Part 36 - Offers to Settle

Question 1

What is a Part 36 Offer?

Answer 1

A Part 36 offer is an offer to settle the whole or part of the claim.

Part 36 offers potentially have costs consequences attached to them if parties do not accept them.

Part 36 offers are made on a “without prejudice save as to costs” basis. This means they are not disclosable to any third party.

The significance of this is that only the offeror and offeree know the content of the offer, even the judge is unaware of any offers until after the trial.

Question 2

When can a Part 36 Offer be made?

Answer 2

1. Before a claim is issued.
2. During proceedings and up until the end of the trial.
3. In appeal hearings.
4. In detailed assessment hearings.

Question 3

Name the FIVE mandatory requirements under CPR 36.5 for a Part 36 offer to be compliant

Answer 3

1. The offer must be made in writing. Form N242A can be used.
2. It must make it clear that the offer is made in accordance with Part 36. (rule 36.5)
3. The offer must state whether it relates to the whole or part of the claim.
4. It must confirm if the offer is also in respect of any counterclaim.
5. It must state the “relevant period” .

Question 4

What is the “relevant period”?

Answer 4

The “relevant period” is a period of not less than 21 days within which the other party will be liable for their opponent’s costs if the offer is accepted.

If the period to the end of trial is less than 21 days, the relevant period is the time from the date of the offer to the end of trial.

Question 5

Can you seek clarity on a Part 36 offer?

Answer 5

If the Part 36 offer is unclear, the offeree may ask the offeror to clarify the offer.

This request should be made within 7 days of service of the offer, and the offeror should responded within 7 days of receiving the request.

If the offeror fails to respond to the request, the offeree can apply to the court for an order that it be provided.

Responses to clarification requests must be made in writing and on a without prejudice basis.

Question 6

How must a Part 36 Offer be accepted?

Answer 6

Part 36 offers must be accepted in writing.

A Part 36 offer can be accepted at any time unless it has been validly withdrawn.

Question 7

Can a Part 36 Offer be withdrawn?

Answer 7

A Part 36 offer can be withdrawn and the withdrawal must be made in writing (Rules 36.9/36.10) so long as it has not been accepted.

If the offeree has served their acceptance to the Part 36 offer, the offeror can apply to the court for permission to withdraw the offer or change its terms, but this will only be granted in circumstances where further evidence has come to light and it is in the interests of justice.

The Part 36 offer may make provision for the offer to be automatically withdrawn at the end of the relevant period. If a further offer more advantageous to the offeree is made, both offers may stand and will have Part 36 consequences.

Question 8

Can you accept a Part 36 out of time?

Answer 8

Yes so long as it has not been withdrawn.

Question 9

When do you need the court’s permission to accept a Part 36?

Answer 9

1. The Part 36 offer is made by some, but not all, of a number of defendants (rule 36.15)
2. Where the claim is for damages for personal injury, and the offer is intended to include any deductible benefits and further deductible benefits have been paid to the claimant since the date of the offer. In this case an application must state the net amount offered, the deductible amounts accrued at the date of offer, and those accrued thereafter. A certificate of recoverable benefits must be provided.
3. Where the claim is brought under the Fatal Accidents Act 1976 and apportionment is required must be approved by the court.
4. Where the trial has started.
5. Where any of the parties is a child or protected party.

Question 10

What are the costs consequences of ACCEPTING a Part 36 Offer?

Answer 10

If the Claimant’s offer is accepted, the Defendant is liable to pay the Claimant’s costs up to the date on which the letter accepting the Part 36 offer is served on the Claimant.

The Claimant has an automatic entitlement to these costs which are assessed on the standard basis within the relevant period.

Question 11

What are the costs consequences of REJECTING a Part 36 Offer?

Answer 11

If the claimant is awarded the same or more than their offer:

1. Interest on all or part of the damages at an enhanced rate of up to 10% above base rate from the expiry of the relevant period to trial.
2. Their costs on the standard basis up to the end of the relevant period.
3. Their costs from the date on which the relevant period expired to be assessed on an indemnity basis.
4. Interest on those costs at an enhanced rate of up to 10% above base rate.

The court will also award an additional amount to the claimant on the following basis:

a. An amount not exceeding £75,000 calculated by applying a prescribed percentage to:

The sum awarded by the claim in a money claim; or
The sum awarded in costs on a non-money claim.

The prescribed percentage is up to 10% of the amount awarded up to £500,000 and 5% of any amount awarded over £500,000 to £1,000,000.

Question 12

Can you recover pre-action costs?

Answer 12

If a Part 36 offer is accepted before proceedings are issued, then the offeror can recover their pre-action costs for steps taken in contemplation of proceedings being issued.

Costs only proceedings can be issued under a Part 8 claim (CPR 46.14).