A PART 36 OFFER MADE LESS THAN 21 DAYS BEFORE TRIAL: WHAT HAPPENS IF THE TRIAL IS ADJOURNED

May 12, 2021 · by · in Appeals, Civil Procedure, Part 36

In  Reader v SPIE Ltd & Anor [2021] EWHC 1221 (QB) Mr Justice Andrew Baker considered an issue in relation to the construction of  CPR 36.  A party made an offer less than 21 days before the date set for trial.  Was that offer a valid offer if, in fact, the trial date was adjourned after the offer was made.  The judge held that the key issue were the facts that existed when the offer was made.

“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 CASE

The court was considering the issue of whether an offer (the “2015 offer”) made less than 21 days before the trial was listed could be valid if the trial, in fact, took place at a later date.

THE FINDINGS AT FIRST INSTANCE

At first instance the judge held that the offer was made less than 21 days before the trial and thus ineffective.

  1. As regards SPIE’s appeal (QA-2020-000069), the judge held that the 2017 Offer was not an offer “made less than 21 days before the start of a trial” within CPR 36.5(2), so it was required to conform to CPR 36.5(1)(c), and since it did not do so (as was and is common ground) no question arose of applying Part 36 Consequences. There was no permission to appeal, and therefore no appeal, against the judge’s conclusion that compliance with CPR 36.5(1)(c), if applicable, was a pre-requisite for Part 36 Consequences to be available, or against his refusal, taking account of the 2017 Offer and all other matters relied on by SPIE, to order indemnity costs as a matter of discretion pursuant to CPR 44.2-44.3.

THE FINDINGS ON APPEAL: KEY ISSUE IS THE FACTS WHEN THE OFFER WAS MADE

The trial judge’s findings were upheld on this issue.

