Disputes (Settlement)

Question 1

What is Part 36?

Answer 1

It is a settlement offer made ‘without prejudice except as to costs’ in the prescribed form per CPR Part 36.

For an offer to fall under Part 36, it must be a genuine settlement offer and comply with Part 36 requirements.

Question 2

When can a Part 36 offer be made?

Answer 2

At any stage of proceedings, including before proceedings are issued.

Question 3

Who can make a Part 36 offer?

Answer 3

Either party can make a Part 36 offer.

Question 4

How does Part 36 differ from Calderbank Offers?

Answer 4

A Calderbank Offer is a written offer made ‘without prejudice except as to costs,’ which can be considered for costs after trial.

Part 36 offers, however, provide specific cost consequences and protection if accepted, and must comply with Part 36 rules.

Question 5

How to make a valid Part 36 offer?

Answer 5

• Be in writing
• State on its face that it is intended to have the consequences of Part 36
• Specify a period for acceptance of not less than 21 days within which the defendant will be liable for the claimant’s costs if the offer is accepted (Relevant Period)
• State whether it relates to the whole or to part of the claim or to an issue that arises in it
• State whether it takes into account any counterclaim
• Contain sufficient information to allow the offeree to consider the offer

If you are a defendant making a Part 36 offer to settle, it must also:

• (In the case of an offer to pay a sum of money) State that the offer is to pay a single sum of money
• State that the sum will be paid at a date not later than 14 days following the date of acceptance.

Question 6

What is the ‘relevant period’ for a Part 36 Offer?

Answer 6

A period for acceptance of not less than 21 days

Question 7

What does ‘in writing’ mean in relation to Part 36?

Answer 7

It means the offer must be made in writing, and a prescribed form (Form N242A) can be used but is not required.

Question 8

When is a Part 36 offer considered made?

Answer 8

A Part 36 offer is considered made when it is served on the offeree.

Pre-issue offers are effective once proceedings are issued or judgment is given.

Question 9

How to clarify a Part 36 offer?

Answer 9

Clarification can be sought within seven days of service to help the offeree properly consider the offer.

Question 10

How to withdraw a Part 36 offer?

Answer 10

The offer can be withdrawn or terms changed…

• If the offer is not accepted within the relevant period (at least 21 days), withdrawal/variation can be made within the relevant period and it will take effect at the end of the relevant period
• If the offer is accepted within the relevant period, court permission is needed for the withdrawal or variation
• Without court permission if the relevant period has expired.

Question 11

The relevant period has not expired.

The Part 36 offer has been accepted

Can I withdraw or change terms?

Answer 11

Since the offer was accepted within the relevant period, withdrawal or variation requires court permission

Question 12

The relevant period has not expired.

The Part 36 offer has not yet been accepted

Can I withdraw or change terms?

Answer 12

If made within the relevant period, the withdrawal or change will take effect at the end of the relevant period

Question 13

The relevant period has expired.

The Part 36 offer was not accepted

Can I withdraw or change terms?

Answer 13

The offer can be withdrawn or terms changed without court permission.

The offer can also be withdrawn automatically if the term states (e.g. time limit in the offer)

Question 14

Has the Relevant Period expired for a Part 36 offer?

Answer 14

If the relevant period has expired, the offer can be withdrawn or changed without court permission.

Question 15

How to apply for permission to withdraw or change a Part 36 offer?

Answer 15

The court must be satisfied that circumstances have changed and that it is in the interests of justice to grant permission.

Application must be made within seven days of acceptance notice.

Question 16

How to withdraw or change a Part 36 offer?

Answer 16

Serve written notice to the offeree or their legal representative.

If not withdrawn, the offer remains open for acceptance.

Question 17

What effect do counter-offers have on a Part 36 offer?

Answer 17

A counter-offer does not invalidate the original offer if it has not been withdrawn by written notice.

Question 18

How to accept a Part 36 offer?

Answer 18

Serve written notice of acceptance on the offeror. If the case is issued, the acceptance must also be filed. No prescribed form is required.

Question 19

What are the consequences of accepting a Part 36 offer?

Answer 19

• The claim will be stayed
• The defendant must pay the agreed sum within 14 days
• Costs consequences will follow based on when the offer is accepted.

Question 20

What are the cost consequences of acceptance within the relevant period of a Part 36 offer?

Answer 20

The claimant is entitled to costs of the proceedings up to the date of acceptance.

Question 21

What are the cost consequences of acceptance after the relevant period of a Part 36 offer

Answer 21

• Offerror is awarded costs up to the date of the relevant period
• Offeree pays the offeror’s cost for the period from date of expiry of the relevant period to the date of acceptance

Question 22

What are the cost consequences of acceptance made less than 21 days before trial

Answer 22

The court will determine liability for costs if the parties do not agree.

