Should I Accept a Part 36 Offer? What You Need To Know
What is a Part 36 offer?
Part 36 of the Civil Procedure Rules set out the guidelines surrounding offers and settlements, which ultimately aim to encourage both claimants and defendants to provide offers and to settle their claims outside of court proceedings.
Offers under Part 36 can be made to settle all or part of a claim, and are most commonly made regarding monetary damages. Sometimes, however, they are made regarding an offer on liability. Part 36 offers are made ‘without prejudice, save as to costs‘ (36.16), which means a court will not be informed of any offers made until the end of proceedings in which it is time for costs to be assessed.
Both parties can make Part 36 offers, though it is much more common for offers to come from the defendant.
If an offer is accepted by either party, then the case concludes and moves to issues of costs, but if the offer is rejected then the case continues to court in which a judge will usually decide the outcome of the case. It is worth noting that there can be costs consequences in continuing to proceed to trial after rejecting a settlement, dependent on the offer itself and the judgement made at court.
If you are wondering “should I accept a Part 36 offer?’, then it is important to weigh up all of your options and the potential consequences that could arise from both accepting and rejecting an offer.
Guidelines surrounding making an offer
There are certain rules and guidelines set out in the Civil Procedure Rules that a party must follow if they wish to present a valid Part 36 offer. The requirements include the following:
- Any Part 36 offer made must be in writing and clearly state that is is made in relation and in line with CPR 36
- The offer must make clear the time period in which the offer is valid for and is open to acceptance. This period must not be any less than 21 days within which the Defendant will be liable for the Claimants costs
- The offer must clearly state whether it applies to the whole claim or only a part of the claim
- A Part 36 offer must also state any counterclaims which are taken into account within the offer
A Part 36 offer can be made at any point during the proceedings up until a judgement is made by the court, this includes before proceedings have even taken place. If a party is considering making an offer before proceedings have commenced then it is important to assess the benefits of doing so as parties are perhaps not as informed as they could be if proceedings were go ahead, and the disclosure of important documents would not yet have been disclosed which could provide vital evidence for the case.
An offer made within 21 days of a trial commencing will have a number of costs consequences to the party, which includes the benefits of beating a Part 36 offer are likely not to apply.
It is also worth noting that a party will require the courts permission to accept any offer made once a trial is already underway, and that a Part 36 offer can be changed or withdrawn at any point if it has not yet been accepted. Written notice of any changes or withdrawal of an offer must be served.
Should I accept a Part 36 offer as a Claimant?
If you wish to accept a Part 36 offer then it must be done in writing under the guidelines set out in CPR 36.11(1), and offers can be accepted at any point within the valid time frame as long as any offer made has not been withdrawn.
It is often the case that the party making a settlement offer is the Defendant and therefore, the paying party. If the Claimant accepts the offer, the paying party then has 14 days from their acceptance to pay the sum of the settlement to them. If they fail to do this, the Claimant can seek a judgement from the courts. This also emphasises the benefit of accepting a Part 36 offer in that settlements and payments happen quickly once things are accepted.
Important information surrounding costs and accepting Part 36 offers include that if an offer is accepted within the relevant outlined period then the Claimant is entitled to recover its costs up to the date of the acceptance. As opposed to if the offer is accepted upon the expiry of the relevant period or if the offer is made within 21 days of a trial taking place, then both parties will need to agree liability on costs, otherwise the court will make a costs order. If the parties can agree liability but fail to reach an agreement on costs then the court will issue a detailed assessment on a standard basis.
A Claimant will be able to recover their costs up to the date of the relevant period expiring if they accept the offer outside of said relevant period.
Should I Reject a Part 36 Offer?
When a Part 36 offer has been received it is important to assess not only the benefits of accepting it but also any disadvantages that may arise due to acceptance.
There can be consequences later on down the line during a trial if the judgement made by the court fails to beat the offer initially presented to you.
If a Claimant obtains a judgement that does not beat the Part 36 offer they made but is better or equal to the Defendants offers then the court will typically make a costs order in favour of the Claimant on a standard basis. If the Defendants offer is not beaten then the Claimants can recover their costs up to the date of the expired Part 36 offer, and will have to pay the Defendants costs following that date.
If a judgement is given which beats the Claimants own offer which was made within the relevant time period then the court can make the following type of order (unless other circumstances mean it is unjust to do so):
- The Claimant will be awarded interest on the damages awarded at 10% from the date at which the relevant period of the Part 36 Offer expired.
- The Claimant will be able to recover its costs on the indemnity basis, rather than standard basis, from the date on which the relevant period expired.
- The Claimant is entitled to interest on those costs, not exceeding 10% above the base rate.
- The Claimant will receive a 10% uplift on the damages awarded, up to a maximum of £75,000.
How Greener Costs can assist
Our team at Greener Costs are experts in legal costs and are experienced to help with both the recovery and disputing of Part 36 costs whether you are a receiving party or paying party.
With our extensive knowledge and highly skilled team of Costs Draftsmen, we can provide law costing services to clients throughout England and Wales. We are also proud to be represented on Your Legal Advisor’s panel of costs experts.
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