    1. The 2017 Offer was made by solicitors’ letter dated 12 January 2017, less than 21 days before the start of trial as it was then listed. It was made expressly on that basis, and on the basis, therefore, that the Part 36 Consequences would not apply unless SPIE made a successful application to the court to abridge “the relevant period”. Thus, SPIE’s solicitors wrote that “… although we are now within 21 days of the start of the trial, if your client does not accept this Offer to settle and our client succeeds 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.“
    1. Part 36 is, as CPR 36.1(1) says, a self-contained procedural code regulating offers made in accordance with its terms. It is also a complex code. But at any rate as between experienced litigation solicitors, as the 2017 Offer was written, it would not require further explanation that:
(1) given the context, the “relevant period” was the period defined by CPR 36.3(g), i.e. the period specified under CPR 36.5(1)(c) (or such longer period as the parties might agree), in the case of an offer made not less than 21 days before a trial, and otherwise the period until the end of the trial;
(2) CPR 36.5(1)(c) generally requires an offer 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 (which will then be the relevant period, see (1) above), but, by CPR 36.5(2), not so for an offer made less than 21 days before the start of a trial (the relevant period in relation to which is not set by CPR 36.5(1)(c), see (1) above again);
(3) by CPR 36.17(7)(c), as part of the consistent whole that is the Part 36 regime, an offer made less than 21 days before the start of trial (to which therefore CPR 36.5(2) applies, and for which the relevant period is the period to the conclusion of the trial), is an offer to which the Part 36 Consequences do not apply “unless the court has abridged the relevant period”.
    1. Those characteristics, with associated consequences, of an offer to settle stated to be made pursuant to Part 36 (else CPR 36.5(1)(b) will not be satisfied and no other Part 36 question need be addressed), must be capable of being judged by the parties, both offeror and offeree, when the offer is made. Parties must be able to take a view on whether to make, respectively accept, what purports to be a Part 36 offer, with certainty as to those matters. There is nothing in the language of the provisions of Part 36 leading to the conclusion, or even hinting at the possibility, that those characteristics, and associated consequences, can change over time or upon some subsequent event.
    1. The 2017 Offer asked Mr Garside’s solicitors in terms to let SPIE’s solicitors know by return “If you consider this offer to be in any way defective or non-compliant of Part 36“. They did not do so, by return or at all. After judgment, however, Mr Vickers, trial counsel for Mr Garside, argued that because the trial was adjourned after the 2017 Offer was made, so that in the event the trial commenced at least 21 days (in fact some 13 months) after the offer, CPR 36.5(2) did not apply. In other words, although the language of ‘validity’ is not my preferred language in this context, the adjournment of the trial invalidated the 2017 Offer as a Part 36 offer.
    1. The judge was persuaded by that argument, but I am not. In my view, the judge erred in law in that regard. 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).
    1. Mr Martin QC argued on appeal, as he did before the judge, that somehow the second part of his submission, as summarised in the above quotation, was unrelated to CPR 36.17(7), “because that is dealing with a different chronological question“. CPR 36.17 deals with what happens when, after trial, it can be seen that an offer to settle has been bettered. But that does not mean that an offer that when made fell within CPR 36.3(g)(ii), and therefore CPR 36.5(2) and CPR 36.17(7)(c), can be re-characterised as an offer falling within CPR 36.3(g)(i) and therefore outside CPR 36.5(2) and CPR 36.17(7)(c).
    1. The judge suggested that Mr Martin QC’s argument on CPR 36.5(2) involved re-writing the rule: “It seems to me his argument does not work unless one reads the words “before the start of a trial” as meaning “the date when the trial was due to start at the time the offer was made”. I think all of those words whether in that order or in a different order, are necessary to encapsulate the interpretation that he wishes to achieve, and the very quantity of necessary additional words alone suggests to me that his construction is not correct.” I respectfully disagree. 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.
    1. The judge concluded that “the correct interpretation of CPR 36.5 and 36.17 is that the offer is not valid unless either a period of not less than 21 days is stipulated or the offer is made less than 21 days before the trial actually starts. To my mind this makes for certainty as to whether a party is at risk or not of Part 36 consequences.” In my view, the instinct was correct that parties, especially offerees, should have as little uncertainty as possible over whether Part 36 Consequences will attach. But with respect, it is the judge’s construction that introduces uncertainty, entailing that the applicability in principle of Part 36 Consequences cannot be judged with certainty when an offer is received, and may change over time. Likewise, Mr Martin QC’s construction under which the “relevant period”, as he submitted, can mean different things at different times in respect of the same offer.
    1. It was to my mind a reflection of what the language of CPR 36.5 and 36.17 naturally conveys, and thus correct, for SPIE’s solicitors to spell out as they did in the 2017 Offer that, given when it was made relative to trial (as matters then stood), Part 36 Consequences could not apply without a successful application to abridge the “relevant period”. If they had said nothing about that, and Mr Garside had sought advice, he should surely have been told the same thing: trial is less than 21 days away; CPR 36.3(g)(ii), 36.5(2) and (most importantly) 36.17(7)(c) therefore all apply; you will only be at risk of Part 36 Consequences if the court abridges the “relevant period”.
    1. It is not suggested that the relevant period was abridged by the trial court, or that any application for abridgement was made, unless it was made ‘on the hoof’ as part of Mr Martin’s oral submissions on 31 January 2020, of which no record or note was included in the appeal papers. The judge’s costs judgment does not refer to any such application being made as part of the argument. Mr Martin QC told me he believes he did make such an application and that his instructing solicitor has the same recollection.
    1. Mr Martin QC submitted that an application for abridgement when the January 2017 trial listing was adjourned rather than simply the making of a fresh offer complying with CPR 36.5(1)(c) as would then have been required, would have been a disproportionate way of seeking to ensure that Part 36 Consequences were in play. I do not have the material to assess the relative monetary value to SPIE of those two options to say whether that submission is correct. What matters is the acknowledgment that even if a freestanding abridgement application would have been disproportionate, it was not SPIE’s only means, the trial having been adjourned, by which to achieve the applicability of Part 36 Consequences. It does not explain why in fact SPIE chose to do nothing.
    1. It was submitted with force that SPIE should not be criticised for failing to act as if the 2017 Offer had failed to comply with CPR 36.5(1), no point on that having been raised on behalf of Mr Garside until Mr Vickers raised it after judgment. But to my mind that misses the point, which is that on the face of the 2017 Offer (and as I have concluded, correctly), SPIE’s position was that it would have to make an application for abridgement to bring Part 36 Consequences into play, but did not do so for over three years.
    1. I do not think it would have been appropriate for the judge to abridge time retrospectively in those circumstances. The judge was not persuaded that it was just, in the exercise of his general costs discretion under Part 44, to order that any of SPIE’s costs be assessed on the indemnity basis, taking account of the 2017 Offer (as he was bound to do, on his finding that Part 36 Consequences did not apply to it: see CPR 44.2(4)(c)) and even though it did not stand alone as a potential basis for a finding that assessment on the indemnity basis for at least some of SPIE’s costs might have been justified. In making that decision, the judge noted that the 2017 Offer was “a hard offer, and it offered little incentive to the third party. That is not the same … as saying it was a requirement to capitulate or not a genuine offer at all. On the other hand it does not seem to me that if it was not a valid Part 36 offer, the third party can be axiomatically criticised for not accepting it.“
    1. Although Mr Martin QC could fairly submit, as he did, that the judge was not there asking himself whether to abridge the “relevant period” pursuant to CPR 36.17(7)(c), so as to render applicable Part 36 Consequences to which SPIE had not caused themselves to be entitled, to my mind that is a clear enough indication that if it required an exercise of the court’s discretion to render Part 36 Consequences applicable, then it was not right to exercise such a discretion in SPIE’s favour in this case (even though, as the judge properly noted elsewhere, had it been for Mr Garside to persuade the court to disapply Part 36 Consequences to which SPIE had presumptively entitled itself, that might have been a difficult burden to discharge).
  1. In those circumstances, I am not prepared to exercise now in favour of SPIE a discretion to abridge the “relevant period”, or to remit the case to the judge (even if he would still be available to hear it) 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.
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