Part 36 Offers

Question 1

What is the purpose of a Part 36 offer?

Answer 1

It is to incentivise parties to make or accept offers to settle

Question 2

Will part 36 offers be seen by the court?

Answer 2

No they will be marked without prejudice save as to costs which means that they will not be seen by court until trial of the substantive matters have been concluded and the court is considering what costs order to make

Question 3

What criteria must be met for a valid Part 36 offer?

Answer 3

• the offer must be in writing
• it must be clear that is pursuant to Part 36
• it must state whether it relates to the whole or part of the claim
• it must state whether it includes any counterclaim
• it must states a relevant period

Question 4

What is the relevant period for Part 36 offers?

Answer 4

Time period from the date offer is served and within which a party can accept the offer without any penalty consequences being applied to them.

Relevant period must be 21 days or more for offer being made

Question 5

What happens on the expiry of the relevant period for part 36 offers?

Answer 5

Offer can still be accepted but cost consequences will apply

Question 6

What questions should be asked in relation to part 36 offers?

Answer 6

• who made the offer?
• was it accepted, rejected or ignored by the other party?
• if it was accepted, was it accepted within or outside the relevant period?
• if it was ignored or rejected, when did the relevant period expire, and was the offer beaten, equalled or not beaten at trial?

Question 7

How is a part 36 offer accepted before trial?

Answer 7

By the party accepting serving a notice of acceptance on the party who made the offer

Question 8

What happens when a party accepts a part 36 offer before trial?

Answer 8

From the date of acceptance, proceedings are then stayed and the defendant must pay the claimant the sum agreed within 14 days.

Question 9

What happens if on accepting a part 36 offer, the defendant fails to pay the claimant in 14 days?

Answer 9

If the defendant fails to pay the claimant within 14 days, the claimant has the right to apply for judgment against the defendant

Question 10

What is the position as to costs when the part 36 offer made by the claimant is accepted within the relevant period?

Answer 10

D will pay the claimant’s costs of the proceedings to the date of the notice of acceptance on the standard basis

Question 11

What is the position as to costs when the part 36 offer made by the claimant is accepted outside the relevant period?

Answer 11

D will pay the claimant’s costs of the proceedings to the date of the notice of acceptance on the standard basis

Question 12

What is the position as to costs when the part 36 offer made by the defendant is accepted within the relevant period?

Answer 12

D will pay the claimant’s costs of the proceedings to the date of the notice of acceptance on the standard basis

Question 13

What is the position as to costs when the part 36 offer made by the defendant is accepted outside the relevant period?

Answer 13

D will pay the claimant’s costs of the proceedings to the date of the expiry of the relevant period on the standard basis.

The claimant will pay D’s costs from the date of expiry of the relevant period to the date of notice of acceptance on the standard basis

Question 14

What happens with regards to the part 36 offer made by the claimant is not accepted or rejected and where the claimant is successful at trial and is awarded a sum that is equal to or beats the value of their offer?

Answer 14

The court has discretion to award the claimant:

• an additional sum for damages of up to 10% for damages up to £500,000 and up to 5% for damages above £500,000, up to a maximum of £75,000
• up to the expiry of the relevant period, interest on damages awarded plus the defendant will pay the claimant’s costs on the standard basis
• from the expiry of the relevant period to the date of judgment, D could be liable to pay interest on damages awarded, and pay claimant’s costs on indemnity basis and interests on costs

Any penalty imposed must be just

Question 15

What happens with regards to the part 36 offer made by the claimant is not accepted or rejected and the claimant is successful at trial but is awarded a sum less than the value of their offer?

Answer 15

The part 36 offer will not have any effect and there will be no penalty imposed.

Likely d will be ordered to pay claimant’s costs on the standard basis, but this is because of the general rules relating to costs as opposed to any impact that the Part 36 offer has had

Question 16

What happens with regards to the part 36 offer made by the claimant is not accepted or rejected and the claimant loses at trial?

Answer 16

The part 36 offer will not have any effect.

Likely claimant will be ordered to pay defendant’s costs on the standard basis

Question 17

What happens with regards to the part 36 offer made by the defendant is not accepted or rejected and the claimant is successful at trial and awarded a sum that beats the value of the defendant’s offer?

Answer 17

The part 36 offer will have no effect and no penalties will be imposed

Question 18

What happens with regards to the part 36 offer made by the defendant is not accepted or rejected and the claimant is successful at trial but awarded a sum that is less than the value of the defendant’s offer?

Answer 18

Up to the expiry of the relevant period, the defendant will pay the claimant’s costs of the standard basis, but from expiry of relevant period to date of judgment, the claimant will pay the defendant’s costs on standard basis and will pay interest on those costs

Question 19

What happens with regards to the part 36 offer made by the defendant is not accepted or rejected and the claimant loses at trial (no judgment is awarded against the defendant)?

Answer 19

It is likely that the claimant will be ordered to pay the defendant’s costs on the standard basis plus interest on those costs, as they have failed to accept the defendant’s offer

Question 20

Why is there a good incentive for the defendant to make an early and reasonable part 36 offer?

Answer 20

As if the claimant wins but does not beat the offer then the claimant will pay the defendant’s costs from expiry of relevant period to date of judgment

Question 21

Can a party withdraw or amend a part 36 offer if it has been accepted?

Answer 21

No - can only do so if offer has not been accepted

Question 22

How does the offeror amend or withdraw their part 36 offer?

Answer 22

They must serve either a notice of withdrawal or notice of amendment on the other party

Question 23

What happens if the offeror wants to amend the part 36 offer before the expiry of the relevant period to make it more advantageous to the other party?

Answer 23

They can do this and a new relevant period would commence

Question 24

What happens if the offeror want to amend or withdraw the part 36 offer before the expiry of the relevant period to make it less advantageous to the other party and the other party has not accepted the offer yet following notice to amend/withdraw?

Answer 24

Then new offer or withdrawal takes effect from date of expiry of the original relevant period

Question 25

What happens if the offeror wants to amend or withdraw the part 36 offer before the expiry of the relevant period to make it less advantageous to the other party and the other party has accepted the offer following notice to amend/withdraw?

Answer 25

Then offeror needs permission of the court to withdraw or amend offer