part 36

Question 1

what are the advantages of a part 36 offer?

Answer 1

Costs: 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 – BUT 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

Rejected offer letter does not need to be disclosed to the court: A Part 36 offer is treated as ‘without prejudice except as to costs’ and 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 2

When can a Part 36 offer be made?

Answer 2

any stage of proceedings and before proceedings
offer can be made by either party

Question 3

‘Calderbank offer’

Answer 3

An offer usually communicated in writing, and written ‘without prejudice save as to costs’ which cannot be referred to the judge until costs are considered after trial – such an offer does not need to comply with Part 36

Question 4

Part 36 vs Calderbank offer

Answer 4

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.

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 5

Contents of a Part 36 offer – required for validity

Additional rules that only apply to Ds offers

Answer 5

• in writing or form N24A
• Make clear its pursuant to part 36
• specific period of at least 21 days within which D will be liable for Cs costs if the offer is accepted
• state is whole or part of the claim

Additional requirements for Ds offers:
- Offer to pay a single sum of money, limited exceptions
- Ds offer to pay all or part at a date later than 14 days following the date of acceptance will not be traded as a part 36 offer unless C accept the offer

Question 5

Contents of a Part 36 offer – required for validity

Additional rules that only apply to Ds offers

Answer 5

• in writing or form N24A
• Make clear its pursuant to part 36
• specific period of at least 21 days within which D will be liable for Cs costs if the offer is accepted
• state is whole or part of the claim

Additional requirements for Ds offers:
- Offer to pay a single sum of money, limited exceptions
- Ds offer to pay all or part at a date later than 14 days following the date of acceptance will not be traded as a part 36 offer unless C accept the offer

Question 6

can the offer be withdrawn if accepted?

Answer 6

No

Question 7

Can the offer be withdrawn if trial has already started?

Answer 7

The courts permission will be required

Question 8

Can offer be withdrawn if relevant period has expired?

Answer 8

If relevant period expired: The offer can be withdrawn, or its terms changed without the court’s permission. The offer can also be withdrawn automatically if its terms state so. This allows the offeror to make an offer that is time limited (cannot be before 21 days)

Question 9

Can offer be withdrawn if relevant period has not expired?

Answer 9

• If relevant period has not expired:
  o Any notice of withdrawal or change during the relevant period will take effect at the end of the relevant period if the offeree does not serve notice of acceptance during the relevant period.

o If offeree serves a notice of acceptance during the relevant period (despite the notice of withdrawal / change) then the offeror can either:
(1) allow the acceptance or
(2) apply to the court for permission to withdraw the offer or to change its terms. This must be done within 7 days of the notice of acceptance or if earlier before the first day of the trial.

Question 10

What must offeree do to accept a Part 36 offer?

Answer 10

1) Serve written notice of acceptance on the offeror (no prescribed form

2) Filed at court (only if the case is already issued)

Question 11

How long does the offeree have to accept the offer?

Answer 11

An offer remains open for acceptance unless it has been withdrawn. 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 12

what are the consequences of accepting a part 36 offer

Answer 12

• stay of claim
• settlement sum:
• If the offer includes an offer to pay or accept a single sum of money – the defendant has 14 days from the acceptance to pay the settlement amount unless otherwise agreed in writing, and if the defendant does not pay within this time, the claimant can enter judgment against the defendant

If the offer does not include an offer to pay this, then if 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

• costs:
  The cost consequences of acceptance depend on when the offer was accepted

Question 13

what is the cost consequence If acceptance is within the relevant period

Answer 13

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 – This is the case regardless of which party made the offer to settle.

Question 14

what is the cost consequence If acceptance is outside the relevant period

Answer 14

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:
i. the claimant be awarded costs up to the date the relevant period expired; and
ii. the offeree pays the offeror’s costs for the period from the date of expiry of the relevant period to the date of acceptance

Question 14

what is the cost consequence If acceptance is outside the relevant period

Question 15

what are the Special rules – if the offer was made less than 21 days before trial

Answer 15

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

Question 16

Special rules – if the offer was made less than 21 days before trial

Answer 16

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

Question 17

Accepting a Part 36 offer which relates to part of a claim – cost consequences

If, at the time of acceptance, the claimant abandons the remainder of the claim

Answer 17

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

Question 18

If, at the time of acceptance, the claimant does not abandon the remainder of the claim

Answer 18

the liability for costs will be determined by the court, unless the parties can reach an agreement about the liability

Question 19

Defendants offer- A claimant fails to obtain a judgment more advantageous (in money terms) than a defendant’s part 36 offer’

what are the consequences?

Answer 19

he penalty imposed on the claimant that does not accept a defendant’s offer is that the claimant must pay the defendant’s costs after the relevant period expired with interest (unless the court considers it unjust).

• costs after relevant period expires + interest on those costs: claimant pays its own costs + defendant’s costs
• costs before relevant period expires: the usual costs rules apply (CPR 44)

-if the claimant wins at trial, the defendant will pay the claimant’s costs in relation to this period but if the defendant won then the claimant pays the defendant’s cost in relation to this period (but the court has discretion on this issue)

-the costs can be ‘split’

Question 20

Claimant part 36 offer

Judgment against the defendant is at least as advantageous to the claimant as the proposals contained in a claimant’s Part 36 offer

Answer 20

The penalty imposed on the defendant is that the court must order (unless unjust):

1. Indemnity costs- from the expiry of the relevant period
2. Interest on those cost up to 10% of base
3. Interest on damages up to 10%
4. Additional amount, depending on the sum

£500k or < interest at 10%
£500k> interest at 5%

Question 21

claimant offer, the claimant has not obtained a judgment a least advantageous as its offer

Answer 21

No consequences

Question 22

what would be considered under ‘ unless unjust’

Answer 22

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
D) The conduct of the parties in relation to giving / refusing information for the purposing of enabling the offer to be made / evaluated
E) Whether the offer was a genuine attempt to settle

• The court’s discretion under this provision is much more limited than the court’s general discretion under the normal costs rules

Question 23

when may the part 36 consequences not apply?

Answer 23

• 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 i.e., 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.
• The Part 36 consequences also do not apply if:
  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.
• If a party wants to get the full costs protection of Part 36 then it needs to:
  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 24

Ds offer, C rejects, C loses at trial

Answer 24

• C will pay Ds cost until expiry period
• C will pay Ds costs post expiry plus interest