CHANGES TO THE DISCOUNT RATE: WITHDRAWING PART 36 OFFERS: IMPORTANT FOR CLAIMANTS AND DEFENDANTS

I wrote yesterday of the practical steps that need to be taken by both parties as a result of the changes to the discount rate (that post is on the Zenith PI Blog and is available here). One point that is mentioned is the need for claimant lawyers to consider, and possibly withdraw, any Part 36 offers they have made.  Further there are important issues for defendants to act upon.  Any prudent insurer will quickly be considering whether there are claimant’s Part 36 offers which should quickly be accepted.

THE RULES: WITHDRAWING THE OFFER ONCE TIME FOR ACCEPTANCE HAS LAPSED

The rule here is clear

“Withdrawing or changing the terms of a Part 36 offer generally

36.9

(1) A Part 36 offer can only be withdrawn, or its terms changed, if the offeree has not previously served notice of acceptance.

(2) The offeror withdraws the offer or changes its terms by serving written notice of the withdrawal or change of terms on the offeree.

The crucial point here is that the Part 36 offer remains open if it is not withdrawn. It is now well established that a counter-offer from the defendant does not mean the offer is withdrawn (Gibbon v Manchester CC: LG Blower Specialist Bricklayer Ltd v Reeves [2010] EWCA Civ 726).  This is one matter that claimants should bear in mind if there are any Part 36 offers that are forgotten but remain open.

WITHDRAWING AN OFFER WITHIN THE RELEVANT PERIOD

There may be some offers made recently which are still within the 21 day period. Here the position is more complex.   Before the  defendant accepts the onus is on a claimant to apply to court to be allowed to withdraw or change the terms of the offer. The court may make an order “if satisfied that there has been a change of circumstances since the making of the original offer and that it is in the interests of justice to give permission.”

THE RULE

Withdrawing or changing the terms of a Part 36 offer before the expiry of the relevant period

36.10

(1) Subject to rule 36.9(1), this rule applies where the offeror serves notice before expiry of the relevant period of withdrawal of the offer or change of its terms to be less advantageous to the offeree.

(2) Where this rule applies—

(a) if the offeree has not served notice of acceptance of the original offer by the expiry of the relevant period, the offeror’s notice has effect on the expiry of that period; and

(b) if the offeree serves notice of acceptance of the original offer before the expiry of the relevant period, that acceptance has effect unless the offeror applies to the court for permission to withdraw the offer or to change its terms—

(i) within 7 days of the offeree’s notice of acceptance; or

(ii) if earlier, before the first day of trial.

(3) On an application under paragraph (2)(b), the court may give permission for the original offer to be withdrawn or its terms changed if satisfied that there has been a change of circumstances since the making of the original offer and that it is in the interests of justice to give permission.”

It is clearly going to be a moot point as to whether the alteration to the discount rate represents a “change in circumstances” and, if so, whether it is “in the interests of justice” to give permission to claimant to withdrawn an offer.

THE IMPORTANT THING FOR BOTH CLAIMANTS AND DEFENDANTS IS TO ACT QUICKLY

The unfortunate thing (for claimants) would be to be caught with an old Part 36 offers which do not take into account the change in the discount rate.  The unfortunate thing (for defendants) would be to miss the fact that a Part 36 offer has been made (and is still open) which is now realistic and attractive.