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PART 36 (36.13 - COST CONSEQUENCES OF ACCEPTING A PART 36 OFFER
GR: If…
PART 36
36.13 - COST CONSEQUENCES OF ACCEPTING A PART 36 OFFER
- GR: If accepted within the relevant period, C will be entitled to costs of proceedings on a standard basis up to date on which the notice of acceptance was served on the offeror.
- Costs of proceedings may include pre-action costs
- The cost order is deemed to have made on the standard basis --> C is entitled to 100% of his assessed cost, that is, the amount payable following a detailed assessment,
36.13(2) - If a D's Part 36 offer relates to only part of the claim and at the time of serving the notice of acceptance within the relevant period, the C abandons the balance of the claim,
the C will only be entitled to costs of claim which his Part 36 offer related, unless court orders otherwise.
- Costs will be assessed on a standard basis
36.13(4) - Situations where liability for costs must be determined by the courts, unless parties have agreed costs.
- Part 36 offer which was made less than 21 days before trial is accepted, or
- Part 36 offer which relates to the whole of the claim is accepted after expiry of relevant period, or
- Subject to 36.13(2) , Part 36 offer which does not relate to the whole of the claim is accepted at any time.
LATE ACCEPTANCE
36.13(5) - If parties cannot agree the liability for costs when a part 36 offer relating to the whole of claim is accepted after the end of the relevant period, then court must order, unless it is unjust that:
- C be awarded cost up to the date on which the relevant period expired AND
- Offeree to pay offeror's cost from date of expiry of relevant period to date of acceptance.
-- NOTE: In considering what is unjust, court must take into account all the circumstances including those listed in 36.17(5).
- There is no presumption that court will order a late-accepting party to pay the other party's cost on an indemnity basis. Usual basis is a standard basis unless the conduct is in issue. If conduct in issue then r.44.2 applies.
- Eg: C accepted a very old Part 36 offer on eve of trial after failing to engage in settlement negotiations and having turned down a number of significantly more attractive offers. Court departed from usual order (required offeree to pay cost from the expiry of the relevant period) and pay costs on indemnity basis.
- There is a difference where the facts known to D do not change significantly and one where D's assessment of the true value of the offer is undermined by subsequent events/ subsequently discovered facts.
C's cost includes any cost dealing with the D's counterclaim if Part 36 offer states that it takes it into account.
36.2 - A PART 36 Offer may be made in respect of the whole, or part of, or any issue that arises in:
- A claim, counterclaim or other additional claim OR
- an appeal / cross-appeal from a decision made at trial
Part 36 may not provide Ds against fraudulent claims, since on acceptance, the D would have to pay the C's cost. -- Better to make a Calberbank offer to settle the genuine part of the claim on terms that C pay D's costs incurred in respect of the fraudulent aspects on the indemnity basis.
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36.17 - Where judgement is entered . This part X apply to a part 36 offer that has been withdrawn / which was chnaged so that the terms are less advantageous to offeree where the offeree has beaten the less advantageous offer/ made less than 21 days before trial
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D made Offer and C fails to obtain judgement more advantageous
- Comparison in money terms is made at the date of judgement
- Since Part 36 offer is deemed to include interest to the end of the relevant period, interest after that date must be ignored
Court must order, unless it is unjust to do so, order that the D is entitled to:
- Costs from the date on which the relevant period has expired and
- interests on those costs
Costs awarded will normally be on a standard basis, but can be on an indemnity basis in limited circumstances where court view that C's conduct was such as to take the situation "out of the norm"
36.9 - Withdrawing/ Changing Terms
- Can only be withdrawn/ changed if offeree has not previously served a notice of acceptance
- The offeror withdraws the offer/ change its terms by serving a written notice of withdrawal or change of terms on the offeree. - takes effect when it is served on the offeree
- If an offeror change terms to make it more advantageous to the offeree, it shall be treated as a new Part 36 offer and have another 21 days or longer to accept
AFTER EXPIRATION OF RELEVANT PERIOD
- can withdraw or change without permission of court or
- the offer is automatically withdrawn in accordance with its terms
BEFORE EXPIRY OF RELEVANT PERIOD OR CHANGE TERMS TO BE LESS ADVANTAGEOUS
- If offeree has not served a notice of acceptance of the original offer by the expiry of the relevant period, the offeror's notice has effect on the expiry of that period
- If offeree serve notice of acceptance before the relevant period expires, the acceptance has effect unless the offeror applies for court permission to withdraw offer/ change terms within 7 days of the offeree's notice of acceptance or if earlier, before the first day of trial. -- Court will only give permission if there has been a change of circumstance and that it is in the interest of justice
Relevant Period = In the case where an offer is made, not less than 21 days before a trial or otherwise, or such other period as parties agree. If no offer made, then the period up to the end of such trial.
