Part 36 offers

Question 1

What is the purpose of a part 36 offer?

Answer 1

To incentivise parties to make or accept offers to settle

Question 2

What does marked ‘without prejudice save as to costs’ mean?

Answer 2

They will not be seen by the court until the trial of the substantive matters has concluded and the court is considering what costs order to make

Question 3

For a valid part 36 offer, what criteria needs to be met?

Answer 3

• the offer must be in writing
• it must be clear that it is made 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 state a relevant period

Question 4

What is a relevant period?

Answer 4

The time period from the date on which the Part 36 offer is served and within which a party can accept the offer without any penalty consequences being applied to them. It must be 21 days or more after which the offer can still be accepted but consequences will begin

Question 5

What happens if a party wishes to accept a part 36 offer?

Answer 5

They need to serve a notice of acceptance and from that date the proceedings are stayed and the defendant must pay the claimant the sum agreed within 14 days. If the defendant fails to pay the claimant has the right to apply for judgment against the defendant

Question 6

What is the effect if the claimant makes a part 36 offer and the defendant accepts inside the relevant period?

Answer 6

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

Question 7

What is the effect if the claimant makes a part 36 offer and the defendant accepts outside the relevant period?

Answer 7

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

Question 8

What is the effect if the defendant makes a part 36 offer and the claimant accepts within the relevant period?

Answer 8

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

Question 9

What is the effect if the defendant makes a part 36 offer and the claimant accepts outside the relevant period?

Answer 9

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

Question 10

What happens if the claimant makes a part 36 offer which is not accepted or is rejected by the defendant and the claimant then goes on to be successful at trial and is awarded a sum that is equal to or more than their part 36 offer?

Answer 10

The court has discretion to award the claimant:
- additional damages of up to 10% up to £500,000 and 5% over £500,000 up to a max of £75,000
- up to the expiry of the relevant period interest on damages plus the defendant will pay the claimant’s cost on the standard basis
- from the expiry of the relevant period to the date of judgment the defendant to pay interest on damages plus claimant’s costs on the indemnity basis and interest on costs

Question 11

What happens if the claimant makes a part 36 offer which is not accepted or is rejected by the defendant and the claimant then goes on to be successful at trial but is awarded a sum that is less than their part 36 offer?

Answer 11

The part 36 offer will have no effect and there will be no penalties imposed on either party. It is likely the defendant is ordered to pay the defendant’s costs on the standard basis due to the general rules

Question 12

What happens if the claimant makes a part 36 offer which is not accepted or is rejected by the defendant and the claimant then goes on to lose at trial?

Answer 12

The part 36 offer will have no effect and there will be no penalties imposed on either party. It is likely the claimant is ordered to pay the defendant’s costs on the standard basis due to the general rules

Question 13

What happens if the defendant makes a part 36 offer which is not accepted or is rejected by the claimant and the claimant is successful at trial and is awarded a sum that beats the part 36 offer?

Answer 13

The part 36 offer will have no effect and there will be no penalties imposed on either party. It is likely the defendant is ordered to pay the defendant’s costs on the standard basis due to the general rules

Question 14

What happens if the defendant makes a part 36 offer which is not accepted or is rejected by the claimant and the claimant is successful at trial and is awarded a sum that is less than the part 36 offer?

Answer 14

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

Question 15

What happens if the defendant makes a part 36 offer which is not accepted or is rejected by the claimant and the claimant loses at trial?

Answer 15

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 part 36 offer

Question 16

When can a party withdraw a part 36 offer?

Answer 16

If it has not already been accepted, the offeror must serve a notice of withdrawal or notice of amendment and it depends whether the relevant time period has expired

Question 17

Can the part 36 offer be withdrawn before the end of the relevant period?

Answer 17

• if the offeror wants to make it more advantageous to the other party yes and a new time period would begin
• if the offeror wants to make it less advantageous or withdraw it completely it depends whether the other party accepts the original offer between receipt of the notice of withdrawal and expiry of relevant time period
• if the part accepts the original offer between receipt of the notice of withdrawal and expiry then the offeror needs the permission of the court
• if the other party does not accept the original offer between receipt of notice of withdrawal and expiry then the new offer or withdrawal takes effect from the date of expiry of the original relevant period