Question 23

What are the cost consequences of acceptance of an offer relating only to part of the claim?

Answer 23

If the claimant abandons the remainder of the claim, they are entitled to costs related to the accepted part only.

If not, the court will determine liability for the remaining claim.

Question 24

What is the overarching consequence of an unaccepted Part 36 offers at trial?

Answer 24

If a Part 36 offer is not accepted and the trial result is less favorable than the offer, the court will impose consequences on the party who failed to accept the offer.

Question 25

Defendant’s offer not accepted - Does it trigger any consequences?

Answer 25

If the claimant obtains a judgment less favorable than the defendant’s offer, the court will impose cost consequences on C.

Question 26

Defendant’s offer not accepted - What are the consequences?

Answer 26

The claimant will have to pay the defendant’s costs from the expiration of the relevant period, in addition to their own costs.

Question 27

Claimant’s offer not accepted - Does it trigger any consequences?

Answer 27

If the claimant obtains a judgment as favorable or better than their offer, the court will impose consequences on D.

Question 28

Claimant’s offer not accepted - What are the consequences?

Answer 28

The court may order **indemnity costs with interest **and an additional penalty based on the award, capped at £75,000.

Question 29

What if both parties make offers at the same time?

Answer 29

• If the court award the equal amount or more than Cs offer (also more than Ds offer) > Cs offer takes effect and Ds offer has no effect
• If the court award less than Cs offer, Cs offer has no effect. However, if the amount is less than Ds offer, Ds offer doesn’t take effect and costs are awarded under normal principles.
• If the court award the same or less than Ds offer, and C has not won the same or more than their own offer, Ds offer takes effect and Part 36 applies.

Question 30

What is a Consent Order?

Answer 30

Following settlement, a consent order has the effect of a normal court order but indicates the parties agree to the terms and the court need not hear both sides of the argument.

Once entered, a defence of estoppel may be available if fresh proceedings are brought regarding the matters.

Question 31

What is a Tomlin Order?

Answer 31

A two-part consent order

• Part 1 containing public court actions
• Part 2 containing confidential settlement terms.

It’s often used when parties want to keep terms confidential or include provisions beyond the court’s scope.

Question 32

How to put Consent & Tomlin Orders in Place?

Answer 32

Both orders need court approval.

Question 33

Recording settlement before proceedings are issued

Answer 33

If a dispute is resolved before proceedings are issued, a settlement agreement (contract) is made instead of a consent or Tomlin order.

The parties simply record their agreement in a settlement agreement - a contract

Question 34

What is Mediation?

Answer 34

A confidential process where an impartial mediator helps resolve disputes.

• If mediation fails, it remains confidential and cannot be used in court.
• The mediator has no authority to make any decision which is binding on the parties.

Question 35

What is Arbitration?

Answer 35

• A formal process where an impartial adjudicator’s decision is binding.
• It’s governed by the Arbitration Act 1996 and can be enforced through the High Court.
• If litigation proceedings are issued where a valid arbitration agreement exists, the proceedings can be stayed on the grounds that a valid arbitration agreement exists
• Arbitration awards can be enforced via the High Court (domestic awards) or New York Convention (cross-jurisdictional)
• There is no right of appeal to the court on a question of fact. However, a decision can be challenged per s.67-69 AA 1996 on three grounds (a) jurisdiction; (b) irregularity; or (c) points of law.

Question 36

What is ?Early Neutral Evaluation (ENE)

Answer 36

• An independent party provides a non-binding assessment of the dispute, which may influence settlement discussions.
• A judge can provide an ENE in relation to a dispute if the court is asked to do so per CPR 3.1(20(m)

Question 37

What is Expert Determination?

Answer 37

An independent expert resolves technical disputes and provides a binding contractual decision enforceable by the court.

Question 38

What is Conciliation?

Answer 38

An independent neutral helps parties resolve disputes in a facilitative manner, similar to mediation, but without formal binding decisions.

Question 39

How does ADR impact other CPR provisions?

Answer 39

• Pre-action protocols encourage ADR, and courts may want to know if ADR was considered before proceeding with litigation.
• Guidance accompanying Precedent H(cost budget) requires inclusion of elements re negotiation and settlement
• Directions Questionnaires require legal representatives to confirm they explained to clients the need to try to settle and the possible options and cost sanctions

Question 40

What is silence in the face of an offer to engage in ADR likely to be considered as?

Answer 40

Silence in response to an ADR offer is unreasonable. Parties should consider the offer, respond promptly, and state reasons if refusing.

Refusal to respond may result in sanctions

Question 41

What should a party receiving an ADR offer do?

Answer 41

• Consider merits of the offer
• Respond promptly in writing setting out reasons
• If it does not wish to engage explain in what circumstances it would agree to ADR
• Make a letter with ‘open’ or ‘without prejudice save as to costs’
• Consider making a note of any reasons for refusal that it is unwilling to express to the opponent at that time, in a form that could be shown to the court later if necessary.

