Part 36 offers MCQs Flashcards
Frank drove into the rear of Sally’s stationary vehicle, causing serious injuries to Sally. Frank (the defendant) has made a Part 36 offer of £30,000 in settlement of the claim issued by Sally (the claimant). The trial is fixed for 3 months’ time.
Which ONE of the following statements in relation to this Part 36 offer is correct?
Assuming it is a valid Part 36 offer, Frank’s offer will apply to the costs of any subsequent appeals as well as the costs of the current proceedings if that is specified in the offer.
Assuming it is a valid Part 36 offer, Sally could accept the offer during the course of the trial of the action without needing to obtain the permission of the court.
Assuming it is a valid Part 36 offer, If Sally accepts the offer within the relevant period, she will be entitled to her costs up to the date on which notice of acceptance was served.
If the offer did not specify a period of not less than 21 days within which Frank will be liable for Sally’s costs if the offer is accepted it would not be a valid offer but this would be a technical defect capable of rectification.
Assuming it is a valid Part 36 offer, If Sally accepts the offer within the relevant period, she will be entitled to her costs up to the date on which notice of acceptance was served.
See CPR 36.13(1) this is the automatic costs position. Costs are assessed on the standard basis if not agreed.
William has issued a breach of contract claim against Stuart in the County Court for damages of £38,000. Stuart has filed a defence in respect of the whole claim which has been just been allocated to the multi-track with a trial fixed in 5 months. Costs budgets have shown that costs to date are now £8,000 including pre-commencement costs. After a conference Stuart provides instructions that, although he maintains that there is a good defence to part of the claim, he is willing to pay £12,000 in respect of damages and £3,000 in respect of costs but no more than those sums.
What is the best advice to give Stuart in light of his specific instructions ?
Make a Part 36 offer of £15,000.
It is not advisable to make any offers until after disclosure and exchange of witness statements.
Make a Part 36 offer in the sum of £12,000
Make a Calderbank offer of £15,000 in full and final settlement of William’s claim for damages and costs.
Make a Calderbank offer of £15,000 in full and final settlement of William’s claim for damages and costs.
This is the best advice in light of instructions -see CPR 36.1 and commentary at 36.2.1. Nothing in Part 36 prevents a party from making an offer to settle in any way that the party chooses. However, if a party wishes the offer to have the specific Part 36 costs consequences, the offer must comply with the formal requirements set out in CPR 36.5. In this case, given that Stuart is the defendant, he would also have to comply with the requirements set out in CPR 36.6. Were William to accept that offer within the relevant period, William would be able to recover from Stuart his costs in the proceedings (including any recoverable pre-action costs) up to the date on which the notice of acceptance was served on the offeree (here, Stuart).
Those costs consequences do not automatically attach to a Calderbank offer. Instead, the court may take into account a Calderbank offer when exercising its general discretion on costs and this is something Stuart must be advised on before making the offer and that it does not give the same level of costs protection as Part 36 can afford.
Clinton Hart is bringing a claim for personal injury against Simon Malik. The claim arises out of a road traffic accident. The case is issued in the High Court. Simon has admitted liability; the only matter in issue is the amount of damages.
Clinton alleges that he has suffered permanent injuries, he cannot work, has mobility issues and needs a significant amount of care. Clinton’s medical evidence supports this and on full valuation the claim would be worth in the region of £1 million.
Simon has made a Part 36 offer of £750,000. The relevant period is 21 days. This offer reflects Simon’s solicitor’s valuation of the claim as they feel that the care element of the claim is overvalued. The Part 36 offer was made 10 days ago and has not yet been accepted.
Today instructing solicitors have received an e-mail with an attachment. The attachment is a recording of Clinton working on a building site run by GDK Construction. He is captured laying bricks and carrying patio slabs. There is no evidence of any injury. The sender is willing to provide a witness statement in support.
What is the best advice to give Simon’s solicitors on the course of action to adopt in light of the new evidence ?
Wait until the end of the relevant period and then serve notice of withdrawal which will take effect on service,
Make an immediate application for permission to withdraw the offer.
Immediately serve a notice of withdrawal of the offer. If Clinton then serves notice of acceptance Simon should apply to the court for permission to withdraw the offer within 7 days of acceptance.
