Chapter 12: Settlement

Question 1

1 Introduction to Part 36
1.1 The role of Part 36

Answer 1

The court and the CPR, including Part 36, encourage the parties to settle. Part 36 of the CPR:
* Describes a kind of offer that a party can make.
* Sets out consequences if an offer of that kind is made and accepted.
* Sets out different consequences if an offer of that kind is made and not accepted and the matter proceeds to trial (and those consequences depend on the outcome at trial).

Question 2

1.1 The role of Part 36

Answer 2

The court generally has a wide discretion when awarding costs, and will consider the behaviour of both parties, including their efforts to settle the case (CPR 44.2). However, the advantage of Part 36 is that the financial incentives contained within it are more certain than the court’s general discretion and go beyond what the court can generally order

Question 3

1.1 The role of Part 36

Answer 3

The central rationale behind Part 36 is that parties who make realistic proposals to settle actions should get some benefit if these are not accepted and it turns out, at trial, that they should have been accepted. A party who is ‘dragged to trial’ having tried to be reasonable should be
‘compensated’, and an unreasonable party who insists on a trial should be subject to a penalty. The ‘penalty’ stipulated in Part 36 generally takes the form of adjusting the costs, damages and/or interest

Question 4

1.1 The role of Part 36

Answer 4

Part 36 of the Civil Procedure Rules is a self-contained procedural code which governs offers made pursuant to the procedure set out in Part 36. The normal contractual rules of offer and acceptance do not apply – the rules that govern the Part 36 offer are set out within Part 36 itself.

Question 5

1.2 When can a Part 36 offer be made?

Answer 5

Part 36 offers can be made at any stage of proceedings, including before proceedings are issued.
A Part 36 offer can be made by either party.

Question 6

Example: When can a Part 36 offer be made?

Answer 6

The claimant can write to the defendant words to the effect: ‘I will accept £x from you to settle these proceedings’ and if the settlement offer conforms with certain other formalities (CPR 36.5) then it is a valid Part 36 offer. In a similar vein, the defendant can write to the claimant words to the effect: ‘I will pay £y to you to settle these proceedings’ and if the settlement offer conforms with certain other formalities (CPR 36.5 and 36.6) then it is a valid Part 36 offer.

Question 7

1.3 Part 36 offers contrasted with Calderbank offers

Answer 7

Part 36 is quite specific that nothing within Part 36 prevents a party from making an offer in whatever way it chooses, including by making a Calderbank offer.

Calderbank offer: An offer, usually communicated in writing, and written ‘without prejudice save as to costs’, such that it cannot be referred to the judge until costs are considered after
trial, but at that point can be relied upon. Such an offer does not need to comply with Part 36

Question 8

1.3 Part 36 offers contrasted with Calderbank offers

Answer 8

Although the specific consequences of Part 36 do not apply the court will have regard to a Calderbank offer when it exercises its discretion on costs (pursuant to CPR Part 44). However, if a party wants to avail itself of the specific cost consequences and protection afforded by Part 36 it must make the offer in compliance with the rules set out in Part 36.

Question 9

1.4 Summary

Answer 9

• Part 36 is a self-contained procedural code which describes a kind of offer, sets out consequences if an offer of that kind is made and accepted, and sets out different consequences if any offer of that kind is made and not accepted and the matter proceeds to trial.
• The aim is to encourage parties to make and accept reasonable offers by offering a system of financial incentives and penalties.
• Part 36 offers can be contrasted with Calderbank offers. The specific consequences of Part 36 do not apply to Calderbank offers, but the court will have regard to them when it exercises its discretion on costs.

Question 10

Making, varying, withdrawing and accepting Part 36 offers
2.1 Making a Part 36 offer
2.1.1 How to make a valid Part 36 offer

Answer 10

Within the rules the party making the offer is defined as the ‘offeror’ and the party receiving the offer is the ‘offeree’. The rules (CPR 36.5) state that the Part 36 offer must:
(a) Be in writing;
(b) Make clear it is made pursuant to Part 36;
(c) 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 (called the ‘relevant period’);
(d) State whether it relates to the whole or part of the claim; and
(e) State whether it takes into account any counterclaim.

