborough office on 01733 333 333. A copy of the judgment is available on request.