Settlement Flashcards
What is the advantage of using a Part 36 offer?
Financial incentives contained within it are more certain than court’s general discretion
Part 36 offers sets out consequences re if offer accepted or not accepted and it proceeds to trial
What is the rationale of Part 36?
Parties who make realistic proposals to settle actions should get some benefit if these are not accepted and it turns out at trial that they should have been
Party ‘dragged to trial’ after reasonable offer should be compensated through adjusting costs, damages and/or interest
When and by who can a Part 36 offer be made?
Any stage during proceedings (including before issued) by either party
Do the normal contractual rules of offer and acceptance apply?
No - Part 36 is a self-contained code
Why would a party not make a Calderbank offer (rather than a Part 36 offer)?
Calderbank offer = offer written ‘without prejudice save as to costs’ (cannot be considered by judge until costs decided)
Part 36 offer afford specific consequences and protection that Calderbank won’t
What happens if a valid Part 36 offer is not accepted for the offeror or offeree?
Offeror potentially obtain extra benefits, offeree can potentially face sanctions
What are the rules for an offer from either the C or D?
- Must be in writing
- Make clear is made pursuant to Part 36
- Specify the relevant period
- State whether it relates to whole/part of claim
- State whether it takes into account any counterclaim
Can a part 36 offer be shown to a judge?
No - treated as ‘without prejudice except as to costs’; must not be communicated to the trial judge until the case has been decided
Even if this was not specifically provided - Part 36 offer would almost always be a genuine attempt to settle - would attract without prejudice privilege
What is the relevant period?
A period of not less than 21 days within which the D will be liable for the C’s costs if the offer is accepted
Costs easier to understand later…
What are the extra rules for offers made by the D only?
- Must offer to pay a single sum of money to be paid within 14 days from acceptance (limited exceptions
- Offer that includes offer to pay all/part of sum later than 14 days following acceptance will not be treated as a Part 36 offer unless offeree accepts the offer
What is the prescribed form for Part 36 offer?
N242A
If completed properly would mean Part 36 offer would comply with rules
Can make it in a letter as long as it is ‘pursuant to Part 36’
When is an Part 36 offer considered made?
When served on offeree
Will a Part 36 offer made before proceedings commence have same effect?
Yes - pre-issue Part 36 offers have usual consequences (including recoverable pre-action costs) upon acceptance after issue of proceedings/judgement being given
What happens if a Part 36 offer is both made and accepted before proceedings commence?
Consequences of acceptance have no effect
These depend upon there being extant proceedings
How is a P36 offer clarified by the offeree?
Offeree can seek clarification of terms of offer within 7 days of service
Can a Part 36 offer be withdrawn/its terms changed if it has been accepted?
No
Can a Part 36 offer be withdrawn if a trial has already started and the relevant period has not expired?
Only with the court’s permission
How can the Part 36 offer be withdrawn if the relevant period has expired?
- Without permission of the court
- If terms automatically state so (e.g. offer is time-limited)
What happens if the relevant period has not expired, the offeree has not served notice of acceptance, but the offeror serves notice of withdrawal/change?
Notice of withdrawal/change during relevant period will take effect at the end of period
What happends if the offeree does serve notice of acceptance during the relevant period (in spite of notice of withdrawal/change)?
Offeror can either:
1. Allow acceptance
2. Apply to court for permission to withdraw offer/change terms
When should an offeror apply for court’s permission to withdraw/change terms where the offeree has served notice of acceptance during the relevant period?
Within 7 days of the notice of acceptance or earlier if before first day of trial
When would a court give permission for original to be withdrawn/its terms satisfied if the offeree has already served acceptance?
Where it is satisfied there has been a change of circumstances since making of offer and it is in interests of justice to do so
E.g. PI claimant seen playing football
Where a Part 36 offer is made and not withdrawn, will consequences only occur if it is accepted?
No:
- If accepted = consequences of acceptance
- If not accepted = potential penalties after trial because offer was not accepted
Is there a prescribed form for accepting a Part 36 offer?