Immediately serve a notice of withdrawal of the offer which will take effect on service and will preclude Clinton from accepting the offer.
Immediately serve a notice of withdrawal of the offer. If Clinton then serves notice of acceptance Simon should apply to the court for permission to withdraw the offer within 7 days of acceptance.
This is the best advice. Simon’s Part 36 offer of £750,000 is now very likely to be too high . As soon as Simon serves the recording evidence Clinton may very well accept the offer. In order to prevent acceptance Simon needs IMMEDIATELY to serve a notice to withdraw the offer. Clinton then has a choice whether to accept the offer or allow the withdrawal to take effect. If Clinton does not accept the offer at that stage the offer will be withdrawn at the expiry of the relevant period. If Clinton does accept the Part 36 offer then Simon will need to apply to the court to withdraw the offer within 7 days of Clinton’s notice of acceptance, see r.36.10 .
Albert Bland is bringing a claim against Gladbury Kitchens Limited (“GKL”) for breach of the implied terms of reasonable care and skill and satisfactory quality contained in the contract between the parties. Albert alleges there were problems in respect of GKL’s construction of his kitchen extension and also that the kitchen units were faulty.
Albert’s claim, as pleaded, amounts to £35,000. GKL has made a Part 36 offer of £25,000. No Part 36 offer was made by Albert. GKL’s offer was not accepted by Albert and the matter proceeded to trial. At trial, the judge awarded Albert £35,000, which sum is calculated as follows: £30,000 by way of damages, £2,500 by way of interest up to the end of the relevant period and £2,500 interest after the end of the relevant period. You represent Albert. There are no conduct issues in respect of wither party.
In these circumstances what is the MOST APPROPRIATE cost order to request from the judge on behalf of Albert?
That as Albert has obtained a judgment more advantageous than GKL’s Part 36 offer the usual rule on costs apply, which in the absence of any other factors, would be that the GKL will be ordered to pay Albert’s costs on the standard basis.
That the court must, unless it is unjust to do so, order that Albert is entitled to interest on the whole or part of the £35,000 at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired, costs on the indemnity basis from the date the relevant period expired, interest on those costs at 10% above base rate and an additional amount of £3,500.
That as Albert has obtained a judgment more advantageous than GKL’s Part 36 offer the usual rule on costs apply, which in the absence of any other factors, would be that the GKL will be ordered to pay Albert’s costs on the indemnity basis.
That the court must, unless it is unjust to do so, order that GKL is entitled to costs including recoverable pre-action costs from the date on which the relevant period expired and interest on those costs.
That as Albert has obtained a judgment more advantageous than GKL’s Part 36 offer the usual rule on costs apply, which in the absence of any other factors, would be that the GKL will be ordered to pay Albert’s costs on the standard basis.
This is the most appropriate costs order. Albert, as the claimant, has won the case. GKL’s Part 36 offer (i.e. the defendant’s Part 36 offer) has no effect. Albert was correct not to accept GKL’s offer as he has achieved significantly more than the Part 36 offer at trial. There are no cost consequences arising under CPR Part 36 but costs are governed by Part 44 and in particular r.44.2. Given that Albert is the successful party, has been wholly successful and there are no conduct it is appropriate that GKL be ordered to pay his costs to be assessed on the standard basis if not agreed.
Four weeks before trial Herbert, in his proceedings against Gladbury Hospital NHS Trust (‘Gladbury’), made a Part 36 offer to Gladbury proposing that Gladbury pays £15,000 in settlement of the claim to him. Gladbury rejects this Part 36 offer and the claim proceeds to trial, where judgment is given for Herbert in the sum of £20,000.
Which one of the following correctly states the consequences of Gladbury’s rejection of Herbert’s offer?
Gladbury’s rejection of the offer will have no Part 36 effect as the offer was made less than 30 days before trial. As the successful party in the proceedings Herbert will be entitled to his costs of the proceedings plus interest on those costs.
As Herbert been awarded more than his offer, unless such order is unjust, Gladbury will be ordered to pay interest of up to 10% above base rate on the damages and costs on the indemnity basis (with interest on those costs) from the date on which the offer was served, together with an additional amount of £2,000 .