- Part 36 offer may be made at any time, even before commencement of proceedings
- Part 36 offer is made when it is served on the offeree.
Except when a Part 36 offer is made in appeal proceedings, costs consequences are only in respect of the proceedings it was made, not in relation to costs of any appeal from a decision in those proceedings
36.5 - Form and Content of a Part 36 Offer
- in writing
- make clear it is pursuant to Part 36
- specify a period not less than 21 days within which the D will be liable for the C's cost
- state whether it relates to the whole/ part / an issue of the claim
- state whether it takes into account any counterclaim
- A part 36 offer which offers to pay or offers to accept a sum of money will be treated as inclusive of all interest.
Part 36 offer by a D must be an offer to pay a single sum of money.
- an offer that includes an offer to pay later than 14 days following the date of acceptance will not be treated as a Part 36 offer unless the offeree accepts the offer.
36.8 - Clarification of a Part 36 Offer
Offeree may within 7 days of the offer being made, request the offeror to clarify the offer.
- If offerror does not give clarification within 7 days of receiving the request, the offeree may, unless the trial has started, apply for an order that the offeror do so.
- If court makes an order, it must specify when the Part 36 offer is treated as having been made
36.11 - ACCEPTANCE
- Acceptance by written notice of acceptance on the offeror, may be accepted at any time, unless it has already been withdrawn.
- Court's permission required to accept where
a) Part 36 offer made by 1/more but not all of a number of Ds and 36.15 X apply
b) relevant period expires and further deductible amounts have been paid to C since date of offer
c) Apportionment is required
d) Trial is in progress
- Where court gives permission, the court must make order dealing with cost
36.14 - Effects of Acceptance
- Claim will be stayed
- Any stay will not affect power of court to enforce terms of Part 36 offer or deal with any question of costs relating to the proceedings
- Where an offer to pay or accept a single sum of money is accepted, the sum must be paid within 14 days of the date or acceptance/ order. If not, the claimant may enter judgement for the unpaid sum
- if its not a monetary sum, then C may apply to enforce the terms of the offer without the need for a new claim
36.15 - Acceptance of a Part 36 offer made by 1/more but not all Ds
- If Ds are sued jointly, the C may accept the offer if
a) C discontinues the claim against those Ds who have not made the offer, and
b) those Ds give written consent to the acceptance of the offer.
- If C alleges that the Ds have several liability to the C, the C may accept the offer and continue with the claims against the other Ds
- In any other cases, C must apply to the courts permission to accept the Part 36 offer
36.17(5) - In considering "Unjust", court must take into account all the circumstances of the case including:
- Terms of any part 36 offer.
- Stage of proceedings when the offer was made, including how long before trial started the offer was made,
- Information available to parties at the time when the offer was made,
- Conduct of parties eg giving of or refusal to give info
- Whether the offer was a genuine attempt to settle proceedings
- Party at risk is required to establish grounds for rendering it unjust to make the order.
- Qs is not whether the offeree had reasonable grounds for not accepting the offer, but to consider whether the usual order was unjust
- Must be something more than harsh, must be something about the particular circumstances which takes it out of the norm.
Eg when it was found to be unjust:
- case was not primarily about money, but reputation. However, in cases concerning defamation/ misuse of P and C info, Ds should bolster their Part 36 offer by offering to make a joint statement in open court.
- Non disclosure of material facts
- Dramatic currency fluctuations
- Change in discount rate
"Genuine attempt to settle"
- Concept of settlement must involve an element of give and take and a settlement offer must involve some genuine element of concession eg 100% offers will not work