Last minute offers under Part 36 and the effect of trial adjournment

Part 36 rules can be a minefield for practitioners at the best of times, but a recent case has served to demonstrate the need for parties to keep their offers under review throughout proceedings.

The Queen’s Bench Division recently handed down judgment in Reader v SPIE Ltd and another, a case concerning fiduciary duties on a seller during the sale of a business, Garside & Laycock Limited (G&L), by way of a share purchase agreement to SPIE Limited (SPIE).

Of interest to litigators more generally, on appeal Andrew Baker J considered the application of the costs consequences of a Part 36 offer (under CPR 36.17) where that offer is made within 21 days of trial, but the trial does not in fact commence within that period.


In this case, the share purchase agreement imposed liability on Paul Garside, director of G&L, if any of four key employees did not agree to SPIE’s standard employment terms, which included a less favourable bonus scheme, by 31 August 2012.

One of those key employees, John Reader, did not transfer until 11 September 2012 as part of a contract between him and G&L. By way of a side letter, this contract provided an enhanced bonus for the 2011/12 financial year of £186,202, up from £49,568. The other key employees entered into similar contracts, but Reader’s was by far the most substantial enhancement.

SPIE did not pay the enhanced bonus, prompting Reader to commence unfair dismissal proceedings and County Court proceedings for payment against SPIE, who brought in Garside as a third party. The transferee then settled Reader’s claim in 2016, leaving ongoing proceedings between SPIE and Garside for recovery of the settlement. Trial was listed for 30 January 2017.

On 12 January 2017, SPIE made a Part 36 offer to accept £10,000 plus costs. The offer specifically stated that the consequences of CPR 36.17(3) would not apply unless the relevant period was abridged to 14 days (CPR 36.17(7)(c)), and made reference to an intention to invite the court to use its discretion under CPR 44.2 to make an order in accordance with Part 36 principles.

The trial was then adjourned, and the matter not heard until 2018, with judgment being handed down only on 31 October 2019 and substantive orders made following a further hearing on 31 January 2020.

Garside was found to be liable for breach of fiduciary duty for failure to disclose the enhanced bonus terms agreed with Reader; effectively, he should have done more than he did to draw the enhanced bonus terms to the attention of SPIE. Garside was ordered to pay two thirds of the 2016 compromise with Reader and to pay SPIE’s costs.

The judge held that the Part 36 offer was ineffective because it was made less than 21 days before trial. It was not an offer made less than 21 days before the start of a trial within the terms of CPR 36.5(2) and so the relevant provision was CPR 36.5(1)(c). The Part 36 offer did not comply with the latter provision and therefore the Part 36 cost consequences did not apply.

Garside appealed on the grounds that the judge should have found that G&L gave informed consent to the payment to Reader.


On analysis, the judge found that the court had not found that Garside had behaved in an underhand fashion, and accordingly it was not open to the court to have found Garside acted in breach of fiduciary duty. He had been authorised by SPIE, in the knowledge of the proposed terms, to enter into the side letter with Reader. Garside had in fact properly disclosed the enhanced terms to SPIE who had approved them.

SPIE appealed the findings in respect of the Part 36 offer and this was dismissed by Andrew Baker J, but on a different analysis.

The judge identified that the Part 36 offer was made within 21 days of the trial as listed at the date of the offer. He then identified three characteristics which are capable of identification at the time the offer is made, namely:

“(1) given the context, the “relevant period” was the period defined by CPR 36.3(g), i.e. the period specified under CPR 36.5(1)(c) (or such longer period as the parties might agree), in the case of an offer made not less than 21 days before a trial, and otherwise the period until the end of the trial;

(2)  CPR 36.5(1)(c) generally requires an offer to specify a period of not less than 21 days within which the defendant will be liable for the claimant’s costs if the offer is accepted (which will then be the relevant period, see (1) above), but, by CPR 36.5(2), not so for an offer made less than 21 days before the start of a trial (the relevant period in relation to which is not set by CPR 36.5(1)(c), see (1) above again);

(3)  by CPR 36.17(7)(c), as part of the consistent whole that is the Part 36 regime, an offer made less than 21 days before the start of trial (to which therefore CPR 36.5(2) applies, and for which the relevant period is the period to the conclusion of the trial), is an offer to which the Part 36 Consequences do not apply “unless the court has abridged the relevant period”.”

Effectively, the judge stated that these issues were capable of identification when the parties are considering making and accepting or rejecting an offer.

The judge accordingly rejected the analysis of the lower court that concluded the adjournment invalidated the Part 36 offer.

Upon adjournment, an application for abridgement or a fresh Part 36 offer could have been made. The judge did not give his opinion on which might have been most appropriate as he did not have sight of the papers necessary to assess the monetary value of each option, but instead indicated that their failure to do anything could not be explained.

The judge was not inclined to retrospectively abridge the relevant period pursuant to CPR 36.17(7)(c), on the basis that “if it required an exercise of the court’s discretion to render Part 36 consequences applicable, then it was not right to exercise such a discretion in SPIE’s favour in this case”.


This is a case that shows the need for lawyers to keep their offers under review as proceedings develop. The offers are to be judged on the information available at the time of the offer, and accordingly the value and the basis for those offers should be considered as the circumstances of the proceedings and the parties change.

The simple remedy for a defective or erroneous Part 36 offer is to withdraw or amend that offer in accordance with CPR 36.9 and 36.10, and practitioners should not avoid availing themselves of these steps where necessary, since there can be no assumption that the court will step in to make good a defective offer.

This case also demonstrates the court’s willingness to interpret Part 36 in a manner that provides certainty to the parties at the time the offers are made. The appeal judgment makes clear that there can be no retrospective change to the interpretation of the offer by later factors that were unknown to the parties at that time. That approach must be correct.

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