And how is an offer accepted?
No, a letter of written notice of acceptance served on the offeror and filed at court will be sufficient
Can acceptance be made after the relevant period expires?
Yes unless automatically withdrawn at end of period
What are the consequences of accepting a Part 36 offer?
3
- Claim is stayed (will not continue to trial)
- Settlement sum made; D has 14 days from acceptance to pay agreed settlement amount (C can enter judgement against D if they fail to do this)
- Costs - depend on when offer was accepted…
What are the cost consequences if the offer was accepted in the relevant period?
I.e. before expiry
C entitled to costs of proceedings up to the date when notice of acceptance was served
C has ‘won’ claim; entitled to cost of proceedings
What are the cost consequences if the offer was accepted outside the relevant period?
Court will detrmine liability for costs unless agreed but must (unless unjust) order that:
1. C is awarded costs up to date of expiry of relevant period
2. Offeree pays offeror’s costs for period from date of expiry to date of acceptance
Offeree is punished for not accepting offer earlier when it had chance
NB offeree can be C or D!!
What are the cost consequences where the offer was made less than 21 days before trial?
If parties do not agree liability for costs the court must determine liability
If a Part 36 offer relates only to part of the claim, what happence if at time of acceptance C…
- Abandonds remainder of claim?
- Does not abandon remainder of the claim
- Abandonds = C only entitled to costs relating to the part of claim contained in offer
- Does not abandon = Liability for costs determined by court
Unless court orders otherwise
Can a party who makes a dodgy offer be penalised?
No - a party who makes an offer will never be penalised for it (however dodgy!)
How does a court determine whether a penalty can be imposed?
Turns on whether a Part 36 Offer should have been accepted
Rules different for C and D
What does ‘trigger’ and ‘consequences’ refer to?
- Trigger - does the failure to accept the offeror’s offer trigger any consequences?
- Consequences - of the trigger
What is the trigger if the D’s offer is not accepted?
Where C fails to obtain a judgement more advantageous (is same or less) than D’s offer
If not met (e.g. C obtains adv judg) = D’s Part 36 offer has no effect
Comparison in money terms made at date of judgement i.e. compare sum set out in P36 with combined quantum of judgement plus what judge awards by way of interest
What if the trigger is not met?
E.g. C does better at trial than is offered by D
Part 36 offer has no effect
What are the consequences for C if D’s offer is not accepted when it should have been?
I.e. trigger is met
Unless unjust, C pays:
1. D’s costs from date the relevant period expired; and
2. Interest on those costs
C obviously bears own costs for this period too
Who pays whose costs re period before relevant period expires?
(When C should have accepted offer)
Usual cost rules - loser pays
Subject to court’s discretion
What is the difference between a) C not accepting and losing and b) merely losing?
Will pay costs either way, but Part 36 offer means they have to pay interest
What is a split costs order?
E.g. D pays C’s costs before end of relevant period (as D is the loser), and C pays D’s costs and interest on those costs after relevant period ends (where C wins at trial but less than D’s offer)
What is the trigger if the C’s offer is not accepted?
Judgement for C (against D) is at least as advantageous (is same or better) as proposals in C’s Part 36 offer
Rationale: If D could have done just as well by accepting
I.e. C won more at trial than amount in offer
What are the consequences for D if C’s offer is not accepted when it should have been?
Unless unjust, D pays…
1. Interest on award (damages) at rate not exceeding 10% above base rate for some/all of period from expiry or relevant period
2. Costs from the end of relevant period on an indemnity basis
3. Interest on those costs at a rate not exceeding 10% above the base rate
4. An additional amount based on % of the award (capped at £75,000)
I.e. enhanced interest, indemnity costs (+ interest) + lump sum
How is the additional amount (lump sum) calculated?
10% up to £500,000 and 5% above £500,000
Recall - capped at £75,000
Will always be £75,000 if above £1m
How is the additional amount calculated where claim does not have any money-claim?
E.g. claim for possession of property without damages
Calculated with total amount of costs awarded to the C used as figure in place of the award
If the claim is subject to the fixed recoverable costs regime, how are the consequences of not accepting C’s offer different?
