PART 36 OFFERS TO SETTLE CLAIM Flashcards
PART 36 OFFERS TO SETTLE CLAIM
- A Part 36 ofer is a formal offer to settle a claim. It is meant
to convince the oferee to settle early, because if the results of continuing on to trial are less advantageous to the offeree than the offer was, the judge could make the offeree pay
the offeror’s legal fees from the point the offer was rejected
(which typically is 21 days after it was made). - A Part 36 ofer
is a ‘without prejudice’ offer, which, means that it cannot be disclosed to the court until the ques-tion of costs is considered. - If the ofer is not made in accor-
dance with the requirements of Part 36, it is unlikely to have
the consequences of a Part 36 ofer.
A Part 36 ofer can be made by either a defendant or a
claimant and must specify the amount that the party would
be prepared to pay or to accept to settle the claim.A
Part 36 ofer must:
*Be in writing;
*State clearly that it is made pursuant to CPR Part 36;
*Specify a period (called the relevant period) of not less
than 21 days within which the oferee can accept. During
this period, the ofer cannot be withdrawn without the
court’s permission;
*State whether the ofer relates to the whole or part of the
claim; and
*State whether the ofer takes into account any counter-
claim.
Wheth-er the ofer is made by the claimant or defendant, if accepted within the relevant period, the defendant will pay the costs of the claim to the point of acceptance and the costs will be as-
sessed on the standard basis (reasonable costs) if the parties cannot agree them.
WHEN CAN A PART 36 OFFER BE MADE?
Part 36 ofers can be made in most types of claim, other
than small claims, and may be made at any time during the
proceedings, including before proceedings are issued and
during the trial.
REQUESTS FOR CLARIFICATION
If the terms of a Part 36 ofer are unclear, the oferee can
request clarifcation within seven days. If the oferor does not provide suitable clarifcation within seven days, the oferee
may apply to the court for an order requiring the oferor to
clarify.
17.5 WITHDRAWING A PART 36 OFFER
1.A Part 36 ofer can be withdrawn as long as the oferee has not served a notice of acceptance.
2.If the notice of withdrawal (or to amend to become less
advantageous to the oferee) is served before the relevant
period expires, it takes effect upon expiry of the relevant
period unless the offeree serves notice of acceptance before expiry of the relevant period.
3. If the oferee serves a notice of acceptance during the rele-
vant period, before the notice of withdrawal can take efect,
the oferor may apply to the court for permission to withdraw the ofer or change its terms within seven days of the ofer-
ee’s notice of acceptance
4. If an ofer has not been accepted by expiry of the relevant
period, the oferor may withdraw or amend the ofer without permission.
ACCEPTANCE OFA PART 36 OFFER
- A Part 36 ofer must be accepted in writing. It can be accept-ed at any time—even after expiry of the relevant period—so
long as the oferor has not withdrawn it
2.If a claimant accepts a defendant’s Part 36 ofer outside the relevant period, the
defendant’s liability to pay the claimant’s costs runs only
up to the end of the relevant period (that is, 21 days after
the ofer was made). The claimant cannot recover costs
incurred after this date unless the parties agree otherwise.
Acceptance During Trial Requires
Permission
Once a trial has started, a party may accept a Part 36 ofer
only with permission of the judge.
Acceptance of Claimant’s Part 36 Offer
1`. If a defendant accepts a claimant’s Part 36 ofer within the
relevant period, they become liable to pay the claimant’s
costs of the proceedings up to the date on which the letter
accepting the Part 36 ofer is served.
2. The claimant has an
automatic entitlement to these costs, to be assessed on the
standard basis.
3. If a defendant accepts a claimant’s Part 36
ofer after expiry of the relevant period, the court will decide the liability for costs if the parties cannot agree.
Acceptance of Defendant’s Part 36 Offer
When More than One Defendant
If a claimant wishes to accept a Part 36 ofer from a single
defendant when there are multiple defendants, the claimant must obtain the court’s permission to accept.
POST-JUDGMENT COST
CONSEQUENCES OF REJECTING A PART 36 OFFER
Rejection by the claimant
a.If Claimant Beats Offer
If a claimant rejects a defendant’s Part 36 ofer and beats
it (that is, secures a more advantageous result at trial), the
defendant will be ordered to pay the claimant’s costs of the
entire proceedings. The Part 36 ofer will have no efect.
b.If Claimant Fails to Beat Offer
If a claimant rejects a defendant’s Part 36 ofer and fails to
beat it (that is, the claimant secures a less advantageous re-
sult at trial than was made in the ofer), the court will, unless it considers it unjust to do so, award the defendant their costs
**on the standard basis **from the date when the relevant period for acceptance expired. The defendant may also be awarded interest on those costs.
EXAMPLE
A client commences proceedings against their former so-
licitor for professional negligence in November 2019. The
client claims damages of £50,000 plus interest. The former solicitor makes a Part 36 ofer of £20,000 on 3 February 2020 and sends it on that day to the former client by frst
class post. The client does not accept. The trial judge
awards the former client damages of £18,000 inclusive of
interest in November 2020.
The consequences are that, unless the court considers it un-
just: the solicitor will pay the former client the £18,000 dam-
ages and interest, their costs on the standard basis up until
26 February, which is the last day on which she could have
accepted the ofer. (To calculate this, you need to understand that the ofer is efective once it is served on the other side
and the usual rules on deemed service apply, so it is deemed served on 5 February and day 21 is therefore 26 February.)
The former client, however, will pay the solicitor their costs
on the standard basis from 27 February up until trial.
Rejection by Defendant
a.If Claimant Fails to Beat Its Own Offer
If a defendant rejects a Part 36 ofer made by the claimant
and the claimant fails to secure a more advantageous or
equal result at trial, the claimant’s Part 36 ofer will have no
efect. Who pays the costs of the action will be determined
by whether the defendant has made a Part 36 ofer and
whether the claimant has beaten the ofer.
b.If Claimant Beats Its Own Offer
If a defendant rejects a Part 36 ofer made by the claimant
and the claimant secures a more advantageous or equal re-
sult at trial, unless it is unjust, the claimant is entitled to inter-est on the entirety of the claim at an enhanced rate of up to
10% above base rate for the period after the time for accep-tance expired. Costs for this period will** be assessed on an indemnity basis** (that is, with little oversight by the court), **with enhanced interest on those costs of up to 10% **above base rate. In addition, the claimant may seek an additional amount of damages by virtue of the defendant failing to accept their reasonable Part 36 ofer
c.Damages Only or Mixed Claims
In damages only claims or mixed claims, the amount to be
paid by the defendant will be calculated as a percentage of
the damages awarded to the claimant (see table below).
d.Non-Monetary Claims
In non-monetary claims, the defendant must pay a percent-
age of the costs that the court has ordered the defendant to
pay to the claimant, subject to a cap of £75,000 (see table
below).
Damages Only or Mixed Claims
Non Monetary claims
