The Court of Appeal has confirmed the comprehensive nature of the Part 45 fixed costs regime for RTA and EL/PL cases, clarifying that the fixed costs regime will continue to apply where a Part 36 offer has been accepted before trial, unless there are exceptional circumstances. Coulson LJ, with whom the other two judges agreed, also made it clear that there can be no presumption that late acceptance of a Part 36 offer will amount to an exceptional circumstance for the purposes of CPR 45.29J. Whether or not it does will depend on the facts of the case: “a long delay with no explanation may well be sufficient to trigger CPR 45.29J; a short delay with a reasonable explanation will not”.
The court differentiated between this situation and the situation where the claimant beats its own Part 36 offer at trial in a case which is subject to the fixed costs regime. In those circumstances, the claimant was entitled to indemnity costs rather than fixed costs because CPR 36.21 expressly reserved the costs consequences set out in CPR 36.17.
The confirmation that late acceptance of a Part 36 offer is not one of the situations in which fixed costs can automatically be avoided will come as a welcome relief to defendants. As the judge says, one of the purposes of the fixed costs regime is to provide certainty, and this judgment helps to preserve that certainty where a Part 36 offer has been made. In addition, the purpose of allowing a party to accept a Part 36 offer after the end of the relevant period was to encourage the acceptance of offers and the settlement of disputes. If parties knew that late acceptance would result in indemnity costs, they would be less likely to accept at all once the relevant period had expired. (Hislop v Perde [2018] EWCA Civ 1726 (23 July 2018).)
It is vital that Part 36 Offers are chased after its expiry and documented. In order to prove exceptional circumstances test, parties should make offers at the earliest opportunity after issuing a case and documents all unreasonable behaviour to demonstrate that those behaviour gives raise to exceptional circumstances.
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