Question 11

2.1.1 How to make a valid Part 36 offer

Answer 11

These rules apply to both claimants’ and defendants’ offers. There are two further rules that apply to defendants’ offers only (CPR 36.6):
(a) With limited exceptions, a Part 36 offer by a defendant to pay a sum of money in settlement of a claim must be an offer to pay a single sum of money.
(b) A defendant’s offer that includes an offer to pay all or part of the sum at a date later than 14
days following the date of acceptance will not be treated as a Part 36 offer unless the offeree
accepts the offer.

Question 12

Relevant Period

Answer 12

Relevant period: A period of not less than 21 days, specified in a Part 36 offer, within which the defendant will be liable for the claimant’s costs if the offer is accepted.

Question 13

Relevant Period

Answer 13

A part 36 offer can be made at any time, including before the issue of proceedings (CPR 36.7(1)). Note that Part 36 offers can be made by the claimant and the defendant – so the rules refer to offeror, which could be either the claimant or the defendant.
The wide definition of writing means that a party could make a Part 36 offer in a letter, and this is usually what takes place.

If a letter is used, then somewhere in the letter it should state that it is made pursuant to Part 36. Alternatively, there is a prescribed form, N242A, which if completed properly would mean that the
Part 36 offer would comply with the rules. If the offer complies with these rules then it will be a valid and proper Part 36 offer.

Question 14

2.1.2 When is a Part 36 offer made?

Answer 14

When it is served on the offeree (CPR 36.7(2)). The rules of service (CPR 6) apply. A party need not wait until proceedings are issued to make a
Part 36 offer as they can be made before proceedings have been commenced. This means that
pre-issue Part 36 offers have the usual Part 36 consequences (including recoverable pre-action
costs) upon acceptance after issue of proceedings or upon judgment being given. Where a Part 36 offer is both made and accepted before proceedings are commenced, the

Part 36 consequences of acceptance (CPR 36.13 and 36.14) considered in this section have no effect since
the consequences are dependent upon there being extant proceedings. The consequences of a Part 36 offer later in this section assume proceedings have been issued.

Question 15

2.1.3 How to clarify a Part 36 offer

Answer 15

The offeree can seek clarification of the terms of the offer, for example a breakdown of the components of the offer, within 7 days of service (CPR 36.8).

Question 16

2.2 Withdrawing a Part 36 offer

Answer 16

If the offer has already been accepted, it cannot be withdrawn, or its terms changed (CPR 36.9(1)).
If the trial has already started, the court’s permission is required to withdraw the offer. The offer can be withdrawn or its terms changed without the court’s permission if the relevant period has expired. The offer can also be withdrawn automatically if its terms state so. This allows the offeror to make an offer that is time limited (CPR 36.9(4)).

Question 17

2.2 Withdrawing a Part 36 offer

Answer 17

Any notice of withdrawal / change during the relevant period (CPR 36.10) will take effect at the end of the relevant period, if the offeree does not serve notice of acceptance during the relevant period. If they do serve notice of acceptance during the relevant period (despite the notice of
withdrawal / change) then the offeror can either allow the acceptance or apply to the court for permission to withdraw the offer or to change its terms.

Question 18

2.2 Withdrawing a Part 36 offer

Answer 18

This must be done within 7 days of the notice of acceptance or if earlier before the first day of the trial. The court may give permission for the original offer to be withdrawn or its terms changed if satisfied that there has been a change of circumstances since the making of the original offer and that it is in the interests of justice to give permission.