Gladbury’s rejection of the offer will have no Part 36 effect because Herbert has been awarded more than he himself offered. As the successful party in the proceedings Herbert will be entitled to his costs of the proceedings plus interest on those costs.
As Herbert has been awarded more than his offer, unless such order is unjust, Gladbury will be ordered to pay interest of up to 10% above base rate on the damages and costs on the indemnity basis (with interest on those costs) from the date on which the relevant period expired, together with an additional amount of £2,000 .
As Herbert has been awarded more than his offer, unless such order is unjust, Gladbury will be ordered to pay interest of up to 10% above base rate on the damages and costs on the indemnity basis (with interest on those costs) from the date on which the relevant period expired, together with an additional amount of £2,000 .
Herbert has obtained judgment at least as advantageous as his own offer and therefore CPR 36.17 (1) (b) and (4) applies. The additional amount would be 10% of the damages awarded as these do not exceed £500,000. Note that the costs up to the end of the relevant period are governed by the court’s discretion in CPR 44.2 and the court is likely to follow the general rule and order that Gladbury pay Herbert’s costs.
Question 3
A claimant makes a Part 36 offer of £40,000 on 1 March to the defendant to settle their
dispute. The offer expires on 22 March (Day 21). The defendant rejects the offer and the
matter proceeds to trial. After considering the evidence, the judge finds in the claimant’s
favour and damages are awarded against the defendant in the sum of £45,000.
Which of the following is a consequence that will apply under Part 36?
A Unless it is unjust to do so, interest will be payable on the claimant’s costs from 23
March onwards at a rate of 1% above base rate.
B Unless it is unjust to do so, interest will be payable by the defendant on the damages
awarded at a rate of up to 10% above base rate from the date of cause of action.
C Unless it is unjust to do so, a split costs order will be made so the defendant is ordered
to pay the costs up to 22 March and the claimant pays the costs from 23 March up to
and including the trial.
D Unless it is unjust to do so, the defendant will pay the claimant’s costs on the standard
basis up to 22 March and thereafter, from 23 March, on the indemnity basis.
E Unless it is unjust to do so, an additional amount of £2250 will be payable by the
defendant to the claimant.
Answer
Option D is correct. Where the claimant secures a judgment which is at least as advantageous
as the claimant’s own Part 36 offer (as here), one of the consequences of the defendant not
accepting the offer is that it will become liable to pay the claimant’s costs on the indemnity
basis from Day 22 onwards, unless it is unjust to do so.
Option A is wrong. Although it is correct to state that one consequence of the claimant
securing a more advantageous judgment is that the defendant will be liable to pay interest
on the claimant’s costs from Day 22 onwards, that interest is payable at a rate of up to 10%
above base rate.
Option B is also wrong because the penalty interest of up to 10% above base rate does
not run from the date of cause of action, but from Day 22. Option C does not apply to this
scenario. A split costs order would be relevant if the defendant had made a Part 36 offer
which the claimant failed to beat. Furthermore, the additional amount payable on the
damages is 10% for the first £500,000 awarded, and so the correct figure is £4500 and not
£2250 as stated in Option E. This is only equivalent to an additional amount of 5% of the
damages.
A defendant in a breach of contract claim made a Part 36 offer for £70,000. The relevant period for that offer expired on 1 February, two months before trial. The claimant replied with its own Part 36 offer in the sum of £110,000. The relevant period for that offer expired on 1 March, one month before trial. No other offers were made. Neither offer was accepted and the matter went to trial. The court found in favour of the claimant and awarded the claimant the sum £95,000 (including a total of £1,000 in relation to interest).
On the information provided what would be the usual order for the Court to make in relation to costs?
Select one alternative:
The claimant to pay the defendant’s costs of the claim on the standard basis.
The defendant to pay the claimant’s costs on the standard basis up to 1 February and then no order as to costs for the period from 1 March onwards.
The defendant to pay the claimant’s costs on the standard basis up to 1 February and then the claimant’s costs together with an additional sum and enhanced interest and costs from 1 February onwards.
The defendant to pay the claimant’s costs of the claim on the standard basis.
The defendant to pay the claimant’s costs on the standard basis up to 1 February and then the claimant’s costs together with an additional sum and enhanced interest and costs from 1 March onwards.
