The Issues:

The Claimant died from mesothelioma, on 3 February 2014 and his estate brought a claim against the Defendant, his former employer, alleging an exposure to asbestos.

The Defendant made a Part 36 offer on 21st July 2015 so the 21 day period for acceptance expired on the 11th August 2015.

The Claimant accepted the Defendant’s Part 36 offer out of time on the 25th May 2016, so the Claimant was entitled to her costs up to 11th August 2015; with the Defendant entitled to its costs thereafter.

Rule 36.14(6) states “where a Part 36 offer that is or includes an offer to pay or accept a single sum of money is accepted, that sum must be paid to the claimant within 14 days of the date of ... acceptance”.

The Defendant applied for an extension of time to pay the settlement sum because it was concerned that the Claimant was impecunious and would not pay the Defendant’s costs. The Defendant relied on the court’s general discretion under Rule 44.2 and Part 3 case management powers to “extend or shorten the time for compliance with any rule”, except “where the Rules provide otherwise”: Rule 3.1(2)(a).

The Claimant maintained that Part 36 was a self-contained code so the exception in Rule 3.1(2) applied and that in any case she had the ability to pay the Defendant’s costs.

Held:

The Court held that a Part 36 offer can be accepted at any time (CPR 36.11(2)) and any sum of money agreed must be paid within 14 days of acceptance (CPR36.14). If payment is not made within 14 days the Claimant can enter Judgment for the unpaid sum.

There is no power under Rule 3.1(2)(a) to extend the time in Rule 36.14(6) for payment as Part 36 is a self-contained code. Under CPR 36.14(7) time can only be extended by agreement in writing between the parties, which was not the case here.

Comment:

A useful case to remember where Part 36 offers are concerned. If there is no written agreement as to an extension of time for payment following acceptance, Judgment can be entered if payment is not made.

Although it did not happen in the above case, the general rule is that the adverse costs which your client must pay are limited to the amount of damages and interest your client recovers, but this does not apply to all situations.

It should be remembered that Section 44.12 of the Amendment Rules allows the Defendant to apply for an order that its costs should also be taken out of the costs the defendant is due to pay your client  ie. out of your costs. This may arise where your client does not beat a Part 36 offer and would penalise you by depriving you of costs which you thought were secure. We can confirm that the Box Legal “ClaimSafe” After the Event Insurance policy provides cover in the above situation.

Rather helpfully, our After the Event Insurance does provide cover where;

• Your client fails to recover more than the defendant has previously offered (fails to "beat a Part 36 offer");
• The defendant obtains an order under Section 44.12 of the Civil Procedure (Amendment) Rules 2013 allowing it to set off its costs against the costs awarded in your client’s favour – the policy will pay the defendant’s costs so that they will not be deducted from the costs you are due to receive;

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