Question 19

2.2 Withdrawing a Part 36 offer

Answer 19

If a part 36 offer has been made and it is not withdrawn, two things can happen:
(a) It is accepted – you then need to know the consequences of the acceptance;
(b) It is not accepted – you then need to know whether the court will impose a ‘penalty’ after trial because the offeree did not accept the offer, and if so, what that penalty will / might be. We will next look at the situation where the offer is accepted. The alternative situation, where the
offer is not accepted, is addressed in a different section

Question 20

2.3 Accepting a Part 36 offer
2.3.1 How to accept a Part 36 offer
Assessment focus point

Answer 20

An offer remains open for acceptance unless it has been withdrawn (CPR 36.11(2)). This remains the case even after the relevant period has expired, unless offer is expressed to be
withdrawn automatically at the end of the relevant period.

Question 21

2.3.2 Consequence of accepting a Part 36 offer

Answer 21

Stay - The claim will be stayed and will not continue to trial – CPR 36.14(1)). Settlement sum - For any Part 36 offer which is, or includes, an offer to pay / accept a single sum
of money, the defendant has 14 days from acceptance to pay the settlement amount agreed unless otherwise agreed in writing (36.14(6)), failing which the claimant can enter judgment against the defendant (CPR 36.14(7)).

Question 22

2.3.2 Consequence of accepting a Part 36 offer

Answer 22

If the Part 36 offer does not include an offer to pay / accept a single sum of money, then in the event that a party fails to comply with whatever was agreed, the aggrieved party can apply to court to enforce the terms of the offer without the need to start separate court proceedings (CPR
36.14(8)). Costs - The cost consequences of acceptance depend on when the offer was accepted.

Question 23

Cost consequences of acceptance in the relevant period

Answer 23

If accepted before the expiry of the relevant period, the claimant is entitled to its costs of the proceedings up to the date the notice of acceptance was served on the offeror (CPR 36.13(1)). The rationale for this cost consequence of accepting an offer is that the claimant will receive a sum of money in settlement and has therefore ‘won’ its claim and so should be entitled to its costs of the proceedings. This is the case regardless of which party made the offer to settle.

Question 24

Cost consequences of acceptance outside the relevant period

Answer 24

If accepted after expiry of the relevant period, then (CPR 36.13(4)):
(a) The court will determine liability for costs unless the parties agree them; BUT
(b) The court must, unless it considers it unjust to do so, order that—
* the claimant be awarded costs up to the date the relevant period expired; and
* the offeree do pay the offeror’s costs for the period from the date of expiry of the relevant period to the date of acceptance.

Question 25

Cost consequences of acceptance outside the relevant period

Answer 25

The rationale is that the claimant has ‘won’ its claim in the sense that the defendant is making a payment to the claimant, and so the claimant should have its costs up to the end of the relevant period. However, from the end of the relevant period up to when the offer was accepted, the
offeree (which could be the claimant or the defendant) should pay the costs as a punishment for not accepting within the relevant period when it had the chance.

Question 26

Cost consequences: special rules where the offer was made less than 21 days before trial

Answer 26

Different rules apply where an offeree accepts an offer but the offer was made less than 21 days before trial. In this situation, if the parties do not agree liability for costs the court must determine liability (36.13(4)).

Question 27

2.3.3 Accepting a Part 36 offer which relates to part of a claim

Answer 27

It is possible to make a Part 36 offer which relates to part of a claim only (CPR 36.5(1)(d)). Special rules apply if such an offer is accepted. If, at the time of acceptance, the claimant abandons the remainder of the claim, the claimant will only be entitled to the costs relating to the part of the claim contained in the offer, unless the court orders otherwise (CPR 36.13(2)).

If, at the time of acceptance, the claimant does not abandon the remainder of the claim, the
liability for costs will be determined by the court, unless the parties can reach an agreement about the liability (CPR 36.13(4)).

