#10138 - Part 36 Prep Letter Ii - Civil Litigation

Clithero Marshall
2 Bishops Row
Rummidge
RU4 9HQ

Hamblings Securities Limited

10 London Wall

London

EC2R 1RT
25 March 2014

Dear sir,

Hamblings Securities Limited v Oscar Azevado: Claimant's Part 36 offer

As discussed earlier, the claimant has made a Part 36 offer, the terms of which are set out in the attached letter dated 03/03/2014. I am writing to explain the implications of a Part 36 offer to help you decide whether or not to accept this offer.

Part 36 is a provision in the Civil Procedure Rules (which govern the conduct of litigation in England and Wales). It 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 Part 36. Basically, if a party fails to accept a realistic offer made by the other side, it is at risk of being penalised in costs and interest at the end of the case.

A Part 36 offer has to specify a period of at least 21 days within which you will be liable for the claimant's costs if you accept the offer (the relevant period). In this case, the relevant period will expire on 24/03/2014. It is possible for the claimant to withdraw or reduce the offer before then, but only with the permission of the court. After the expiry of the relevant period, the claimant can withdraw the offer at any time without the permission of the court by serving a notice of withdrawal. If the offer is withdrawn, it will not have the consequences set out in Part 36, although the court will take it into account when exercising its wide discretion regarding costs.

As long as the offer remains open, you can accept it at any time before the start of the trial without the permission of the court. After the trial has commenced the offer can be accepted only with the permission of the court.

EFFECT OF ACCEPTANCE OF OFFER

If you accept the claimant’s offer within the relevant period, the claim will be stayed, and you will be expected to pay the amount which the claimant has asked for in its offer within 14 days of accepting the offer. (If you do not honour the terms of the offer, the claimant could make an application to court to enforce the terms of the offer without the need for bringing a new claim.) In addition, unless the court orders otherwise, you will have to pay the claimant’s legal costs, to be assessed if not agreed by the parties, up to the date of service of notice of acceptance of the offer. If they are not agreed by the parties, the costs will be calculated by the court on what is called the "standard basis". This means that you will have to pay all of the claimant’s costs provided that they are reasonable and proportionate, with any doubt in relation to the amount or nature of the costs resolved in your favour.

If you accept the offer after the relevant period has expired then, unless the parties can agree liability for costs, the court will make a costs order. The usual order will be for you to pay the claimant's legal costs to the date of acceptance. However, the risk of this course of action is that the costs will probably have increased and you run the risk that the offer may have been withdrawn.

WHAT IS BEING OFFERED

Oscar is willing to settle the whole of the claim on the following terms:

• Hamblings is to pay Oscar the sum of 3,500,000 (the “Settlement Sum”) by electronic transfer;

• This must be paid within 14 days of acceptance of the offer;

• Into their bank account.

EFFECT OF REJECTION OF OFFER

If you do not accept the claimant’s offer and the claimant obtains a judgment which is equal to or more advantageous than its offer at trial, you will have to pay the amount awarded to the claimant and, unless it considers it unjust, the court will also order you to pay:

• Interest on all or part of the amount awarded at a rate of up to 10% above base rate from the date on which the relevant period expired.

• The claimant’s legal costs, as follows:

  • those costs incurred before the expiry of the relevant period on the standard basis (see above) to be assessed if not agreed, although the court may make a different order, having regard to all the circumstances.

  • those costs incurred after the expiry of the relevant period on the "indemnity basis". This means that you will have to pay all of the claimant’s costs for that period, save to the extent that they were unreasonably incurred, with any doubt in relation to those costs being resolved in the claimant’s...