#14719 - Part 36 Offers - Civil Litigation

Purpose & Definition

The purpose of a Part 36 Offer is to offer a settlement with financial incentives attached (namely damages, interest and costs). There must be a valid Part 36 Offer for the cost consequences to apply (CPR 36.5).

The offer must be made to the legal representatives of the party (36A PD 1.2) and state it is ‘without prejudice save as to costs’ (CPR 36.16(1)). The offer is only made when it is served on the other party (CPR 36.7(2)). The offer must be in writing and clearly state that it is pursuant to Part 36 (CPR 36.5(1)(a)-(b)).

The offer must settle all or part of the claim (CPR 36.5(1)(d)) and be clear as to interest (CPR 36.5(4)) and costs (CPR 36.13).

The offer can be withdrawn pursuant to CPR 36.9(4).

Accepting the Offer

Offers can accepted by serving written notice on the claimant (CPR 36.11(1)). The claimant will be entitled to the settlement amount and the cost of proceedings up until the notice was served (CPR 36.13). This amount must be paid within 14 days (CPR 36.14(6)).

The court will then stay the claim (CPR 36.14(1)).

Offers will be recorded in a Consent Order or in a Tomlin Order.

A Tomlin Order is a form of consent order which allows the parties to make their settlement order confidential.

• Part 1 of the order is the public face of the order and records and contains actions enforceable by the court, the stay in proceedings and details of costs.

• Part 2 of the order is the confidential part and can contain commercial sensitive information and non-legal settlement options (e.g. letter of apology, maintaining relationships etc.)

Two Valid Offers

If both the claimant and the defendant make valid Part 36 Offers at the same time then the following consequences will apply:

Claimant’s Part 36 Offers

For Part 36 Offers made by the claimant use CPR 36.17(1)(b) & (4). Part 36 will apply unless the court considers it unjust to do so (CPR 36.17(5)).

If the claimant wins at trial and is awarded the same or more than the settlement offer they made to the defendant then CPR 36.17(1)(b) & (4) apply. The court must award the claimant the damages and costs for the whole action.

The court has the discretion to also award the following:

• Interest on some/all of the damages (not exceeding 10% above base rate) (CPR 36.17(4)(a));

• Indemnity costs from the date the relevant period expired (i.e. from the last point the defendant could have accepted the offer) (CPR 36.17(4)(b));

• Interest on all costs (not exceeding 10% above base rate) (CPR 36.17(4)(c)); and

• An additional amount (10% on the first 500,000 awarded, and 5% above 500,000, as long as the total does not exceed 75,000) (CPR 36.17(4)(d)).

If the claimant wins at trial and is awarded the same or more than the settlement offer they made to the defendant then CPR 36.17(1)(b) & (4) do not apply.

The claimant will get the damages awarded and costs under the general principle in CPR 44.2. There are no other cost consequences.

If the claimant loses at trial then CPR 36.17(1)(b) & (4) do not apply.

The claimant will receive nothing as they will have lost the action. The defendant will get cost under the general rule in CPR 44.2.

Defendant’s Part 36 Offers

For Part 36 Offers made by the defendant use CPR 36.17(1)(a) & (3). Part 36 will apply unless the court considers it unjust to do so (CPR 36.17(5)).

If the claimant wins at...