Question 28

2.4 Summary

Answer 28

• Part 36 offers must be marked as such, be in writing, state whether they apply to the whole / part of claim / any counterclaim and state a period of at least 21 days when the defendant will be liable for the claimant’s costs if accepted.
• A Part 36 offer cannot be withdrawn after it is accepted, and there are limits on withdrawing it within the relevant period.
• After the end of the relevant period, a Part 36 can be withdrawn.

Question 29

2.4 Summary

Answer 29

• If a Part 36 offer is accepted, the claim is stayed and the settlement sum must usually be paid within 14 days.
• If the Part 36 offer was accepted within the relevant period, the claimant is entitled to its costs
  up to the date notice of acceptance was served on the offeror.
• If the Part 36 offer was accepted after the relevant period, then the court will determine costs (unless the parties agree) but unless unjust the court must award the claimant its costs up to the expiry of the relevant period and the offeror its costs from that point onwards.

Question 30

3 Consequences of unaccepted Part 36 offers at trial

Answer 30

The central rationale behind Part 36 is that parties who make realistic proposals to settle actions should get some benefit if these are not accepted and it turns out, at trial, that they should have been accepted. A party who is ‘dragged to trial’ having tried to be reasonable should be
compensated, and an unreasonable party who insists on a trial should be penalised.

Question 31

3 Consequences of unaccepted Part 36 offers at trial

Answer 31

Where a Part 36 offer is not accepted and the claim proceeds to trial, the court has to determine whether a penalty should be imposed, which (broadly) turns on whether a Part 36 offer should have been accepted. How the court approaches this question depends on whether the offer concerned is a claimant’s offer or a defendant’s offer. We will consider the situation where it is a defendant’s offer first.

Question 32

3.1 Defendant’s offer, not accepted

Answer 32

You need to consider two issues:
(a) Trigger: does the failure to accept the defendant’s offer trigger any consequences?
(b) Consequences: if so, what are those consequences?

Question 33

3.1.1 Trigger

Answer 33

The ‘trigger’ (CPR 36.17(1)(a)) is where “A claimant fails to obtain a judgment more advantageous than a defendant’s part 36 offer“

Question 34

More advantageous

Answer 34

‘More advantageous’ means better in money terms, however small the amount. So unless the result at trial is better in money terms than the defendant’s Part 36 offer, then the failure to accept that offer will have consequences. This is logical – if the result at trial is not ‘better’ than
the defendant’s offer, then that offer should have been accepted, and a penalty will be imposed on the claimant for not accepting it.

Question 35

More advantageous

Answer 35

When ascertaining whether the judgment is ‘more advantageous’, the comparison in money terms is made at the date of judgment. Since the Part 36 offer is deemed to include interest up to the end of the relevant period (CPR 36.5(4)), interest after that date is to be ignored. So, one must compare the sum set out in the Part 36 offer with combined quantum of judgment plus what the
judge awards by way of interest up to the end of the relevant period.

Question 36

3.1.2 Consequences

Answer 36

The ‘consequences’ or the penalty imposed on the claimant in these circumstances is that unless it considers it unjust to do so, the court must order that:
(a) The claimant pays the defendant’s costs from the date the relevant period expired; and
(b) Interest on those costs (CPR 36.17(3)). Obviously, the claimant must bear their own costs for this period as well.

Question 37

3.1.2 Consequences

Answer 37

Who pays whose costs in relation to the period before the relevant period expired? Part 36 does not tell us the answer, so the usual costs rules (CPR 44) apply. This means that if the claimant won and received something at trial, then the normal rule is that the defendant will pay the claimant’s costs in relation to this period. If the defendant won, then the normal rule is that the claimant will pay the defendant’s costs in relation to this period. But the court has a discretion on this issue.

Question 38

If the trigger is not met

Answer 38

If the ‘trigger’ is not met, for example because the claimant does better at trial than offered by the defendant then the defendant’s Part 36 offer has no effect.

