#3209 - Part 36 Offers - Civil Litigation

Civil Litigation

FIVE: Part 36 offers and Settlement

Part 36 offer

CPR 36

Definition:

Formal offer to settle an action / part of an action.
Made “without prejudice save as to costs” = only ‘offeror’ and ‘offeree’ know about the offer. They cannot disclose to third party / judge.
Part 36 offers are inclusive of interest until expiry of the relevant time period, after which interest will continue to accrue in addition to the offer.

Formalities of a P.36 offer – CPR 36.2(2)

Offer must be:

In writing
State on the face of it that it is a P.36 offer
Specify period not less than 21 days within which D will be liable for C’s costs in accordance with CPR 36.10 if offer is accepted.
Whether it related to whole / part of claim
State whether it takes into account any counter claim

If these are not complied with – the offer will not have the P.36 cost consequences. [CPR 36.1(2)]

Accepting P.36 offer – CPR 36.9

CPR 36.9 (2) can be accepted any time. Even after time period of the offer has expired. Cannot be accepted if formally and properly withdrawn by offeror.

Effect of acceptance – CPR 36.11

The claim is stayed on the terms of the offer

Cost consequences – CPR 36.10

Claimant is offering

If defendant accepting P.36 offer within relevant time period: D will pay C’s costs up until the date on which the notice of acceptance was served on the offeror.
If D rejects P36 offer and D wrong to reject the offer?

e.g. D has to pay 10K more at trial [40K] than C’s offer [30K]

e.g. D has to pay same amount at trial [40K) as C’s offer [40K]

D will be penalised if they have to pay more / same as claimant’s original P.36 offer because there was no point in going to trial.

CPR 36.14 (3):

D will pay on a standard basis up until the relevant period expires and then it is at courts discretion to order him to pay [i.e. following the expiry of the relevant period]:

Higher interest on damages
D pays claimant’s costs on an indemnity basis (more onerous – no proportionality. If there is any doubt as to costs it will be awarded in favor of the receiving party).
Higher rate of interest on the costs.

Defendant offering

If claimant accepts P.36 offer from defendant within time period: D will pay C’s costs up until the date on which the notice of acceptance was served on the offeror.

CPR 36.11(6) D must pay lump sum within 14 days.

C rejects offer and C was wrong to reject D’s offer?

e.g. C got 10K less at trial (325k) than D’s original offer of 45K.

e.g. C got 35K at trial and D’s original offer was 35K.

If yes – 36.14(2): Claimant gets cost penalties in form of a ‘split cost order’ (because there was no point in the trial).

As C won the case, court orders D to pay C’s costs up until relevant period expires and after this point claimant must pay for D’s costs because he was wrong to reject the offer.
Claimant pays interest on the costs he / she is liable for under (a).

Withdrawing the P.36 offer

Before expiry period	36.3(5): only withdraw with courts permission
After expiry period	36.3(6): withdrawal is possible but provided there has been no notice of acceptance.

Benefits of P.36 offer:

CPR 36.13: restriction on disclosure. Judge can ONLY be told about P.36...

#3209 - Part 36 Offers - Civil Litigation

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