Settlement offers play a key role in civil litigation, as they encourage parties to resolve disputes without the need for costly trials. Two common routes for making settlement offers are Calderbank offers and Part 36 offers.

Both types of offers are designed to bring litigation to an end before trial, but they differ in some areas, including legal structure, consequences, and procedural rules.

If you would like more information on the services our Cost Draftsmen can offer relating to Calderbank offers and Part 36 offers, then please do not hesitate to get in touch with our team today.

Calderbank Offers

A Calderbank offer is an informal type of settlement offer made on a “written without prejudice save as to costs” basis. This means that the contents of the offer are protected from disclosure to the court, but if the offer is rejected and the costs case proceeds to trial, the court can take the offer into account when deciding who should pay the costs.

Calderbank offers provide greater flexibility than Part 36 offers. They allow parties to make bespoke offers, which can include non-monetary terms or conditions, making them useful in more complex cases or arbitration proceedings where strict court rules do not apply.

The flexibility of Calderbank offers is also reflected in their time-limited nature. Unlike Part 36 offers, there is no mandatory 21-day acceptance period. Instead, the offeror can set a deadline with Calderbank offers, and if accepted, the court will later decide what weight to give the offer when determining costs.

Part 36 Offers

In contrast, Part 36 offers are governed by Part 36 of the Civil Procedure Rules (CPR) and are subject to strict court rules. A Part 36 offer is a formal settlement offer made with specific wording and procedural requirements, providing a structured framework for both the offering and receiving parties.

The key feature of Part 36 offers is their automatic cost consequences. If a party makes a Part 36 offer and the offeree does not accept it but fails to achieve a better outcome at trial, the court can impose significant financial consequences on the offeree, including ordering them to pay the offeror’s costs from the date of the offer.

A Part 36 offer remains open for acceptance to costs for at least 21 days, after which the offeror may seek an order for costs if the offeree does not accept and fails to beat the offer in court. If the party that offered the deal succeeds in court, they are typically entitled to recover costs on the standard basis from the offeree.

This formal protocol surrounding Part 36 offers provides complete discretion to decide costs consequences based on the offer’s timing and the parties’ conduct. It is particularly useful in ensuring that litigants take settlement seriously, knowing that failure to accept a reasonable offer could lead to steep financial penalties.

Key Differences Between Calderbank and Part 36 Offers

While both types of offers aim to resolve disputes early, there are significant differences:

1. Flexibility: Calderbank offers provide greater flexibility in terms of form and conditions, allowing parties to craft settlements outside the strict rules of Part 36, such as for claims allocated to the small claims track. By contrast, Part 36 offers must comply with the procedural requirements set out by 36 of the Civil Procedure Rules, offering less flexibility but greater certainty in terms of costs consequences.
2. Costs consequences: Part 36 offers have automatic costs consequences if a party fails to beat the offer at trial, while Calderbank offers give the court the discretion to decide what weight to give the offer when determining costs.
3. Procedure: Part 36 offers are highly procedural and open for acceptance for at least 21 days, providing a clear framework. Calderbank offers, on the other hand, are more flexible and can be time-limited to any period deemed appropriate by the offeror.

Recent Case Law: Holden v Holden & Anor [2024] EWHC 453 (Ch)

In Holden v Holden (2024), the court was faced with a situation where the offers were not Part 36 offers, and it had to determine the costs of a preliminary trial. The case underscores the importance of understanding the distinction between Calderbank and Part 36 offers.

The court in Holden considered two offers made during the proceedings. Neither offer complied with the formal requirements of Part 36, meaning they could not be treated as Part 36 offers. However, both were made without prejudice, save as to costs, in the form of Calderbank offers. The offers were not binding contracts between the parties, but they still carried weight in determining the outcome of costs after the trial.

The court emphasised that, while these offers were not made under Part 36 of the Civil Procedure Rules, it still retained the power to decide what weight to give them when making a costs order. In this case, the claimant failed to achieve a better outcome at trial than what had been offered. The court ultimately held that costs should be awarded against the claimant despite the fact that the offers were not formal Part 36 offers.

This case illustrates that Calderbank offers can still lead to significant costs consequences even in situations where strict court rules do not apply, provided the offer was reasonable and the party making the offer can argue that it should have been accepted.

How can Greener Costs assist?

Both Calderbank offers and Part 36 offers are valuable tools in civil litigation, with their effectiveness depending on the specific circumstances of a case. Calderbank offers provide greater flexibility, allowing for time-limited offers and more tailored terms, while Part 36 offers carry automatic costs consequences under strict court rules.

Our team at Greener Costs are experts in legal costs and are experienced to help with both types of offers. If you would like expert advice regarding the costs in your case, then please get in touch.

With our extensive knowledge and highly skilled team of cost draftsmen, we can provide law costing services to clients throughout England and Wales.

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If you wish to speak to a member of the team here at Greener Costs, then please contact us at 01204 263047, info@greenercosts.co.uk or use the online form on our website below.