Question 39

Example: Defendant’s Part 36 offer - final judgment for claimant less than or same as offer

Answer 39

Trigger: claimant has failed to obtain a judgment more advantageous than a defendant’s part 36 offer. Consequences apply.
Consequence: defendant gets:
(a) Its costs from expiry of the relevant period; and
(b) Interest on those costs;
Unless unjust (CPR 36.17(3) and (5)).
It is likely that the claimant will gets its costs up to the end of the relevant period under the normal costs rules (CPR 44.2), but this is at the court’s discretion. This is sometimes called a split costs order and so another way of viewing the consequences is set
out on the further diagram.

Question 40

Example: Defendant’s Part 36 offer - final judgment made in favour of
defendant

Answer 40

Trigger: claimant has failed to obtain a judgment more advantageous than a defendant’s part 36 offer. Consequences apply. Consequence: defendant gets:
(a) Its costs from expiry of the relevant period; and
(b) Interest on those costs;
Unless unjust (CPR 36.17(3) and (5)).
It is likely that the defendant will gets its costs up to the end of the relevant period as well under the normal costs rules (CPR 44.2), but this is at the court’s discretion

Question 41

Example: Defendant’s Part 36 offer - final judgment for claimant more than (or same as) offer

Answer 41

Trigger: claimant has not failed to obtain a judgment more advantageous than a defendant’s Part 36 offer. On the contrary, the claimant has obtained a judgment more advantageous than the
defendant’s offer. The defendant’s offer has no consequences.
Consequence: there are no consequences under Part 36.
It is likely that the claimant will gets its costs of the whole claim under the normal costs rules (CPR 44.2), but this is at the court’s discretion.

Question 42

3.2 Claimant’s offer, not accepted

Answer 42

We turn now to consider the situation when it is a claimant’s offer (rather than a defendant’s offer) which has not been accepted.
Again, you need to consider two issues:
(a) Trigger: does the failure to accept the claimant’s offer trigger any consequences?
(b) Consequences: if so, what are those consequences?

Question 43

3.2.1 Trigger

Answer 43

The ‘trigger’ (CPR 36.17(1)(b)) is where “Judgment against the defendant is at least as advantageous to the claimant as the proposals contained in a claimant’s Part 36 offer“. Where claimant does the same or better at trial than its own Part 36 offer, then the failure to accept that offer will have consequences. This is logical – if the defendant could have done just as well by accepting the offer, then a penalty will be imposed on the defendant for not accepting it.

Question 44

3.2.1 Trigger

Answer 44

Again, when ascertaining whether the judgment is ‘at least as advantageous’, the comparison in
money terms is made at the date of judgment and the approach to interest is as set out under
‘Defendant’s offer, not accepted’ above.

Question 45

3.2.2 Consequences

Answer 45

The penalty imposed on the defendant in these circumstances is that unless it considers it unjust
to do so, the court must order:
(a) Interest on the award at a rate not exceeding 10% above base rate for some or all of the period from the expiry of the relevant period. This is a penalty because the award of interest
is at a higher rate than the usual rate.

Question 46

3.2.2 Consequences

Answer 46

(b) The costs from the end of the relevant period are to be assessed on the indemnity basis (in contrast to the usual basis - the standard basis). Any assessment on the indemnity basis can result in significantly more costs being awarded to the claimant.
(c) Interest on those costs at a rate not exceeding 10% above base rate. Again this rate of interest is in excess of the usual rate.

Question 47

3.2.2 Consequences

Answer 47

(d) An additional amount based on a percentage of the award. The percentage being 10% up to
£500,000 and 5% above £500,000. The total amount is capped at £75,000 (CPR 36.17(4)). Where the claim does not have any money-claim within it (eg it is a claim for possession of property, without any damages claim) then the penalty in (d) above is calculated with the total
amount of costs awarded to the claimant used as the figure in place of the award. If the ‘trigger’ is not met, for example because the claimant does worse at trial than it offered to accept, then the claimant’s Part 36 offer has no effect.

