The Civil Procedure (Amendment) Rules 2021

New CPR rules are coming into force on the 6^th April 2021 with the intention to amend the rules surrounding Part 36 offers and the accrual of interest after acceptance.

The rule introduces CPR 36.5(5), which reads:

“(5) A Part 36 offer to accept a sum of money may make provision for accrual of interest on such sum after the date specified in paragraph (4). If such an offer does not make any such provision, it shall be treated as inclusive of all interest up to the date of acceptance if it is later accepted.”

A further clause will be included in CPR PD 47:

“9. 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. (A Part 36 offer is treated as inclusive of interest: see CPR 36.5(4).)”

Origin of the new rules

The new rules essentially make statute the various Court of Appeal decisions that have recently been heard.

1. In King v City of London Corporation, it was held that it was not a valid Part 36 offer if the offer was made exclusive of interest.
2. In Calonne Construction Ltd v Dawnus Southern Ltd [2019] EWCA Civ 75, it was held that a Part 36 offer which provides for interest to be accrued after the expiration of a Part 36 offer does not invalidate the offer. The court went further to say however that unless the accrual of interest is not provided for then the offer will not have the costs consequences set out in CPR36

Consequences of the new rules

The new provision means that where a Part 36 offer is accepted late, in order to claim interest after the Part 36 offer expired, there must be an express provision allowing interest to be accrued.

Therefore, in order to be a valid Part 36 offer, the following must apply:

1. Be in writing
2. Is made pursuant to Part 36
3. Specify a period of not less than 21 days within which the Defendant will be liable for costs in accordance with rule 36.13 or 36.20 if the offer is accepted.
4. State whether the offer is in relation to the whole claim or part of it/specific issue
5. State whether it takes into account any counterclaim
6. A Part 36 offer is intended to be inclusive of interest where the offer is accepted within 21 days (CPR36.5(4)).

7. After the offer is expired, the Part 36 offer must specifically state that interest will accrue from the expiration of the relevant period up to the date that the offer is later accepted.

8. Where the Part 36 offer is silent on the issue of interest, then the original Part 36 will be treated as being inclusive of all interest up to the date of acceptance.

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