Part 36 Offers
If you are involved in a civil dispute whether you are the Claimant or the Defendant it is possible to make an offer to the other party. Legal advice should always be sought on such matters.
When may an offer be made?
It can be made at any time including before the commencement of the proceedings. It may be made in an appeal.
Offers of money
If your offer is an offer of money then it will be deemed to include interest due on your claim.
The relevant period
In the case of an offer it is generally the case that you have to give the other party 21 days within which to accept the offer.
Acceptance of the offer
If the offer is accepted then that should be done by service of a written notice of acceptance on the other party. The effect of acceptance is that the case is effectively over bar the assessment of costs.
Withdrawal of an offer
If an offer is made and not accepted within the 21 day period then it may be withdrawn by writing a withdrawal letter to the other party. It is important to note that if the offer is not withdrawn then it can still be accepted even after the 21 day period has expired. Therefore if you make a low offer and it is not accepted and you decide to press on with your claim it would be wise to withdraw the offer to avoid a scenario where the other party lets the case progress but then decides to accept the low offer before the case reaches trial.
Cost consequences of accepting a part 36 offer
If you are the Claimant in the case and accept the Defendant’s part 36 offer then the Defendant will also have to pay your reasonable costs to be assessed on what is called a standard basis by the Court if an amount is not agreed. The costs are payable up to the date on which the notice of acceptance was served. If you accept an offer after the 21 day period has expired then unless the Court makes a different order the general rule is that the party who accepts the offer will be liable to pay the legal costs of the party who made the offer from the date of expiry of the 21 day period to the date the offer was accepted. This is generally where there was late acceptance of an offer.
If a part 36 offer is made but not accepted and the case goes to trial and the trial Judge awards the Claimant an amount of money which is not better in money terms than the offered amount then even though the Claimant would have won the case and received an award they would have to pay the Defendant’s costs from the date on which the offer could have been accepted to and including the trial.
If the Claimant makes an offer of settlement under part 36 and the Defendant rejects it but the Claimant goes on to receive an award from the Court which is better in money terms than the Claimant’s offered amount then the Defendant would be penalised in having to pay interest on the money at a rate not exceeding 10% above the base rate, they would have to pay all of the Claimant’s costs and a 10% uplift on claims up to £500,000.00 on the award of damages. For a damages award of £500,000.00 and up to £1 million an additional amount is payable in the sum of 10% of the first £500,000.00 and 5% of any amount above that figure.
The judicious use of part 36 offers can bring about an early resolution of civil disputes thereby avoiding costs to the parties.
It is important that you keep your offers under review throughout the case and give consideration to withdrawing low offers which are not accepted by the other party. Otherwise you could find yourself in a position whereby you build a strong case for recovering an award of damages equal to your claim but then find the other party accepts the low offer you made at the beginning of the case.
Specialist legal advice should be sought before making a part 36 offer as the rules are complicated and the above represents a brief summary.
24th February 2015
Matthew Winder is a Senior Litigator member of the Association of Personal Injury Lawyers and a Director of Clarkson Hirst Solicitors who have offices at Lancaster, Kendal and Barrow.