Question 48

Example: Claimant’s Part 36 offer - final judgment for claimant more than offer

Answer 48

Trigger: claimant has obtained a judgment ‘at least as advantageous’ as its offer (in fact much more advantageous). Consequences apply. Consequence: claimant gets:
(a) Indemnity costs (from end of relevant period);
(b) Interest on those costs up to 10% above base rate;
(c) Interest on damages up to 10 % above base rate (from end of relevant period); and
(d) An additional amount (in this case) of £75,000.
Unless unjust (CPR 36.17(4) and (5)).

Question 49

Example: Claimant’s Part 36 offer - final judgment for claimant less than offer

Answer 49

Figure 12.10: Claimant’s Part 36 offer - final judgment for claimant less than offer
Trigger: claimant has not obtained a judgment ‘at least as advantageous’ as its offer. The claimant’s offer has no consequences. Consequence: there are no consequences under Part 36. It is likely that the claimant will gets its costs of the whole claim under the normal costs rules (CPR
44.2) (the claimant has still won the claim), but this is at the court’s discretion

Question 50

Example: Claimant’s Part 36 offer - final judgment made in favour of defendant

Answer 50

Figure 12.11: Claimant’s Part 36 offer - final judgment made in favour of defendant
Trigger: claimant has not obtained a judgment ‘at least as advantageous’ as its offer. The claimant’s offer has no consequences. Consequence: there are no consequences under Part 36. It is likely that the defendant will gets its costs of the whole claim under the normal costs rules
(CPR 44.2) (the defendant has won the claim), but this is at the court’s discretion.

Question 51

3.3 Unless unjust to do so

Answer 51

As already set out, when the Part 36 consequences are triggered, the penalties will be imposed
‘unless the court considers it unjust to do so’. When deciding what is unjust, the court will take into account:
(a) The terms of any Part 36 offer;
(b) The stage in the proceedings when the offer was made;
(c) The information available to the parties;

Question 52

3.3 Unless unjust to do so

Answer 52

(d) The conduct of the parties in relation to giving / refusing information for the purposing of
enabling the offer to be made / evaluated; and
(e) Whether the offer was a genuine attempt to settle (CPR 36.17(5)).
The court’s discretion under this provision is much more limited than the court’s general discretion under the normal costs rules (CPR 44).

Question 53

3.4 Claimant’s or defendant’s offer not accepted – special rules

Answer 53

Where an offer was made within 21 days of the trial, then even if the applicable ‘trigger’ set out above is satisfied, there will be no Part 36 consequences unless the court abridges the relevant period ie shortens it. This is fair because the relevant period (which is always at least 21 days) had not expired before trial. The offeree did not have a fair opportunity to accept the offer

Question 54

The Part 36 consequences also do not apply if:

Answer 54

(a) The Part 36 offer was withdrawn; or
(b) The Part 36 offer was changed so that its terms are less advantageous to the offeree and the offeree has beaten the less advantageous offer

Question 55

If a party wants to get the full costs protection of Part 36 then it needs to:

Answer 55

(a) Make the offer more than 21 days before trial. Indeed, the earlier the offer is made, the greater the potential benefits to the offeror; and
(b) Leave the offer open (not withdraw it).

Question 56

3.5 Open claimant’s and defendant’s offers effective at the same time

Answer 56

What if both the claimant and the defendant have made Part 36 offers, neither of which have been accepted when the matter goes to trial? You just need to consider each offer in turn. Consider the examples already provided where the defendant’s offer was £2mil and the claimant’s
offer was £3.5mil.

Question 57

3.5 Open claimant’s and defendant’s offers effective at the same time

Answer 57

If the judge awards, say, £4mil then as the claimant has won the same or more than their offer (of £3.5mil) the claimant’s offer takes effect and Part 36 will apply (CPR 36.17(4)). The defendant’s offer has no effect as the claimant has won more than the defendant’s offer (of £2mil)

Question 58

3.5 Open claimant’s and defendant’s offers effective at the same time

Answer 58

If the judge awards, say, £3mil, then neither offer has any effect. The claimant’s offer (of £3.5mil) has no effect as the claimant has not won the same or more than their own offer. The defendant’s offer (of £2mil) has no effect because the claimant has not won the same or less than the defendant’s offer. Costs are likely to be awarded in this situation under the normal principles (CPR 44.2).

