Settlement

Question 1

What is Part 36?

Answer 1

A kind of offer that a party can make.

Sets out the consequences if an offer of that kind is made and accepted.

Sets out different consequences if an offer of that kind is made and not accepted and the matter proceeds to trial.

Rationale: parties who make realistic proposals to settle actions should get some benefit if these are not accepted and it turns out at trial they should have been accepted.

Penalty is in the form of adjusting the costs, damages and/or interest.

Question 2

Who and when can a part 36 offer be made?

Answer 2

Can be made at any stage of proceedings including before proceedings are issued.

Part 36 offer can be made by either party.

Question 3

Part 36 vs Calderbank offer

Answer 3

A calderbank offer is a written offer “without prejudice save as to costs” such that it cannot be referred to the judge until costs are considered after trial but at that point can be relied on.

Will not have the specific costs consequences and protections afforded by Part 36 but court will have regard to a Calderbank offer when it exercises its discretion on costs.

Question 4

How to make a valid Part 36 Offer

Answer 4

Must:

• be in writing
• made clear it is pursuant to Part 36
• specify a ‘relevant period’ (a period of not less than 21 days within which the defendant will be liable for the claimant’s costs if the offer is accepted
• state whether it relates to the whole or part of the claim
• state whether it takes into account any counterclaim

DEFENDANT ONLY:
- offer to pay a single sum of money
- if offer is to pay sum at a date later than 14 days after the date of acceptance will not be treated as a Part 36 offer unless offeree accepts the offer

Question 5

Relevant period

Answer 5

A period of not less than 21 days specified in a Part 36 offer within which the defendant will be liable for the claimant’s costs if the offer is accepted

Question 6

When is a Part 36 offer made?

Answer 6

When it is served on the offeree (usual service rules apply)

Need not wait for proceedings to commence.

Question 7

How to clarify a part 36 offer?

Answer 7

Offeree can seek clarification on terms of the offer within 7 days of service.

Question 8

Withdrawal of Part 36 offer

Answer 8

If offer has already been accepted: it cannot be withdrawn or its terms changed

If trial has started: court’s permission is required to withdraw

Relevant period expires?

Yes: offer can be withdrawn or terms changed without court’s permission, can also make the offer time limited.

No: any notice of withdrawal or change during relevant period will take effect at end of period if offeree does not serve acceptance during relevant period.
If do serve notice of acceptance despite notice notice of withdrawal. Can either accept or apply to court to have offer withdrawn.
Must apply within 7 days of notice of acceptance or before first day of trial (soonest)

Court must be:
- change of circumstances since making of offer
- in the interests of justice to give permission

Question 9

How to accept a Part 36 offer

Answer 9

1. Serve written notice of acceptance on the offeror
2. If case is issued the acceptance also needs to be filed at court.

Question 10

Cost consequences of acceptance outside the relevant period

Answer 10

• Court will determine liability for costs unless parties agree
• Court must (unless unjust) order:
  + claimant be awarded costs up to the date of the relevant period expired; and
  + offeree do pay the offeror’s costs for the period from the date of expiry of the relevant period to the date of acceptance.

Note: deemed to include interest up to relevant period. After relevant period has expired interest is ignored.

Question 10

Cost consequences of acceptance in the relevant period

Answer 10

Claimant is entitled to it costs of the proceedings up to the date of the notice of acceptance was served.

Note: deemed to include interest up to the end of the relevant period.

Question 11

Offer made less than 21 days before trial

Answer 11

In this situation if the parties do not agree liability for costs the court must determine liability.

Question 12

Part 36 for part of a claim

Answer 12

If accepted:

Claimant abandons the remainder of the claim - only entitled to costs relating to the part of the claim contained in the offer.

Does not abandon the remainder of the claim - liability for costs will be determined by the court unless the court can reach an agreement about the liability

Question 13

What to consider if a Part 36 offer is not accepted?

Answer 13

1) Trigger: does failure to accept trigger any consequences?

2) Consequences: What are the consequences?

Question 14

Failure to accept a defendant’s P36 offer

Answer 14

Trigger: A claimant fails to obtain a judgement more advantageous than a defendant’s part 36 offer.

