PART 36 OFFERS TO SETTLE CLAIM

Question 1

3

PART 36 OFFERS TO SETTLE CLAIM

Answer 1

1. A Part 36 offer is a formal offer to settle a claim. It is meant to convince the offeree 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).
2. A Part 36 offer is a ‘without prejudice’ offer, which, means that it cannot be disclosed to the court until the ques-tion of costs is considered.
3. If the offer is not made in accor-
   dance with the requirements of Part 36, it is unlikely to have the consequences of a Part 36 ofer.

Question 2

5

A Part 36 offer 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:

Answer 2

*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 offeree can accept. During
this period, the offer cannot be withdrawn without the court’s permission;
*State whether the offer relates to the whole or part of the claim; and
*State whether the offer takes into account any counter-claim.

Wheth-er the offer 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 assessed on the** standard basis** (reasonable costs) if the parties cannot agree them.

Question 3

WHEN CAN A PART 36 OFFER BE MADE?

Answer 3

Part 36 offers 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.

Question 4

REQUESTS FOR CLARIFICATION

Answer 4

If the terms of a Part 36 offer are unclear, the offeree can request clarifcation within** seven days**. If the oferor does not provide suitable clarifcation within seven days, the offeree may apply to the court for an order requiring the offeror to clarify.

Question 5

4

WITHDRAWING A PART 36 OFFER

Answer 5

1. A Part 36 offer can be withdrawn as long as the offeree** has not served a notice of acceptance**.
2. If the notice of withdrawal (or to amend to become less advantageous to the offeree) 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 relevant period, before the notice of withdrawal can take efect, the offeror may apply to the court for permission to withdraw the offer or change its terms within seven days of the offeree’s notice of acceptance
4. If an offer has not been accepted by expiry of the relevant period, the offeror may withdraw or amend the ofer without permission.

Question 6

ACCEPTANCE OFA PART 36 OFFER

Answer 6

1. A Part 36 offer must be accepted in writing. It can be accepted 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 offer 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 offer was made). The claimant cannot recover costs incurred after this date unless the parties agree otherwise.

Question 7

Acceptance During Trial Requires
Permission

Answer 7

Once a trial has started, a party may accept a Part 36 offer only with permission of the judge.

Question 8

3

Acceptance of Claimant’s Part 36 Offer

Answer 8

1. If a defendant accepts a claimant’s Part 36 offer 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 offer 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 offer** after expiry** of the relevant period, the court will decide the liability for costs if the parties cannot agree.

Question 9

Acceptance of Defendant’s Part 36 Offer
When More than One Defendant

Answer 9

If a claimant wishes to accept a Part 36 offer from a single
defendant when there are multiple defendants, the claimant must obtain the court’s permission to accept.

Question 10

2

POST-JUDGMENT COST
CONSEQUENCES OF REJECTING A PART 36 OFFER

Rejection by the claimant

Answer 10

a.If Claimant Beats Offer
If a claimant rejects a defendant’s Part 36 offer 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 offer will have** no effect**.
b.If Claimant Fails to Beat Offer
If a claimant rejects a defendant’s Part 36 offer and fails to beat it (that is, the claimant secures a less advantageous result 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 solicitor for professional negligence in November 2019. The client claims damages of £50,000 plus interest. The former solicitor makes a Part 36 offer of £20,000 on 3 February 2020 and sends it on that day to the former client by first 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 unjust: the solicitor will pay the former client the £18,000 damages and interest, their costs on the standard basis up until 26 February, which is the last day on which she could have
accepted the offer. (To calculate this, you need to understand that the offer is effective once it is served on the other sideand 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 costson the standard basis from 27 February up until trial.

Question 11

4

Rejection by Defendant

Answer 11

a.If Claimant Fails to Beat Its Own Offer
If a defendant rejects a Part 36 offer made by the claimant and the claimant fails to secure a more advantageous or
equal result at trial, the claimant’s Part 36 offer will have no efect. Who pays the costs of the action will be determined by whether the defendant has made a Part 36 offer and whether the claimant has beaten the offer.

b.If Claimant Beats Its Own Offer
If a defendant rejects a Part 36 offer made by the claimant and the claimant secures a more advantageous or equal result 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 offer

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

d.Non-Monetary Claims
In non-monetary claims, the defendant must pay a percentage 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).

Question 12

Damages Only or Mixed Claims

Answer 12

Question 13

Non Monetary claims

Answer 13