Costs consequences following the variation of a Part 36 Offer
Burrett v Mencap Ltd (July 2014) Portsmouth County Court
Background
The Claimant claimed damages following three accidents at work. The Claimant alleged she sustained soft tissue injuries and subsequently developed fibromyalgia. Damages were claimed in excess of GBP 100,000.
On 19 July 2013 the Defendant made a Part 36 offer in the sum of GBP 15,000. This was not accepted by the Claimant.
The Defendant then instructed a medical expert to examine the Claimant and prepare a report. The Claimant was also placed under covert surveillance.
The medical expert found that the Claimant did not satisfy the criteria for fibromyalgia and doubted whether the Claimant was suffering any injuries as a result of the accident.
The surveillance revealed that the Claimant had grossly exaggerated the extent of her symptoms; there was an abundance of inconsistencies between the Claimant’s witness evidence and the footage obtained.
Accordingly, on 17 January 2014 the Defendant served notice of the Claimant amending the terms of the Part 36 Offer to GBP 2,500. The medical report and surveillance footage was served shortly thereafter.
Unsurprisingly the Claimant accepted the lower Part 36 Offer and made an application for determination of costs on the basis that the amended offer constituted a new Part 36 offer and she was therefore entitled to her costs to 7 February 2014 (the expiry of the relevant period; 21 days).
Findings
District Judge Ackroyd had to decide whether on amending a Part 36 Offer the relevant period began on the date the original offer was served or whether a fresh period began. CPR 36 and case law are both silent on this issue.
CPR 36.6(6) provides that “After expiry of the relevant period and provided that the offeree has not previously served notice of acceptance, the offeror may withdraw the offer or change its terms to be less advantageous to the offeree without the permission of the court”.
The Judge found that the costs consequences of the Part 36 offer ran from the date of the first offer. Accordingly the Claimant’s application was dismissed and the Claimant was required to pay the Defendant’s costs of the application. The Defendant had to pay the Claimant’s costs to 12 August 2013 and the Claimant had to pay the Defendant’s costs thereafter.
The Claimant was granted permission to appeal, although the Claimant did not proceed with it.
Key points for defendants
If a Defendant is to reduce an earlier offer, they should consider amending their original offer
The reduced offer should be stated to be by way of CPR 36.3(6) (i.e. as an amended offer)
Insurers who have made a Part 36 offer and then obtain evidence that a claim is exaggerated/fraudulent can reduce the sum on offer by way of variation without losing costs protection from the date the original offer expired
Claimants are likely to term any increased offer as a variation of the original offer as this falls within CPR 36.3(6) “less advantageous to the offeree”