New Carrots and Sticks: Proposals for Reform of CPR Part 36
| Published date | 01 March 2007 |
| Author | Daniel L. Ward |
| Date | 01 March 2007 |
| DOI | http://doi.org/10.1111/j.1468-2230.2007.00637.x |
LEGISLATION
New Carrots and Sticks:
Proposals for Reform of CPR Part 36
Daniel L.Ward
n
Part36 of the Civil Procedure Rulesis a n importantcomponent of Engli sh civil procedure’scosts
apportioning mechanism and its primary means of encouraging early settlement.Twochanges to
make Part36 more attractiveto defendants have been proposed. Firstly, public and insured defen-
dants would be exemptedfrom the requirement of payment intocourt. Secondly,the costs pro -
tection given to a claimantthat betters its Part 36 o¡er at trial ^ indemnity costs assessment and
enhanced interest ^ would apply to defendants’ o¡ers. It is argued that the payment into court
requirement should be abolished. Claimantsdo not reject settlement o¡ers overdoubts as to the
defendant’s solvency as this risk remains throughout the litigation. The requiremento nlydeters
defendants from using Part 36. Awarding indemnity costs under Part 36 creates perverse incen-
tives.Where bettering a Part 36 o¡er weakens costs scrutiny there is an additional incentive to
expend disproportionate resources in achieving a better result.
INTRODUCTION
A key objective of recent civil justice reform has been promotion of early and
cost-e⁄cient settlement of claims.
1
Part 36 of the Civil Procedure Rules (CPR)
is the procedural mechanism most squarelyaimed at this goal.It rewards litigants
who make reasonably-pitched settlement o¡ers, andpenalises litigantswho refuse
reasonable o¡ers, in the award of costs after trial.
Traditionally, defendants have had to make payment into court to take advan-
tage of Part 36 and its predecessor provisions.
2
Disquiet amongst institutional
defendants with the need for payment into court has produced case law develop-
ments that have signi¢cantly loosened this requirement.
3
These developments
have recentlybee n followedby the issue of a consultation paper (theConsultation
Paper) by the Department for Constitutional A¡airs (DCA).
4
The Consultation
Paper makes a number of proposals to reform the operation of CPR Part 36.
Responses to the consultation have broadly favoured the recommendations of
n
BA,BCL, Barrister-at-Law.
1 Lord Woolf, Accessto Justice: InterimReport to the LordChancelloron the CivilJusticeSystemin England and
Wales (London: HMSO, 1995), ch 2, para 7 (Interim Report); Lord Woolf, Access to Justice: Final
Report to the Lord Chancelloron the Civil Justice System in England and Wales (Lo ndon: HMSO,1996),
ch 9,para 1 (Final Report). CPR 1.4(2):‘Activecase management includes . . . (f ) helping the parties
to settle the whole or part of the case’.
2 For the pre-CPR history of the system: n 14 below.
3 See 283 below
4 Department for Constitutional A¡airs,Part 36 of the Civil ProcedureR ules: O¡ers to settle and payments
into court (2006) at http://www.dca.gov.uk/consult/civilproc36/cp0206.htm.
r2007 The Author.Journal Compilation r2007 The Modern Law ReviewLimited.
Published by BlackwellPublishing, 9600 Garsington Road,Oxford OX4 2DQ,UK and 350 Main Street, Malden, MA 02148, USA
(2007) 70(2) MLR278^293
the DCA,
5
and it seems likely the proposed changes will be made in the next
revision of theCivil Procedure Rules, expected to come into force in April 2007.
This article examines two of the main proposals: ¢rstly, that certain types of
defendant should be exempt from the requirement of backing o¡ers by payment
into court; and secondly, that indemnity costs should be awarded to a defendant
whose Part 36 o¡er/payment has been rejected. It is argued here that the require-
ment of payment into court serves no useful purpose ^ regardless of the category
of litigant ^ and deters the making of Part 36 settlement o¡ers. In respect of the
second proposal, it is suggested that expanded use of indemnity costs within the
Part 36 scheme will tend to create incentives to disproportionate expenditure on
litigation. It is arguedthat this side-e¡ect is not worth the added incentive to settle
created by imposing punitive consequences on a litigant who rejects an o¡er.
SETTLEMENTAS AN OBJECTIVE OF THE PROCEDURAL SYSTEM
In his Access toJustice: Interim Report, LordWoolf stated that ‘the philosophy of liti-
gation should be primarily to encourage early settlement of disputes’.
6
This is
sometimes treated as axiomatic; yet there are several reasons why settlement
might be thought to be desirable.The concern to alleviate the case-load of the
civil courts is often cited.
7
In quite a di¡erent vein, it is sometimes argued that
the quality of dispute resolution by negotiation and agreement is superior to for-
mal adjudication because parties have greater involvement in the process and/or
because outcomes can be tailored to the parties’particular needs.
8
However, in the current English context of prohibitively high legal costs pro-
motion of settlement is, ¢rst and foremost, a matter of sparing parties the crip-
pling expense of conducting litigation. This is certainly the context ^ the
conundrum of ‘access to justice’ ^ in which Lord Woolf recommended that
encouraging settlement should be a priority.
9
The level of costs remains a serious
problem und er the C PR.
10
In the circumstances, the objective of promoting dis-
posal without trial is, to a large degree,subsidiary to the goalof keeping downthe
expense of l itigation. This h as to be borne in mind in engineeri ng a procedural
mechanism designed to promote settlement.
5 Department of Constitutional A¡airs, Part36 of the CivilProcedureRules: O¡ersto settle and payments
into court ^ Response to Consultation (2006) at http://www.dca.gov.uk/consult/civilproc36/response
0206.pdf.
6Interim Report, n1 above,ch 2, para 7.
7CivilProcedure (TheWhite Book), vol 1 (London:Sweet & Maxwell, 2006), para 1.4.9; N Andrews,
EnglishCivilProcedure: Fundamentalsof the New CivilJusticeSystem(Oxford: Oxford UniversityPress,
2003),539.
8 C. Menkel-Meadow,‘Fora ndAgainst Settlement: Uses and Abuses of the Mandatory Settlement
Conference’ (1985)33 UCLA L Rev485; for doubts on the relative merits of settlement see: O. M.
Fiss,‘Against Settlement’ (1984) 93 Yale LJ 1073.
9Interim Report,n 1 above, ch 3, paras12^28, 37^39;H. Genn ‘Surveyof Litigation Costs’,Annex 3 to
Final Repor t, n1 above;S. Issacharo¡,‘TooMuch Lawyering,TooLittle Law’ in A.A.S. Zuckerman
and R. Cranston (eds) Reform of CivilProcedure^ Essays on Accessto Justice (Oxford:Oxford Univer-
sity Press,1995).
10 J. Peysnera nd M.Se neviratne,Themanagementof civil cases:the courtsand the post-Woolf landscape (Lon-
don: DCA, 2005),3, 61^70.
Daniel L.Ward
279
r2007 The Author.Journal Compilation r2007 The Modern Law ReviewLimited.
(2007) 70(2)MLR 278^293
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