The defendant to pay the claimant’s costs of the claim on the standard basis.
This question relates to ‘Part 36 and other offers’ and ‘inter partes costs orders (interim and final)’. In particular, this question is about the general rule in relation to costs and the costs consequences of Part 36 offers. Part 36 consequences apply where either: (a) a claimant fails to obtain a judgment more advantageous than a defendant’s Part 36 offer; or (b) judgment against the defendant is at least as advantageous to the claimant as the proposals contained in a claimant’s Part 36 offer (CPR 36.17). Neither of these ‘triggers’ applies here – the judgment was more advantageous than the defendant’s offer, and not as advantageous as the claimant’s offer. In these circumstances, the ‘general rule’ in relation to costs applies – the unsuccessful party pays the costs of the successful party. The claimant is the successful party because the claim has been successful. The question asked what the ‘usual order’ would be, but in any event, there is nothing on the facts to justify departing from the general rule. The distractors are all wrong because they either misapply the general rule or they detail cost consequences set out in Part 36 but which do not apply on these facts for the reasons set out above.
The claimant in a professional neglience dispute is claiming £350,000. The claimant makes a Part 36 settlement offer, offering to accept £200,000 including interest. That offer specifies a period of 21 days, ending on 27 November, within which the defendant will be liable for the claimant’s costs if the offer is accepted. The offer says nothing about what happens or whether it can be accepted after 27 November. The defendant does not accept the offer by 27 November. On 10 December (4 months before trial), the defendant realises that the litigation is becoming so disruptive and time consuming that it would now be content to settle the dispute for £200,000, even if this means paying the claimant’s costs in addition to this sum.
Which of the following is the best course of action for the defendant to take?
Select one alternative:
Ask the claimant to repeat its offer to settle.
Apply to court for relief from sanctions and for permission to accept the claimant’s Part 36 offer.
Make a Part 36 offer to settle the dispute for a payment of £200,000.
Serve a notice of acceptance in relation to the claimant’s Part 36 offer.
Apply to court for permission to accept the claimant’s Part 36 offer.
This question relates to ‘Part 36 and other offers’. In particular, this question is about accepting a Part 36 offer after the expiry of the relevant period. In this scenario, the relevant period has expired, but there is no indication that the Part 36 offer has been withdrawn or that it was expressed to be automatically withdrawn at the end of the relevant period. In those circumstances, it can still be accepted (CPR 36.11(2)) by serving written notice of acceptance (CPR 36.11(1)). There is no need to make any sort of application to court. Making a Part 36 offer or asking the claimant to repeat its offer are more convoluted and will not necessarily result in a binding settlement if the claimant is not cooperative.
In a breach of contract claim the court has ordered the claimant and the defendant to file and serve a budget (precedent H) by no later than 21 days before the first case management conference. 14 days before the deadline, the defendant realises it will not be ready until one day after the deadline, when the contact at the client who is needed to approve the budget returns from sickness leave.
Which of the following courses of action should the defendant most appropriately pursue in the first instance?
Select one alternative:
Notify the claimant that the budget will be served one day late.
Serve the budget by the deadline in its unsigned form.
Apply to court for an extension of time for serving the budget.
Apply to court for relief from sanctions.
Ask the claimant to agree that the deadline for serving budgets be extended by a day.
Ask the claimant to agree that the deadline for serving budgets be extended by a day.
This question relates to ‘non-compliance with orders, sanctions and relief’. In this case, the defendant does not wish to comply with a court order – it wishes to extend the deadline for serving budgets by a day. The parties can agree to extend such a deadline by up to 28 days provided always that any such extension does not put at risk any hearing date. On the facts presented, there is no reason to think an extension of a single day will put the CMC or any other hearing at any risk. The defendant should therefore ask for such an extension. Applying for relief from sanctions is not necessary (no sanction has been imposed – the deadline has not yet arrived). Notifying the claimant that the budget will be served one day late achieves little: it does not extend the deadline or avoid a sanction being imposed upon the deadline being missed. Applying to court for an extension of time is possible, but if the claimant’s consent can be obtained, this is a more certain and much less costly way to proceed. It is not at all clear that serving a budget in an unsigned form would be sufficient to avoid the imposition of sanctions, even if it were possible to obtain instructions to do so.
