part 36 settlement offer litigation advice

Claimant’s Part 36 offer containing error for relevant period held to be compliant

In the High Court case of Essex County Council v UBB Waste (Essex) Ltd (No 3) [2020] EWHC 2387 (TCC), it was held that a Claimant’s Part 36 offer which failed to correctly set out the relevant period was still deemed compliant with Part 36 of the Civil Procedure Rules.

In the High Court case of Essex County Council v UBB Waste (Essex) Ltd (No 3) [2020] EWHC 2387 (TCC), it was held that a Claimant’s Part 36 offer which failed to correctly set out the relevant period was still deemed compliant with Part 36 of the Civil Procedure Rules.

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Part 36 offer in £9 million case disputed on basis of service

In the underlying case, the Claimant was awarded damages of around £9 million for the Defendant’s breach of an agreement to construct a waste treatment plant. On the issue of costs, there were several matters in dispute including whether the Claimant had made a compliant part 36 offer in March 2019.

The Claimant had sent a part 36 offer by email at 16:54 on 7 March 2019. The offer stated that the relevant period was within 21 days of the date of that letter. Under the deemed service rules under the CPR, where an email is sent after 16:30, it is deemed served on the following business day. This therefore meant that the Claimant’s offer was made on 8 March 2019.

The Defendant sought to argue that due to receiving the offer on 8 March 2019, the relevant period would expire 20 days from the date the offer was made and therefore the Claimant’s offer did not comply with CPR 36.

Part 36 offer held to be valid

The High Court held that the Claimant’s Part 36 offer was valid and that the offer could be construed as compliant in its proper context and taking into account the Claimant’s intention for the offer to be a Part 36 offer.

“Any ambiguity in an offer purporting to be a Part 36 offer should be construed so far as reasonably possible as complying with Part 36”

What is a Part 36 offer?

A Part 36 offer pursuant to the Civil Procedure Rules, made on a “without prejudice, save as to costs” basis, is a provision which aims to encourage parties to try to settle their disputes and avoid, where possible, going to trial. The offer will setting out the costs consequences of a party’s failure to accept which may include costs on the indemnity basis and interest.

What is the relevant period for a Part 36 offer?

CPR 36.5(1)(c) states that a Part 36 offer “must specify a period of not less than 21 days within which the defendant will be liable for the claimant’s costs in accordance with rule 36.13 or 36.20 if the offer is accepted“. This is referred to as the “relevant period”.

What happens if I beat my Part 36 offer?

If the Defendant rejects a Claimant’s offer and 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 up to a maximum of £75,000 :
Amount awarded by the courtPrescribed percentage
Up to £500,00010% of the amount awarded
Above £500,00010% of the first £500,000 and (subject to the limit of £75,000) 5% of any amount above that figure.
CPR 36.17

In this case, as the Claimant had obtained a judgment which was as advantageous as the terms of its Part 36 offer held to be valid, the Claimant was awarded indemnity costs, interest at 10% on the damages and costs and an additional amount of £75,000.

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 affect 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. 

Should I make a Part 36 offer?

There are advantages to making a Part 36 offer at different stages in your claim including costs protection and to reach an early resolution in your dispute. Our specialist litigation lawyers with understanding and experience of the Civil Procedure Rules can advise on a case-by-case basis on the value and timing of a protective part 36 offer or other types of without prejudice offers and discussions.

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​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our extensive litigation experience we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our lawyer’s negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process.

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LIMITATION ACT 1980 – WARNING

The Limitation Act 1980 sets out strict statutory deadlines within which you must bring litigation claims. Your legal rights will become irreversibly time-barred if you fail to take legal action (or defend a claim on time). Therefore, you should seek specific legal advice about your legal dispute at the very first opportunity so that you understand the time you have left. Failure to take advice or delay in taking action can be fatal to your prospects of success.