• Means more money than the offer. (Part 36 offer vs quantum of judgement plus what judge awards by way of interest)

Consequences: unless court considers it unjust to do so, the court must order:
- claimant pays the defendant’s costs from the date the relevant period expired
- interest on those costs

Before relevant period: usual costs rules under CPR 44 apply.

If trigger is not met then P36 has no effect.

Question 15

Failure to accept claimant’s offer

Answer 15

Trigger: Judgment against the claimant is at least as advantageous to the claimant as the proposals contained in P36 offer. (judgment is the same or higher)

Consequences: court must, unless unjust order:

• Indemnity costs (from end of relevant period)
• interest on those costs up to 10% above base rate
• interest on damages up to 10% above base rate (from end of relevant period)
• An additional amount of £75,000

Question 16

When considering if an order would be unjust the court will take into account:

Answer 16

• Terms of any Part 36 offer
• Stage in the proceedings when the order was made
• Information available to the parties
• Conduct of the parties (in relation to giving, refusing information for the purpose of enabling the offer to be made
• Whether the offer was a genuine attempt to settle

Note: court’s discretion is much more limited than the court’s general discretion under the normal costs rules.

Question 17

What to do to get full protection of a Part 36 offer

Answer 17

• Make the offer more than 21 days before the trial: the earlier the offer is made the greater the potential benefits to the offeror
• Leave the offer open

Question 18

What is a consent order?

Answer 18

Once a matter has been settled between the parties it is usual for the settlement to be recorded in a consent order.

Once a consent order has been entered into, a defence of estoppel may be available if fresh proceedings are brought regarding matters in the agreement but depends on the wording.

Question 18

Two types of consent orders

Answer 18

Based on contract: consent order is evidence of the contract between the parties and will only rarely be interfered with by the court.

Not based on contract: not a contract but simply the parties agreeing terms of settlement in the claim. Such an order may be altered or varied by the court.

Question 19

What is a Tomlin order?

Answer 19

A type of consent order.

It is made up of two parts.

1. The public part ‘order’
   - looks like any other consent order
   - public
   - contains actions to be taken by the court (stay of proceedings, permission or apply, detailed assessment of costs)
2. Confidential part ‘Schedule’: contains details of the agreement reached.
   - confidential
   - contains terms of agreement - enforceable with a further court order
   - enables parties to include provisions beyond those a court could order

Generally used when either:
- parties wish for the key settlement terms to be confidential; and/or
- when the agreed settlement terms go beyond those that the court could generally order as part of the proceedings.

Question 20

Putting a consent or tomlin order in place

Answer 20

• need court approval
• after agreement need to apply to the court to have the order made
• if the court does indeed make the order, the order takes effect like any other court order
• sometimes settlement is reached during a period when the claim has been stayed - then applicaiton for order is treated as an application also to have the stay lifted

Question 21

Settlement before proceedings

Answer 21

• no need to seek approval of the court
• recorded in settlement agreement that is a contract

Question 22

Consent orders and interim applications

Answer 22

Parties can reach an agreement for an interim application before the hearing (usually done where court approval is required).

Usually agreement is filed at court with application notice and the judge will consider it without a hearing.

Question 23

How do claims end?

Answer 23

• Success on substance: trial, summary judgement
• Judgment following the striking out of the claim/defence
• Settlement
• Admission
• Claim is discontinued

Question 24

What is discontinuance?

Answer 24

Only a claimant can discontinue a claim.

Claimant can so so at anytime - essentially the claimant choosing not to pursue the claim against the defendant any further.

Can discontinue the whole claim or part of the claim.

Generally do not need court’s permission, but may do where the claimant has received some sort of remedy such as an interim injunction or interim payment.

Question 25

Consequences of discontinuance

Answer 25

1. Ends proceedings in relation to the claim/part of the claim discontinued
2. The claimant is liable to pay the defendant’s costs up to the point of discontinuance unless court orders otherwise.

Question 26

Procedure for Discontinuance

Answer 26

1. File a notice of discontinuance at court (if only part, make clear which part)
2. Serve a copy on every party
3. Discontinuance takes effect from the date of service
4. Upon discontinuance a costs order is deemed to have been made in the defendant’s favour on the standard basis