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Dispute Resolution - 17 - Part 36 Offers to Settle - Coggle Diagram
Dispute Resolution - 17 - Part 36 Offers to Settle
What is a Part 36 Offer + Requirements
Formal requirements
Be in
writing
(Custom
letter
OR
N242A)
Clearly
identified as Part 36 offer
Specify a
RELEVANT PERIOD
in which the offeree can accept (
minimum 21 days)
Cannot withdraw without court permission before 21 days
Expiry
unless a set time limit provided by the offering party
Does not expire unless specifically withdrawn/amended; or
State whether the offer takes into account any
counter-claim
State whether the offer
relates to the WHOLE
of the
claim
, or
just PART
of the claim
Typically made inclusive of interest; offer to settle
When Can a Part 36 Offer Be Made?
At any time,
including before proceedings are issued
and
during the trial
If a party makes a Part 36 offer
before
legal proceedings start, and the
claim is settled
without going to court, the court may require the
other party to pay the
(called PRE-ACTION)
costs the offeror incurred
before the legal
proceedings
even began.
If a Part 36 offer is made
before legal proceedings start, but the offer is rejected
, and the
offering party wins
the case, the court may
order the other party
to pay for BOTH the
pre-action costs
and the
costs of the legal proceedings.
NOT possible in
Small Claims
Requests for Clarification - If Part 36 Offer Terms are Unclear
Offeree can
request clarification within 7 days
If
offeror doesn't provide suitable clarification
within 7 days, offeree can
APPLY for Court ORDER requiring clarification
Withdrawing Part 36 Offers
Must serve Notice of Withdrawal/Amendment - Possible
as long as offeree has not served Notice of Acceptance
Before Expiry of Relevant period
Only takes effect if
offeree doesn't accept offer on the table
; AND
Only takes effect
once Relevant Period expires
Special case: After Acceptance
If offeree serves Notice of Acceptance during the relevant period, before the Notice of Withdrawal takes effect:
Offeror
may APPLY TO COURT for PERMISSION TO WITHDRAW the OFFER
OR to
CHANGE ITS TERMS
within
7 DAYS
of Offeree's Notice of Acceptance
Court will
only grant permission if
It is in the interests of justice; AND
There has been a change of circumstances since the offer was made
Otherwise, acceptance remains effective
After Expiry of Relevant Period
May be withdrawn or amended without court permission
If new/amended offer is less advantageous to offeree, then:
Offeree won't be penalised for not accepting the original, more generous offer, once it has been withdrawn or amended (so usual Part 36 costs rules don't apply)
Acceptance of Part 36 Offers
Must
be in
writing
If accepted by
Claimant
outside the relevant period:
Defendant's costs liability to claimant runs
only up until the end of the relevant period (21 days)
So full usual court fees + whatever is spent in those 21 days, but no more than that
Parties must then
agree
on
who pays for the costs AFTER the RELEVANT PERIOD
If they cannot agree,
COURT
will decide, typically ordering
claimant to pay defendant's costs from END OF RELEVANT PERIOD to DATE OF ACCEPTANCE
Acceptance DURING THE TRIAL
requires the
COURT'S PERMISSION
If
Defendant
accepts
Claimant's offer
Pays claimant's costs
up to date
on which Part 36
Acceptance
Letter (from defendant) is
served
Costs are assessed on a
Standard Basis (proportionate)
If defendant accepts Part 36 offer from claimant
after relevant period
, Court decides costs
if parties cannot agree
Claimant's acceptance of Part 36 offer from
one defendant
when there are
multiple defendants
REQUIRES COURT PERMISSION
Post-Judgement Cost Consequences of Rejecting Part 36 Offer
Rejection by Claimant
of Defendant's Offer (
But Claimant Wins at Trial)
If Claimant beats offer
Defendant
ordered to pay claimant's costs of entire proceedings
- part 36 offer has no effect
If Claimant
Doesn't
beat offer
Court will
award Defendants their costs
(from claimant) on
standard basis
from the
date when the Relevant Period Expired
But note**defendant still has to pay normal costs leading up to end of Relevant Period
Court may also add
interest
to this for defendant
This applies unless the Court considers it
unjust
to make this payment order
Rejection by Defendant
of Claimant's Offer
If Claimant beats offer (that they made) - IMPORTANT
If the
defendant rejects a Part 36 offer from the claimant
, and the
claimant wins EQUAL TO or MORE
than what they offered at trial, the claimant is entitled to additional benefits:
Interest on the entire award at an enhanced rate
(up to
10
%
above the base
rate)
FROM THE END OF THE ACCEPTANCE PERIOD
.
enhanced interest on damages starting on the 22nd day after the offer, Indemnity costs, Enhanced interest
on the indemnity costs
claimant does not get enhanced interest on the standard costs incurred before the expiry of the Part 36 offer.
The
defendant will have to pay costs
after the relevant period on an
INDEMNITY
basis,
plus
enhanced interest
on those costs (up to 10% above the base rate) (for period AFTER PART 36 WAS REJECTED)
The claimant
may also receive additional damages because the defendant failed to accept a reasonable
Part 36 offer.
Costs award
depends on nature of case
For
damages
only/
mixed
claim
Amount paid
BY DEFENDANT
calculated as
percentage of damages awarded to claimant
10% of up to £500,000 in damages
5% above £500,000 (+10% of £500,000)
For non-monetary claim (eg claim for injunction, specific performance, etc)
Amount paid
BY DEFENDANT
also calculated
as a percentage
, but is
CAPPED AT £75,000
Follows same calculation rules as pure damages/mixed - 10% up to £500,000, 5% above £500,000
Defendant pays costs up until part 36 offer expires on standard basis. Then indemnity costs after the part 36 offer "relevant period" expires.
If Claimant
doesn't beat offer
(that they made)
If the defendant rejects a Part 36 offer from the claimant, and the claimant
does not win more than what they offered at trial, the Part 36 offer has no effect
.
Who pays the legal costs will depend on whether the defendant made their own Part 36 offer and whether the claimant beat that offer.
Brief summary
Claimant beats
OWN part 36 offer
at trial =
indemnity
Claimant doesn't beat
OWN
part 36 offer at trial = court caluclates costs
Defendant makes offer, claimant rejects it and beats it = defendant pays all of proceedings
Defendant makes offer, claimant rejects it and doesn't beat it = defendant only pays up to relevant period, claimant pays defendant for rest
When Might A Part 36 Costs Order Be Unjust? - Court considers:
The
Terms
of the Part 36 Offer:
Example: If the offer contained complex terms that were difficult to understand, or if the wording was vague, making it
unclear what was being offered
+ offeror didn't respond to Requests for Clarification
The
Timing
of the Part 36 Offer:
Example: If the offer was
made very late in the proceedings, just a few days before trial, and the offeree didn’t have enough time to properly consider
or respond to it.
The
Information Available
at the Time:
Example: If critical
evidence that could significantly affect the case was not available to both parties
when the offer was made, making it unfair to judge the offeree for rejecting the offer.
The
Conduct
of the
Parties
:
Example: If one party
deliberately withheld important information
, making it
difficult for the other side to evaluate whether the offer was reasonable
or whether it was in their best interest to accept it.
Whether the Offer Was a
Genuine Attempt to Settle:
Example: If the offer was made at an
unrealistically low amount, just to trigger cost penalties later
, rather than as a sincere attempt to settle the claim fairly.