New rules promise clarity on issue of interest in Part 36 offers

Legislation to give litigators certainty about the issue of Part 36 offers and interest is to be introduced this spring, the government has announced. The rule change, effective from 6 April, is one of a raft of amendments to the civil procedure rules published yesterday as statutory instruments.

The judiciary says that, following inconsistency in case law, the Part 36 change provides clarity, particularly for litigants in person, that an offer to settle can include accrual of interest. Where it is silent on this point, the presumption will be that the offer is inclusive of all interest.

The exact legislation will state: ‘Where an offer to settle is made, whether under Part 36 or otherwise, it should specify whether or not it is intended to be inclusive of the cost of preparation of the bill and VAT. An offer which is made otherwise than under Part 36 should specify whether or not it is intended to be inclusive of interest. Unless the offer states otherwise it will be treated as being inclusive of all of these.’

The legislation essentially codifies last month’s Court of Appeal decision in King v City of London Corporation, where judges ruled it was not possible to make a valid Part 36 settlement offer exclusive of interest.

Among other changes brought about by the statutory instrument there is an amendment to the CPR’s overriding objective in relation to vulnerable witnesses following a recommendation from last February by the Civil Justice Council.

The amendment makes it clear that dealing with a case justly includes ensuring that the parties can participate fully, and that parties and witnesses can give their best evidence. It also deals with the costs provision for additional work or expense incurred due to vulnerability of a party or witness.

These changes represent the 127th practice direction update and have been signed off by the master of the rolls and courts minister.

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