Basically, if a party fails to accept a realistic Part 36 offer made by the other side, it is at risk of being penalised in costs and interest at the end of the case. Making such an offer is therefore a legitimate means of putting the other side under pressure to settle, and should not generally be seen as a sign of weakness.
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What does a Part 36 offer mean?
Part 36 offer in the Civil Procedure Rules is a provision which aims to encourage parties to try to settle their disputes by setting out the costs consequences of offers to settle if they are made in accordance with a Part 36. However if a party fails to accept a realistic offer made from the other side there is a risk of penalised costs and interest at the end of the case. Therefore a legitimate offer should be made which puts the other side under pressure to settle.
Why are Part 36 offers made without prejudice?
Part 36 offers are made on a “without prejudice save as to costs” basis so that the court is not made aware of a part 36 offer until the has reached a judgement. But this is before the Court has made an order in relation to the cost of proceedings.
When can a Part 36 offer be made?
Part 36 offers can be made before court proceedings are issued. However Part 36 do not apply to claims that are small claims track (claims that are less than £10,000).
What are the requirements of a Part 36 offer?
A Part 36 offer must be in writing which states the consequences of the Part 36 and state the offer that is made to settle the whole claim or only part of it and whether it takes into account any counterclaim.
How long does a Part 36 offer last?
The relevant period if you decide to make a part 36 offer has to specify a period of at least 21 days within which the other party will be liable for your costs if the offer is accepted.
How do I withdraw or vary a Part 36 offer?
If your Part 36 offer is not time limited you can still withdraw it or change its terms so that it is less advantageous to the other side. If the other side has not already accepted the Part 36 offer you may withdraw or vary this at any time after the relevant period has expired and this will not need the court’s permission.
Can a Part 36 offer be withdrawn or varied before the end of the relevant period?
If you want to withdraw or vary a Part 36 offer before the end of the relevant period you need to serve a notice of withdrawal or variation on the other side, this will effect the end of the relevant period unless the other party serves a notice of acceptance in the meantime. In these circumstances the other side’s acceptance will take effect unless you successfully apply to court within 7 days of the acceptance so that permission is granted to withdraw the offer or change its terms.
What happens if the Defendant accepts the Claimant’s Part 36 offer ?
When you make a Part 36 offer and the Defendant accepted within the relevant period the Defendant will then have to pay the settlement sum and your legal costs however costs to be assessed if not agreed on a standard basis up to date of service of the notice of acceptance. This means that the court will resolve any doubt which it may have as to the costs if they are whether or not reasonable or proportionate. Then the matter will be settled.
However, if the Defendant accepts the offer after the relevant period has expired then if the parties cannot agree on the liability for costs then the court will make a costs order. Usually an order will be for the Defendant to pay the Claimant’s legal costs to the date of the acceptance.
What happens if the Defendant rejects the Claimant’s Part 36 offer?
If the Defendant rejects your offer and the claim proceeds to trial the trial judge will not be told about the offer until the case has been decided. If the Claimant obtains a judgement which is equal to or more significant then the offer made at the trial then the Defendant will have to pay whatever the amount the court awards you unless if the court considers it unjust.
In addition to this, the court will order the Defendant to pay the following:
- up to 10% interest on the whole or a part of any reward from the date on which the relevant period expired.
- your legal costs on a “indemnity basis” which is the assessment of the costs incurred after the expiry of the relevant period.
- An additional amount of 10% of the damages awarded for awards up to £500,000. but for awards above £500,000 then the additional amount would be 10% of the first £500,000 and then a 5% of any damages awarded above the figure up to an overall limit of £75,000.
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LIMITATION ACT 1980 – WARNING
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