Settlement and ADR Flashcards
Role of part 36?
Court encourages parties to settle.
Offerors perspectives - makes a valid part 36 offer - potentially obtains extra benefits at trial if not accepted
Offerrees perspective - receive a valid part 36 offers - potentially face sanctions at trial if the offer is not accepted
Part 36 – describes a kind of offer that a party can make. Sets out consequences if an offer is accepted. Sets out different consequences if an offer is made and not accepted.
- This can affect the awarding of costs
When can a part 36 offer be made?
At any stage of proceedings
Contrasted with Calderbank offers
- Part 36 is specific that nothing within part 36 prevents a party from making an offer in whatever way it chooses.
- A Calderbank offers - an offer usually communicated in writing, and written without prejudice to save as to casts, such that it cannot be referred to the judge until cost are considered. It doesn’t have to comply with any particular rule.
Valid part 36 offer?
A valid part 36 offer
- Be in writing
- Make it clear made pursuant to part 36
- Specify a period of not less than 21 days within which the defendant will be liable for claimant cost if offer is accepted.
- State whether it related to whole or part of the claim.
- Sate whether it takes into effect any counterclaim
Can be served any time. Can be clarified of terms of offer within 7 days of service.
Two further rules to defendant only offers?
- An offer by a defendant to pay a sum of money in settlement must be an offer to pay a single sum of money
- A defendants offer to pay all or part of sum at a later date than 14 days following acceptance will not be treated as part 36 unless offeree accepts the offer.
Withdrawing a part 36 offer?
- If it’s been accepted it cannot be withdrawn
- If trial has already started courts permission is required to withdraw offer.
- Can be withdrawn if relevant period has expired.
- Any notice of withdrawal during relevant period will take affect at end of relevant period.
- Offer remains open even out of relevant period unless it’s been withdrawn.
An offer can be accepted by? Consequences of acceptance?
- Serve written notice of acceptance on the offeror
- If the case is issued the acceptance also needs to be filed at court.
- Consequence of acceptance
- Stay – the claim will be stayed and will not go to rial
- Settlement sum – defendant has 14 days from acceptance to pay settlement amount agreed unless otherwise is in writing. Failing which the claimant can enter judgement against the defendant.
- If part 36 does not include an offer to pay then in the event that a party fails to comply with whatever was agreed the aggrieved party can apply to court to enforce terms of the offer without the need to start separate court proceedings.
Costs consequences?
– cost consequences of acceptance depend on when the offer was accepted.
- If accepted before expiry of relevant period – claimant is entitled to costs of proceedings up to date the notice of acceptance was served.
- If accepted outside relevant period – then court will determine liability for costs unless party agreed BUT
- THE COURT MUST unless its unjust to do so that
- Claimant be awarded costs up to date of relevant period
- The offeree does pay the offerors cost for period from date of expiry of relevant period to date of acceptance.
The consequences – if its 21 days before trial
- If parties don’t agree then court must determine liability
- Claimant gets cost up to relevant period and defendants get from relevant period onwards.
Accepting for an offer which related to part of the claim?
- If at time of acceptance the claimant abandons the remainder of the claim, claimant will only be entitled to costs relating to the part of the claim contained in the offer.
- If claimant does not abandon then liability for costs will be determined by court.
IF ACCEPTED IN RELEAVNT PERIOD – claimant entitled to cost up until the relevant period
If accepted AFTER relevant period – court determine costs – default position – claimant is entitled to costs up until expiry of relevant period – BUT THE offeree pays offerors cost after that.
Consequences of unaccepted part 36 offers at trial?
(a) a claimant fails to obtain a judgment MORE advantageous than a defendant’s Part 36 offer; or
(b) judgment against the defendant is at least as advantageous to the claimant as the proposals contained in a claimant’s Part 36 offer.
) Subject to paragraphs (7) and (8), where paragraph (1)(a) applies, the court must, unless it considers it unjust to do so, order that the defendant is entitled to—
(a) costs (including any recoverable pre-action costs) from the date on which the relevant period expired; and
(b) interest on those costs.
(4) Subject to paragraph (7), where paragraph (1)(b) applies, the court must, unless it considers it unjust to do so, order that the claimant is entitled to—
(a) interest on the whole or part of any sum of money (excluding interest) awarded, at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired;
(b) costs (including any recoverable pre-action costs) on the indemnity basis from the date on which the relevant period expired;
(c) interest on those costs at a rate not exceeding 10% above base rate; and
(d) provided that the case has been decided and there has not been a previous order under this sub-paragraph, an additional amount, which shall not exceed £75,000, calculated by applying the prescribed percentage set out below to an amount which is—
(i) the sum awarded to the claimant by the court; or
(ii) where there is no monetary award, the sum awarded to the claimant by the court in respect of costs—
Defendants offer no accepted?
