A recent review of cases has shown that there was no unanimous judicial decision with regards to the approach of the Court when there is late acceptance of a Part 36 Offer.

Given this is an issue that is raised repeatedly, it may come as a surprise that there is considerable divergence of opinions as to whether a paying party faces any consequences when a receiving party’s Part 36 Offer has been accepted out of time.

A recent comprehensive judgment addressing a number of decisions on this topic dealt with by District Judges and Circuit Judges, was handed down by HHJ Tindal recently in Parsa v Smith [2017].

This case concerns the costs consequences of a Defendant accepting a Claimant’s Part 36 Offer out of time in a Fast Track case which has exited the Road Traffic Portal, normally governed by a Fixed Costs under CPR 45.

In the above matter, the Judge was firstly tasked with addressing Indemnity Costs ought to be awarded. The Judge was considering a number of cases and rejected the Claimant’s argument that indemnity costs ought to be awarded because of the Defendant’s conduct under CPR 44.2 and that there were no ‘exceptional circumstances’ under CPR 45.29J.

The late acceptance argument was thereafter considered along with CPR 36.13/20. CPR 36.13 assumes assessed costs for late acceptance of a Part 36 Offer, and that is not modified by the Portal-specific provision in CPR 36.20. This was a difficult argument to address given there is no guidance above the level of a Circuit Judge and contradictory approaches had been taken by different judges. It was therefore decided that this was a point that needed consideration of a High Court Judge. HHJ Tindal therefore granted permission to appeal but first had to come to his own decision on the point.

It was decided in this matter by HHJ Tindal that fixed costs continued to apply for the following three reasons:

  1. as ‘costs’ in CPR 36.13(5) can either mean assessed costs or fixed costs,
  2. and CPR 36.13(3) does not require costs under CPR 36.13(5) to be assessed on the standard basis,
  3. and CPR 36.13(5) does not distinguish between the basis of ‘costs’ in (a) and (b), the logical interpretation of CPR 36.13(5) in a case to which fixed costs applies under CPR 45.29A/B (as here), is that ‘costs’ in CPR 36.13(5) means ‘fixed costs’.

It therefore needs to be borne in mind on matters governed under CPR 45, that even when a Part 36 Offer is accepted out of time, this will not automatically result in fixed costs no longer applying.