Shaw v Merthyr Tydfil County Borough

Civil Procedure Rules Part 36 is a self-contained and highly prescriptive procedural code. Its specified costs consequences arise only where an offer complies with its mandatory formal requirements.

An offer does not become a Part 36 offer merely because it is headed as one. In particular, it must state on its face that it is intended to have the consequences of Section I of Part 36. Contractual principles of construction cannot supply a mandatory procedural requirement which the offer omits.

An offer which restricts acceptance after 21 days to agreement on costs or the court’s permission is inconsistent with the amended Part 36 regime. It is therefore not a compliant Part 36 offer.

The claimant brought a modest highways claim arising from a tripping accident. Before proceedings, her solicitors sent a letter headed “Part 36 Offer”, offering £2,000 plus costs. The letter said that, after 21 days, it could be accepted only by agreement on costs or with the court’s permission.

After the claimant ultimately succeeded on liability and recovered £6,510, she contended that she had beaten the 2009 offer and was entitled to Part 36 costs consequences. District Judge Morgan Jenkins held that the letter was not a Part 36 offer and made a costs order under the general costs jurisdiction. Permission to appeal was granted and the matter was transferred to the Court of Appeal.

The central issue was whether the 2009 letter complied with the mandatory formal requirements of Part 36.

1. Appeal dismissed unanimously. Lord Justice Maurice Kay gave the principal judgment. Lord Justice Elias and Lord Justice Pitchford agreed.

2. Part 36 is a carefully structured, self-contained procedural code. Although parties may settle outside it, an offer attracts its prescribed costs consequences only if it satisfies the mandatory requirements of rule 36.2. The requirements in rule 36.2(2), including rule 36.2(2)(b), are mandatory.

3. The claimant’s letter was not a Part 36 offer. Its heading did not cure its failure to state on its face that it was intended to have the consequences of Section I of Part 36. Further, its restriction on acceptance after 21 days was inconsistent with the amended withdrawal and acceptance regime in rule 36.3.

4. The court followed the analysis in Thewlis v Groupama Insurance Company Ltd [2012] EWHC 3 (TCC). The offer in that case was materially indistinguishable, and the term limiting acceptance after 21 days was inconsistent with Part 36.

5. Contractual construction could not cure the defects. The court distinguished C v D [2011] EWCA Civ 646, where the offer had formally complied with rule 36.2(2) and was capable of a reasonable construction which avoided treating it as time limited. Here, no construction could deem omitted mandatory requirements satisfied or disregard terms wholly inconsistent with Part 36.

• Court of Appeal (Civil Division) — dismissed the claimant’s appeal and upheld the conclusion that the 2009 letter was not a Part 36 offer.
• Cardiff County Court — on 17 July 2013, District Judge Morgan Jenkins held that the letter did not comply with Part 36 and made a costs order under the general costs jurisdiction.
• County Court appeal on liability — following an unsuccessful fast-track trial, the claimant succeeded on an appeal to a circuit judge on liability before the subsequent costs dispute.