- Does failure to accept trigger any consequences
- CPR 36.17 – a claimant fails to obtain a judgement more advantageous than a defendant’s part 36 offer.
- So, unless the result at trial is better in money terms, the failure to accept the offer will have consequences. This is logical if at trial it’s not better than defendants offer then that offer should have been accepted and penalty imposed for not accepting.
- Interest after date is ignored.
- Consequences -is unless its unjust to do so court MUST order that:
o The claimant pays the defendants cost from date the relevant period expired
o Interests on those costs
o And bear its own casts
o So, if its more advantageous NO EFFECT OF PART 36
Claimants offer not accepted?
- Judgement against the defendant is at least as advantageous to claimant as proposals contains in claimants’ part 36 offer.
- When a claimant does the same or better at trial than its part 36 offers, then the failure to accept will have consequences.
- Consequences are:
o Penalty imposed unless unjust to do so, court MUST order:
o Interest on award at a rate not exceeding 10% above base rate for period of all expiry from relevant period.
o Costs from end of relevant period are to be assessed on an indemnity basis can result in more cost being awarded to claimant because the courts punishing them. Standard basis up until the point of the just before the end of the relevant period.
o Interest on those costs exceeds usual rate 10%
o An additional amount based on a percentage of the award. 10% up to 500,000 and 5% above 500,000. Capped at 75,000.
Special rules?
Claimants or defendants offer not accepted – special rules
- If made within 21 dates of trial – then even if applicable trigger is satisfied there will be no part 36 consequences
If both make an offer to each other that’s not accepted you consider each on in turn, and apply only the relevant one. So, either the claimant or the defendant’s benefit.
The Part 36 consequences also do not apply if:
(a) The Part 36 offer was withdrawn; or
204 Dispute Resolution
(b) The Part 36 offer was changed so that its terms are less advantageous to the offeree and the
offeree has beaten the less advantageous offer.
If a party wants to get the full costs protection of Part 36 then it needs to:
(a) Make the offer more than 21 days before trial. Indeed, the earlier the offer is made, the
greater the potential benefits to the offeror; and
(b) Leave the offer open (not withdraw it).
Orders following settlement? Consent orders?
- Once a matter is settled, usually recorded in a consent order.
- Indicates the parties agree the terms it sets out so no need for court to hear arguments from both sides. Two types:
o A consent order based on contract – its evidence of the contract between the 2 parties and will rarely be interfered with by court.
o A consent order not based on contract – such an order may be altered or varied by the court.
o 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.
Orders following settlement? Tomlin orders?
- Type of consent order. It’s made up for 2 parts =, first bit is public and second is confidential and details the agreement between the parties.
- Generally used when
- The parties wish for key settlement terms to be confidential
- When agreed settlement terms go beyond those that court could generally order.
- Any direction for payment of money must be contained in public part
Putting a consent or Tomlin order in place?
- Still need court approval
- Need to apply to court to have order made, if it is made it takes affect like any other court order.
Recording a settlement before proceedings are issued - If this happens no need for either a consent or Tomlin order. Instead, they agree on a settlement agreement 0 a form of contract.
- Needs to be very carefully drafted.
Can have a consent order for interim applications?
If claimant needs an extension for exchanging witness statements. Can usually agree an extension of 28 days without court. But Iif need longer. Then application will usually be required.
Claimant is issued an application court in usual manner.
A consent order would be drawn up receoding the agreement extension longer.
Consent order would be filed at court. When application notice is filed.
Applicant would usually invite the court to consider the application on paper and without a hearing.
However, if the claimant needs a longer extension, then an
application to court will usually be required, even if the defendant is willing to agree to the
extension. In that scenario, the claimant would make an application to court in the usual manner
but at the same time:
(a) A consent order would be drawn up recording the agreement (an extension of 35 days) and
both parties would indicate their agreement to this consent order;
(b) The consent order would be filed at court – ideally when the application notice is filed, but
later if necessary;
(c) The applicant would usually invite the court to consider the application on paper and without
a hearing.
The court is not obliged to approve such a consent order – this is a case management decision,
but the fact that the parties are agreed makes approval much more likely.