Question 42

Will the court refuse to award costs to a successful party simply because they did not actively positively suggest ADR?

Answer 42

No - there is no need to positively suggest ADR.

Question 43

Can the court compel ADR?

Answer 43

The court cannot compel ADR! However they can penalise a party that unreasonably refuses to engage in ADR in costs

Question 44

Who can discontinue a claim?

Answer 44

Only a claimant can discontinue a claim.

Question 45

When can a claim be discontinued?

Answer 45

Any time

Question 46

What is the consequence of C discontinuing a claim

Answer 46

• It ends the proceedings in relation to the claim or part discontinued
• C is liable to pay Ds costs up to the point of discontinuance (or for the part up until discontinuance) unless the court orders otherwise.

Question 47

Is court permission needed for discontinuance? What is the procedure?

Answer 47

No court permission is needed unless there has been some sort of exceptional remedy issued such as an interim injunction or payment.

The procedure…

• File notice of discontinuance at court
• Serve a copy on every party
• Discontinuance takes effect from the date of service
• A cost order is deemed to have been made in Ds favour on the standard basis

Question 48

If a Part 36 offer relating to the claimant’s claim is made and the claim was stayed upon the terms of the offer - can the fact of the offer and/or the terms of the. offer be made known to the judge of the trial of the counterclaim?

Answer 48

Yes. Both the fact of the offer and its terms can be communicated to the trial judge

Although a Part 36 offer is generally treated as being made without prejudice save as to costs and must not be communicated to the trial judge until the case has been decided, the original claim has been decided and has been stayed following acceptance of the offer.

The counterclaim is a claim in its own right.

Question 49

Does a child (someone under 18) always need a litigation friend?

Answer 49

Whilst a child must ordinarily have a litigation friend to conduct proceedings, the court can make an order permitting a child to conduct proceedings without a litigation friend.

Question 50

What must happen if a Part 36 offer is accepted by a protected party?

Answer 50

If the person is a protected party, the settlement must be approved by the court before it is valid - the 14 day payment clock doesn’t commence until court approval.

Protected Party - e.g. child or (for example) a motorcyclist is seriously injured in a road traffic accident as a result of which he suffers permanent brain damage

Question 51

If there is a split trial (liability & quantum) and the defendant makes a part 36 offer to settle the whole claim (which is neither withdrawn or rejected) can the terms be made known to the trial judge?

Answer 51

No.

The defendant cannot disclose the exact terms of their Part 36 offer until the entire case is decided.

Question 52

Does a mediator have any authority to make a decision?

Answer 52

No. The mediator’s role is facilitative. The parties discuss and come to their own agreement/compromises

No decision - binding or otherwise is made by the mediator

Question 53

If there is a litigant in person, who must file a cost budget?

Answer 53

All parties except litigants in person must file and exchange budgets

Question 54

Are the costs of exploring funding options recoverable?

Answer 54

No

They are no costs of and incidental to the litigation

Question 55

How is a success fee calculated?

Answer 55

The success fee percentage is calculated by dividing the chances of losing by the chances of winning

For example, if the prospects of success on the balance of probabilities are 60%. the success fee is 40/60 = 66.67%

If the agreement states that there is a base charge of £4,000, then then success fee is 4000 x 66.67 = £2,667

Question 56

What does it mean to say that a Part 36 offer is treated as ‘without prejudice except as to costs’

Answer 56

The fact that a Part 36 offer has been made and the terms of such offer must not be communicated to the trial judge until the case has been decided

Question 57

C makes a Part 36 offer of £90,000

D replies with a Part 36 offer to pay £45,000.

Neither party accepts the other party’s offer.

C obtains a judgment for £70,000.

What is the court most likely to order in relation to costs?

Answer 57

The defendant to pay the claimant’s costs of the claim.

Part 36 has no consequences in these circumstances since neither party has done the same as, or better than, it offered.

Accordingly the general rule in relation to costs applies – the unsuccessful party should pay the costs of the successful party

Question 58

Is court’s permission required to instruct an expert witness?

Answer 58

No

A party may instruct as many experts as it likes - the court’s permission is not needed for the Intended Instructions.

However, the court’s permission is needed, however, to call an expert or rely upon a written expert’s report at trial

Question 59

Your client was unaware of an important Email at the time disclosure lists were served

They indicates to you that in no circumstances will it notify the other party of the Email, or disclose it.

What should you do?

Answer 59

You should cease to act.

In failing to disclose the document, the client is failing to comply with a disclosure obligation and is also misleading the court

You will therefore need to cease to act. You cannot notify the court or the other party of the email as this would be to breach the obligation of confidentiality owed to the wholesaler.