#10160 - Part 36 Offer - Civil Litigation

Why?	C or D may make a Part 36 offer, stating the sum it is prepared to receive or pay Creates a formal settlement framework Put you in good stead if you make one and it’s refused / they end up getting less at trial It is a means of pressuring the other side It removes the uncertainty of what the court may award/decide
When?	It can be made before, during and after proceedings (r.36.3(2)). The offer becomes formal only when it has formally been served (if D or C legally represented, service is to their Sol).
Form and Content	Form N242A precedent P.302 or a letter precedent P.365 r.36.2: the offer must: be in writing State on its face its intention of being a Part 36 offer Specify the “relevant period” (the acceptance window of minimum 21 days): Offer is deemed to made when it is served on the other side (r.36.7(1)) P.208 Offer is deemed inclusive of interest for 21 days (r.36.3(1)(b)) If made close to trial, relevant period is the end of trial (r.36.3(1)(c)) P.208 Once trial starts, offeree needs court’s permission to accept (r.36.9(3)) Financial consequences of r.36.14(3) & (2) won’t apply to the offer unless the judge has abridged the relevant period State whether it relates to the whole or part of the claim (if part, which part) State whether it takes into account any counter-claim E.g. offer faxed on morning of Fri 9/03/12, it expires at midnight on 30/03/12
Judge aware?	The court and judge will not be aware of an offer being made until costs are assessed It is made on a “without prejudice save as to costs” (r.36.13(1)) and therefore , the Part 36 offer can NOT be referred to during court proceedings
How much should be offered?	r.36.4: where the offer is made by the defendant, it must: offer a single sum in payment (not instalments); and be willing to pay the whole amount within 14 days of C accepting it The sum offered is inclusive of interest until the relevant period expires (r.36.3(3)) Start off low, because more than on Offer can be made
Clarification P.209	Under(r.36.8) If the offer is not clear, the offeree may request clarification from the offeror within 7 days of receiving the order and it is best to put it in writing

Withdrawing a Part 36 Offer

Implied Withdrawal	Not applicable So, if you want to reduce your second offer, you must expressly withdraw the first offer
Express Withdrawal	Must be done in writing Usually, just serve a letter on the offeree
Court Permission	If relevant period has ended, no permission is necessary If relevant period is ongoing, permission to withdraw must be sought (r.36.5(3))
The Effect	Upon changing or withdrawing an offer, the offer is no longer a Part 36 Offer Therefore, the financial consequences under r.36.14 will no longer apply to it

Always do a timeline of dates (loss; C instruct sols; D instruct sols; expiry of offers; judgment)

Accepting a Part 36 Offer

When?

At any time, before or after the relevant period (provided it has not been withdrawn) (C v D (2011))
If attempt to accept is during trial, the court’s permission must be sought (r.36.9(3))

How?

Serve a written notice on the offeror (r.36.9(1))
If attempt to accept is during trial, also serve written notice on the court (PD 36 para 3.1)
If party is incapable (mental or child), court’s permission to accept must be sought

The Effect

P.210

The claim is stayed
If C accepts D’s offer, D must pay all the money within 14 days of accepting or C can enter judgment for any sum outstanding (r.26.11(6) and (7))

D accepts C’s offer P.383	*C accepts D’s offer within* the relevant period P.384**	*C accepts D’s offer after* the relevant period P.385**
D pays C’s costs up to the date the notice of acceptance was served Costs are agreed by the parties (or, in default, by the court)	D pays C’s costs up to the date the notice of acceptance was served If costs cannot be agreed, the court will determine them on standard basis	D pays C’s costs up to the date the relevant period expired C usually pays D’s costs thereafter (r.36.10(5))

Permutations and Consequences at trial of Unaccepted Part 36 Offers (r.36.14)