Question 59

3.5 Open claimant’s and defendant’s offers effective at the same time

Answer 59

If the judge awards, say, £1mil, then as the claimant has won the same or less than the defendant’s offer (of £2mil), the defendant’s offer takes effect and Part 36 will apply (CPR
36.17(3)). The claimant’s offer has no effect as the claimant has not won the same or more than their own offer (of £3.5mil).

Question 60

3.6 Summary

Answer 60

Claimants’ offers and defendants’ offers have different consequences.
* You first need to consider whether an unaccepted offer triggers any consequences – this depends on comparing the sum awarded at trial to the sum contained in the offer.
* If the claimant fails to beat a defendant’s offer, the penalty is the claimant being ordered to
pay the defendant’s costs from the date the relevant period expired, and interest on those costs.

Question 61

3.6 Summary

Answer 61

• If the claimant does the same or better than its own offer, the penalty is the defendant being ordered to pay enhanced interest, indemnity costs and interests on those costs from the date the relevant period expired, plus a lump sum.
• All these consequences are ‘unless the court considers it unjust’ to impose them.
• All these consequences need to be seen in the context of the ‘normal’ costs rules in CPR 44 which will apply where Part 36 is silent or where there are no Part 36 consequences at all.

Question 62

4 Orders following settlement
4.1 Consent orders

Answer 62

Once a matter has been settled between the parties, it is usual for that settlement to be recorded
in a consent order. This has the effect of a ‘normal’ court order but indicates that the parties agree the terms it sets out, so that there is no need for the court to hear arguments from both sides (CPR 40.6 / 40B PD 3). There are two types:

Question 63

4.1 Consent orders

Answer 63

• A consent order based on contract. The consent order is evidence of the contract between the parties and, as such, will only rarely be interfered with by the court. Please see ‘Tomlin Orders’ on the next page.
• A consent order not based on contract. This consent order is not a contract but simply the parties agreeing terms of settlement in the claim. Such an order may be altered or varied by the court.

Question 64

4.1 Consent orders

Answer 64

Once a consent order has been entered into, a defence of estoppel may be available if fresh proceedings are brought regarding matters in the agreement, but this will depend on the exact wording of the agreement.

Question 65

4.2 Tomlin Orders

Answer 65

A Tomlin Order is a type of consent order. When settling a cause of action, your client might, depending upon the circumstances of its particular case, agree either a ‘standard’ consent order with the other party or a Tomlin Order.

A Tomlin Order is made up of 2 parts; the first part is the public part and the second, the confidential part that contains the detail of the agreement reached between the parties.

Question 66

A Tomlin Order is generally used when either:

Answer 66

• the parties wish for the key settlement terms to be confidential; and/or
• when the agreed settlement terms go beyond those that the court could generally order as part of the proceedings. This is why a Tomlin Order contains its schedule; such a schedule is not generally present in a ‘standard’ consent order

Question 67

Any direction of payment of money

Answer 67

Any direction for payment of money out of court or the payment and/or assessment of costs must be contained in Part 1, the main body of the order (40B PD 3.5). These directions require action by the court and must therefore be included in the ‘public part’ of the order (as opposed to the ‘private’ schedule).

Question 68

4.3 Putting a consent or Tomlin Order in place

Answer 68

Although consent orders and Tomlin Orders reflect the agreement of the parties, they still need the
court’s approval. Once the parties have agreed the content of the order, they will need to apply to the court to have the order made. If the court does indeed make the order, then the order takes effect like any other court order.

