Part 36 Offers

A Part 36 Offer is an attempt to set out terms which will bring the litigation to a conclusion without going to court. An offer to settle the action is made with provision for payment of costs.

You generally have 21 days after the offer was made in which to give notification of acceptance. You do not need the courts consent to accept unless the offer was made 21 days before the start of trial. Accepting a Part 36 offer after the 21 days will result in the client suffering unfavourable costs consequences.

Requirements of a Part 36 Offer

• Be in writing
• State, it’s intended to have the consequences of Part 36.
• Specify a period of no less than 21 days within to accept and the Defendant will be liable for the Claimants costs (rule 36.10).
• State if it relates to whole or part of the claim.
• State does it take into account any counterclaim.

You can use form N242A to make the offer. However once court proceedings have started this form must be used in making an offer.

Consequences of Acceptance/Refusal of Part 36

Depends on the outcome of the litigation.

• Upon acceptance (prior to proceedings at court) the parties have a binding settlement upon which either party can rely.
• If proceedings have been commenced and an offer is made, the sum must be paid within 14 days unless the parties agree otherwise in writing, failing which the claimant can enter judgement for unpaid amount.
• If a claim is not accepted, and the Claimant goes on to do better than the proposal put forward in the Offer the Defendants may be penalised by order of the Court.
• The Claimant loses her case; the general principle is that the loser will pay the winners costs. Thus the claimant will pay the defendants reasonable costs as well as covering her own.
• Claimant wins but does not obtain judgement as advantageous as offer: The loser pays the winners costs.
• Claimant wins and obtains judgement greater than offer (CPR 36.14): The loser pays the winners costs, the defendant will pay interest on any sum awarded at a rate not exceeding 10% above basic rate for some/all of the period. The defendant pays the claimants costs on the indemnity basis from the date of expiry of the Relevant Period.

Practical Considerations

The earlier a Part 36 offer is made, the greater the financial consequences. Clearly the spirit of the Overriding Objective should be considered. Placing such pressure upon the defendant should save expense, assist a more expeditious conclusion and above all protect the client's interests on the question of costs. However, the quantification of the damages must be accurate and the timing of the offer correct. Or even put pressure on the defendant to make the Part 36 offer