C Wins & beats D’s & own offer (p.384)	*C Wins & beats D’s offer but not* own offer (p.385)**	*C Wins but does not* beat D’s offer (p.382)**	C loses at trial (p.383)
D pays C interest on damages as claimed in the Particulars of Claim From: date of loss To: 21 days after C’s offer	D pays C interest on damages as claimed in the Particulars of Claim From: date of loss To: date of judgment	D pays C interest on damages as claimed in the Particulars of Claim From: date of loss To: date of judgment	NO damages awarded to C as failed to establish liability
D pays C’s costs on a standard basis From: date C instructed sol To: 21 days after C’s offer	D pays C’s costs on a standard basis From: date C instructed sol To: date of judgment	D pays C’s costs on a standard basis From: date C instructed sol To: 21 days after D’s offer	C pays D’s costs on a standard basis From: date D instructed sol To: date of judgment
Consequences under r.36.14(3) Penalties commence after C’s offer expired	None –treated as if Part 36 never offered	Consequences under r.36.14(2) for C to pay Some of D’s costs	Consequences under r.36.14(2) for C to pay Some of D’s costs
D pays C interest on damages at base rate plus up to maximum 10% (J’s discretion) above base rate – CPR 36.14(3)(a) From: 22 days after C offer To: date of judgment	N/A	C pays D’s costs on a standard basis From: 22 days after D offer To: date of judgment	C pays interest on D’s costs at base rate plus up to 1% above the base rate - Bim Kemi v Blackburn Chemical From: 22 days after D offer To: date of judgment
D pays C’s costs on Indemnity Basis for work during period CPR 36.14(3)(b) FROM Day 22 TO Judgment Date	N/A	C pays interest on D’s costs at base rate plus up to 1% above the base rate - Bim Kemi v Blackburn Chemical From: 22 days after D offer To: date of judgment	C pays own costs From: date C instructed sol To: date of judgment
D pays interest on C’s indemnity costs up to 10% above base rate CPR 36.14(3)(c) FROM – Day 22 TO – Judgment date	N/A	C pays own costs From: 22 days after D offer To: date of judgment
D pays C a % increase on damages awarded as follows: Up to 500k – 10% of amount awarded. 500-1m – 10% of 1^st 500 and 5% above that figure capped at 75,000 - (CPR 36.14(3) (d) – NEW RULE APR 13	N/A	N/A	N/A

D pays C interest on damages as claimed in the Particulars of Claim

From: date of loss

To: 21 days after C’s offer

D pays C interest on damages as claimed in the Particulars of Claim

From: date of loss

To: date of judgment

D pays C interest on damages as claimed in the Particulars of Claim

From: date of loss

To: date of judgment

NO damages awarded to C as failed to establish liability

D pays C’s costs on a standard basis

From: date C instructed sol

To: 21 days after C’s offer

D pays C’s costs on a standard basis

From: date C instructed sol

To: date of judgment

D pays C’s costs on a standard basis

From: date C instructed sol

To: 21 days after D’s offer

C pays D’s costs on a standard basis

From: date D instructed sol

To: date of judgment

Consequences under r.36.14(3) Penalties commence after C’s offer expired

None –treated as if Part 36 never offered

Consequences under r.36.14(2) for C to pay Some of D’s costs

D pays C interest on damages at base rate plus up to maximum 10% (J’s discretion) above base rate – CPR 36.14(3)(a)

From: 22 days after C offer

To: date of judgment

N/A

C pays D’s costs on a standard basis

From: 22 days after D offer

To: date of judgment

C pays interest on D’s costs at base rate plus up to 1% above the base rate - Bim Kemi v Blackburn Chemical

From: 22 days after D offer

To: date of judgment

D pays C’s costs on

Indemnity Basis for work during period CPR 36.14(3)(b)

FROM Day 22

TO Judgment Date

N/A

C pays interest on D’s costs at base rate plus up to 1% above the base rate - Bim Kemi v Blackburn Chemical

From: 22 days after D offer

To: date of judgment

C pays own costs

From: date C instructed sol

To: date of judgment

D pays interest on C’s indemnity costs up to 10% above base rate

CPR 36.14(3)(c)

FROM – Day 22

TO – Judgment date

N/A

C pays own costs

From: 22 days after D offer

To: date of judgment

D pays C a % increase on damages awarded as follows:

Up to 500k – 10% of amount awarded.

500-1m – 10% of 1^st 500 and 5% above that figure capped at 75,000 - (CPR 36.14(3) (d) – NEW RULE APR 13