Sometimes settlement is reached during a period when the claim has been stayed: if that is the case, then the application for the consent / Tomlin Order is treated as an application also to have the stay lifted.

Question 69

4.4 Recording a settlement before proceedings are issued

Answer 69

It is generally preferable, and common, for parties to resolve their dispute without the need to
issue proceedings at all. If this happens there is no need for either a consent order or a Tomlin order – there are no proceedings to dispose of. Instead, the parties will record their agreement in a settlement
agreement – effectively a form of contract.

Question 70

4.4 Recording a settlement before proceedings are issued

Answer 70

A settlement agreement still needs to be very carefully drafted to ensure that it reflects the parties’ agreement. In particular, if one party is giving up the right to bring proceedings in relation to an alleged wrongdoing on the part of the other party, a great deal of care needs to be given to
define the scope of the dispute which is being settled (as there are no statements of case to define the scope of the dispute).

Question 71

4.5 Consent orders and interim applications

Answer 71

So far in this section, we have been considering settlement of a dispute as a whole. It is also possible to reach an agreement in relation to an interim application. For example, the claimant may need an extension of time for the exchange of witness statements. If the defendant is willing, the parties can usually agree an extension of up to 28 days without the need to apply to court (CPR 3.8(4)). However, if the claimant needs a longer extension, then an
application to court will usually be required, even if the defendant is willing to agree to the extension. In that scenario, the claimant would make an application to court in the usual manner but at the same time:

Question 72

4.5 Consent orders and interim applications

Answer 72

(a) A consent order would be drawn up recording the agreement (an extension of 35 days) and both parties would indicate their agreement to this consent order;
(b) The consent order would be filed at court – ideally when the application notice is filed, but
later if necessary;
(c) The applicant would usually invite the court to consider the application on paper and without a hearing.
The court is not obliged to approve such a consent order – this is a case management decision, but the fact that the parties are agreed makes approval much more likely.

Question 73

4.6 Summary

Answer 73

• Judgments and orders can be made after settlement by consent and at an interim stage before trial.
• Consent orders are signed by all parties and sealed by the court. They can be in the form of a 2-part Tomlin Order or a ‘regular’ order.
• A Tomlin Order has the advantage of allowing some terms of settlement to be kept confidential by inclusion in a confidential schedule to the main order.

Question 74

4.6 Summary

Answer 74

• A Tomlin Order also allows for greater flexibility in terms of settlement terms than a Consent
  Order.
• If a party wants to enforce the terms in a schedule to a Tomlin Order, a further order is required.
• Consent orders can also be used to indicate agreement in relation to an interim application to court.

Question 75

5 Discontinuance

Answer 75

This section explains discontinuance – a relatively uncommon way for a claim to end. Unlike the rest of the content of this chapter, discontinuance is not a form of settlement, but it is a way of
the claimant bringing its claim to an end if it does not wish to proceed to trial and where settlement is not an option, for example, the claimant has realised it has a weak case.

Question 76

5.1 The nature of discontinuance

Answer 76

Only a claimant can discontinue a claim. The claimant can do so at any time – the claimant is choosing not to pursue the claim against the defendant any further (CPR 38.2(1)).
The claimant can discontinue part of a claim rather than the whole claim (CPR 38.2(1)). The claimant can choose to discontinue the claim against only one defendant, or against all of the defendants (if more than one).

Question 77

Discontinuance has two major consequences:

Answer 77

(a) It ends the proceedings in relation to the claim / part of claim discontinued (CPR 38.5(2));
(b) The claimant is liable to pay the defendant’s costs up to the point of discontinuance, unless the court orders otherwise (if the claim is only discontinued in part, then the claimant is only liable for costs in relation to the part which is discontinued) (CPR 38.6).

Question 78

5.1 The nature of discontinuance

Answer 78

In exceptional circumstances the court’s permission is needed to discontinue proceedings – generally when the claimant has already received some sort of remedy, such as an interim injunction or an interim payment (CPR 38.2(2)).