Beating a Part 36 Offer in a non-money claim

The case of Rahman v Hassan & Others [2024] was a rare matter of a claimant (normally a friend or carer) proving that an individual had made a gift to them in contemplation of that individual’s imminent death (a “deathbed gift”), to the detriment of those (normally family members) named in an earlier Will.  

Though the law relating to deathbed gifts is itself worthy of legal analysis, discussion was also had as to the effect of Part 36 offers in non-money claims. This article does not seek to set out the exact financial sanctions of failing to accept such an offer, and reference should be had to CPR 36.17(3) and (4) on that point.  

Part 36 Offers – overview 

In general terms, CPR 36 allows for the creation of settlement offers “with teeth”. If a party (the “Offeree”) refuses to accept an offer, but then fails to achieve a result at trial which is “more advantageous” than the offer which was made, costs sanctions will most probably be imposed in line with CPR36.17(3) and (4) in recognition of the fact that the Offeree has, effectively, wasted everybody’s time and resources in continuing with a matter which could have been resolved at an earlier stage.  

The goal of the Offeror in submitting a Part 36 Offer is to cause the Offeree to be concerned that it might not “beat” the offer which was made at trial, and so settle to avoid the risk of the financial sanctions of CPR 36 being imposed against them. 

“More advantageous” 

The provisions of CPR 36 have been varied over the 25 years during which the concept has been in existence.   

An amendment had been made following the case of Carver v BAA Plc [2009]. In that matter the claimant beat the defendant’s Part 36 offer, but only by a sum equivalent to around 1% of the offer which had been made. In that matter, the Court of Appeal held that the result of the trial was not an outcome to the claimant which was “more advantageous” than the offer which had previously been made to her. The Court reasoned that no reasonable litigant would have embarked on a claim after the Part 36 offer had been made for such a small gain.  

In response, the current CPR 36(2) was implemented, stating that “…in relation to any money claim…“more advantageous” means better in money terms by any amount, however small”.  Beating a Part 36 offer by 1p constitutes the obtaining of a judgement which is “more advantageous” than the offer.   

That is the starting point, though the court retains the discretion not to apply the CPR 36 sanctions if it would consider it unjust to do so.  

Non-money claims 

The defendants in Rahman sought to argue that due to the wording of CPR 36.17(2), and regardless of the clear intention of CPR 36, the sanctions of CPR 36.17(4) could not apply to a non-money claim. The argument was not well formulated, and the judge had to make assumptions as to the basis of the defendant’s assertions. 

Whereas it appeared that the defendant was seeking to state that 36.17(2) asserted that only money claims and no other were part of the rule, the judge found that in non-money based claims the phrases “more advantageous” and “at least as advantageous” do not have a money-based meaning, but are to be construed in the ordinary sense of the words.  

In this case, the claimant had made a Part 36 offer to accept a house and the contents thereof in full and final settlement of their claim that the deceased had left them all their worldly goods as a deathbed gift. It was noted that the issue fee paid by the claimant on the claim form was for non-monetary relief (declarations, accounts and vesting orders) rather than a claim for a specific amount of money, which would have attracted a specific fee based on the amount being sought.   

The final judgement was that the claimant should have the house but not the contents thereof, as well as two flats which had been owned by the deceased. Even in the absence of any valuations the judge found himself “… in no doubt the two flats are worth far more than the furniture and personal effects of the house. Accordingly…the claimant has obtained…a judgement at least as advantageous as the Part 36 offer”. 

As such, the costs consequences of 36.17(4) were applied against the defendant. 

The Birketts view 

Reason prevailed in the judgement on this point, and any other outcome was always unlikely.  

In relation to what constitutes “non-monetary”, and regardless of the fact that the issue fee was for a claim for non-monetary relief, this was still an outcome which could be judged in monetary terms (the difference in value of the contents of the house, as opposed to two flats).   

Would the position have been different if the non-money claim had been for declaration as to the position of a boundary, or the exact route of a right of way for example? 

Though undoubtedly open to an element of discretion, a judge is unlikely to have any trouble in deciding whether the outcome of such a case is more advantageous to one party than any offer previously made, especially given that reference can be made to pleadings which would specify each party’s desired outcome, in the rare event that an outcome being “more advantageous” than a Part 36 offer is not as obvious as it was in Rahman.