What is a Part 36 offer?
A Part 36 Offer is covered by section 36 of the Civil Procedure Rules (CPR) and is an offer to settle the matter. if a realistic offer is made by either party and not accepted, cost consequences may follow. The cost consequences imposed are to encourage parties to settle the claim without incurring unnecessary expenses.
How to make a Part 36 offer
- Be in writing;
- Make it clear that the offer is made pursuant to Part 36;
- Specify a period of not less than 21 days within which the Defendant will be liable for the Claimant’s costs CPR36.13 or 36.23)
- State whether it relates to the whole of the claim or to part of it or to an issue that arises in it and if so to which part or issue; and
- State whether it takes into account any counterclaim.
CPR 36.5 states that in order to be a Part 36 Offer, the offer must:
CPR 36.5 (c) is important, this is known as the relevant period. This determines at which point the cost consequences shall start, following the non-acceptance of an offer.
Accepting a Part 36 offer
If the Part 36 offer is accepted within the relevant period as specified within the order, the Claimant is entitled to their costs up to the date of acceptance and the claim is stayed.
If the Part 36 offer is accepted after the relevant period has expired, the parties are to agree the liability for costs. If no agreement can be reached, the court will determine the liability for costs. The normal position is that the Claimant is entitled to their costs up to the date the relevant period expired, after which, the party making the offer is entitled to their costs up to the date the offer is accepted. The claim will be stayed.
You can accept a part 36 offer at any time unless it has been withdrawn or changed.
What happens if I don’t accept the Part 36 offer before trial?
For example, the Claimant has a claim for £10,000 against the Defendant.
When the Claimant makes a Part 36 offer
Claimant makes a Part 36 offer for £8,000 and is awarded £7,000 at trial.
- If the Claimant does not beat their own Part 36 offer, there are no cost consequences, and the Defendant will have to pay the Claimant’s costs in the usual way.
Claimant makes a Part 36 offer of £8,000 and is awarded £10,000
- If the Claimant matches or beats their own Part 36 offer, the Defendant will face cost consequences in that the court can order them to pay:
- An additional 10% of the damages awarded to the Claimant.
- Costs on an indemnity basis from the expiry of the relevant period.
- Interests on the damages and costs from the date of the expiry of the relevant period of up to 10%.
When the Defendant makes a Part 36 offer
Defendant makes a Part 36 offer for £5,000 and the Claimant is awarded £6,000 at trial
- If the Claimant beats the Defendant’s Part 36 offer at the outcome of the trial, the usual costs rules apply, and the Defendant will have to pay the Claimant’s costs at the standard rate.
Defendant makes a Part 36 offer for £5,000 and the Claimant is awarded £4,000 at trial
- If the Claimant does not beat the Defendant’s Part 36 offer at the outcome of the trial, the Claimant will have to pay the Defendant’s costs from the date that the relevant period expired, with interest on the costs. This is because the Claimant failed to accept the offer which would have prevented further unnecessary costs being incurred.
Withdrawing or varying a Part 36 offer
If the other side has not accepted the Part 36 offer, it can be withdrawn at any time after the relevant period has expired without the courts permission.
To withdraw or vary the part 30 offer prior to the expiry of the relevant period, written notice must be served on the other side stating the offer is withdrawn. If the offer has been accepted, you must apply to the court for permission to withdraw the offer within seven days of acceptance. However, the court has discretion and a change of circumstances since making the initial offer has to be shown.
If you need any help with Part 36 offers, please contact clerks@anvilchambers.co.uk