Instead of being awarded indemnity costs, additional costs awarded are an amount equivalent to 35% of difference between fixed costs when relevant period expires and those at date of judgement
What does a court consider when deciding whether a penalty is ‘unjust’?
I.e. penalty imposed unless ‘unjust to do so’
- Terms of offer
- Stage in proceedings offer made
- Information available to parties
- Conduct of parties re giving/refusing info for purpose of enabling offer to be made/evaluated
- Whether offer was genuine attempt to settle
Discretion here more limited than normal costs rules
What happens where an offer was made within 21 days of the trial and trigger is satisfied?
No Part 36 consequences unless court shortens relevant period
Unfair - relevant period could not have expired before trial - not a fair opportunity to consider
Why would a party prefer to leave an offer in place (rather than withdraw)?
Consequences will not apply if it is withdrawn or changed so terms mean consequences less likely
What should a party to do benefit from full costs protection of Part 36?
Make offer more than 21 days before trial and leave offer open
What happens where both C and D have made Part 36 offers and neither have been accepted when matter goes to trial?
Either:
1. C’s offer takes effect if amount awarded is same/more than C’s offer
2. Neither offer takes effect if amount awarded is between the two offers; normal costs rules apply
3. D’s offer takes effect if amount awarded is same/less than D’s offer
Will a Part 36 offer continue into the appeal stage?
No - a Part 36 offer only has consequences for the costs in the proceedings in which it is made
What is a consent order and what is its effect?
Where parties record their settlement - has effect of a normal court order but no need for court to hear arguemtns (as parties agree the terms)
What are the 2 types of consent order? What is the role of the court in both?
- Based on contract - consent order is evidence of contract between parties and court rarely interferes
- Not based on contract - parties simply agree terms of settlement in claim - may be altered/varied by the court
What happens if, once consent order is entered into, fresh proceedings are brought re the matters in the agreement?
A defence of estoppel may be available
Depends on wording of agreement!
What is a Tomlin order and what is it made up of?
A type of consent order, made up of:
1. Public part (order)
2. Confidential part (schedule)
Why would a Tomlin order be used?
- Parties wish for key settlement terms to be confidential; and/or
- When the settlement terms go beyond those that the court could generally order
What is contained in the ‘order’ of a Tomlin order?
The public part
Actions to be taken (and enforceable) by the court e.g. stay, permission to apply, detailed assessment of costs
Any directions for payment of money out of court payment/assm’t of costs
What is contained in the ‘schedule’ of a Tomlin order?
The private part
Terms of agreement that are beyond the limits of the dispute (e.g. C must provide goods on particular terms to D; court can not order this)
Is enforceable with a further court order!
Is the court’s approval needed for a consent/Tomlin order even though they reflect the parties’ agreement?
Yes
What do parties need to do after agreeing the content of the order to have it enforced?
Apply to the court - if court makes order it takes effect like any other court order
What if the settlement is reached during period where claim has been stayed?
The application for the consent/Tomlin order treated as an application to have the stay lifted
How is a consent/Tomlin order made if proceedings have not been issued yet?
No need for one - parties will record their agreement in a settlement agreement (basically a contract)
No proceedings to dispose of!
If parties are giving up the right to bring proceedings re alleged wrongdoing of other party, what should be carefully defined?
The scope of the dispute which is being settled
Can consent orders be drawn up only for the settlement of the dispute as a whole?
No - can be used when reaching an agreement re interim application
Do courts have to accept a consent order for interim applications?
No - is a case management decision - but ageement makes approval far more likely
Does an application to court re the consent order still need to be made re interim application if the other party agrees to it?
E.g. D is willing to agree to extension needed by C
Yes - would apply to court in usual manner, but at same time draw p and file a consent order along with application notice.
Court would then consider the application on paper and without a hearing
What does the settlement require where the C is a protected party?
Court approval
Within what period of time must a Tomlin order be enforced?
6 years - like any other contract time period for breaches