N/A

Difference Between the Offers

Claimant’s Part 36 Offer	Defendant’s Part 36 Offer
Why? C cannot be certain of recovering full amount from D Ensures money now and avoids uncertainty C can stipulate figure, plus costs To put pressure on Defendant	Why? D recognises the risk of losing at trial Pay money now and avoid uncertainty D can stipulate the figure, plus costs To Put pressure on Claimant
D’s Incentive? D wants to avoid a penalty of paying additional interest and costs to C D must assess what the judge will award C at trial	C’s Incentive? C wants to avoid a penalty of paying a proportion of D’s costs C must assess what the judge will award C at trial
Downside? No penalty if C receives less than the amount at trial Counterproductive to make an unreasonably high offer because C is very likely to have to make a second smaller offer which would reduce C’s credibility	C Already Made an Offer? D assesses C’s offer as too high Therefore, counter-claim with their own Part 36 offer for a lesser sum
Procedure? r.36.2: a Part 36 offer must: be in writing state on its face its intent of being an offer state the relevant period state whether it’s whole or part of the claim does it take into account any counter-claim? Made without prejudice save as to costs (r.36.13(1)) Offer not made until formally served (r.36.7(1))	Procedure? r.36.2: a Part 36 offer must: be in writing state on its face its intent of being an offer state the relevant period state whether it’s whole or part of the claim does it take into account any counter-claim? Made without prejudice save as to costs (r.36.13(1)) Offer not made until formally served (r.36.7(1))
After Offer? 21 days from service to accept Can request for clarification within 7 days (r.36.8) Accept by written notice (r.36.9(1)) Money paid in full within 14 days of acceptance If costs can’t be agreed, a judge will determine them	After Offer? 21 days from service to accept Can request for clarification within 7 days (r.36.8) Accept by written notice (r.36.9(1)) Money paid in full within 14 days of acceptance If costs can’t be agreed, a judge will determine them
Consequences? D may be penalised if fails to accept offer r.36.14(3) outlines sanctions: enhanced interest on damages starting on the 22^nd day after the offer Indemnity costs Enhanced interest on indemnity costs	Consequences? C may be penalised if fails to accept offer r.36.4(2) outlines sanctions: non-recovery of own costs pay D’s costs payment of interest on those costs (a ‘split costs’ order

Why?

C cannot be certain of recovering full amount from D
Ensures money now and avoids uncertainty
C can stipulate figure, plus costs
To put pressure on Defendant

Why?

D recognises the risk of losing at trial
Pay money now and avoid uncertainty
D can stipulate the figure, plus costs
To Put pressure on Claimant

D’s Incentive?

D wants to avoid a penalty of paying additional interest and costs to C
D must assess what the judge will award C at trial

C’s Incentive?

C wants to avoid a penalty of paying a proportion of D’s costs
C must assess what the judge will award C at trial

Downside?

No penalty if C receives less than the amount at trial
Counterproductive to make an unreasonably high offer because C is very likely to have to make a second smaller offer which would reduce C’s credibility

C Already Made an Offer?

D assesses C’s offer as too high
Therefore, counter-claim with their own Part 36 offer for a lesser sum

Procedure?

r.36.2: a Part 36 offer must:
1. be in writing
2. state on its face its intent of being an offer
3. state the relevant period
4. state whether it’s whole or part of the claim
5. does it take into account any counter-claim?

Made without prejudice save as to costs (r.36.13(1))
Offer not made until formally served (r.36.7(1))

Procedure?

r.36.2: a Part 36 offer must:
1. be in writing
2. state on its face its intent of being an offer
3. state the relevant period
4. state whether it’s whole or part of the claim
5. does it take into account any counter-claim?

Made without prejudice save as to costs (r.36.13(1))
Offer not made until formally served (r.36.7(1))

After Offer?

21 days from service to accept
Can request for clarification within 7 days (r.36.8)
Accept by written notice (r.36.9(1))
Money paid in full within 14 days of acceptance
If costs can’t be agreed, a judge will determine them

After Offer?

21 days from service to accept
Can request for clarification within 7 days (r.36.8)
Accept by written notice (r.36.9(1))
Money paid in full within 14 days of acceptance
If costs can’t be agreed, a judge will determine them

Consequences?

D may be penalised if fails to accept offer
r.36.14(3) outlines sanctions:
- enhanced interest on damages starting on the 22^nd day after the offer
- Indemnity costs
- Enhanced interest on indemnity costs

Consequences?

C may be penalised if fails to accept offer
r.36.4(2) outlines sanctions:
- non-recovery of own costs
- pay D’s costs
- payment of interest on those costs (a ‘split costs’ order

If a party accepts the other party’s Part 36 offer, there is no need to draft a consent order as Part 36 makes it clear that once an offer is accepted the litigation will be stayed on those terms. (Consent order AKA Tomlin Order (r.40.6 and PD 40 p206 a Tomlin order stays the claim on agreed terms that are set out in a schedule attached to the order))

#10160 - Part 36 Offer - Civil Litigation

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