A Part 36 offer is an offer to settle a claim or part of a claim. It should be compliant with Part 36 of the Civil Procedure Rules for it to carry potential costs consequences.
A Part 36 offer must be in writing. Make clear that it is made pursuant to Part 36. Specify a period of not less than 21 days. 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. It must state whether it takes into account any counterclaim.
A Part 36 offer can be made at any time which includes prior to the commencement of proceedings.
A Part 36 offer will be treated as ‘without prejudice except as to costs’ which means that it may not be used as evidence of admissions in court against the party who made the offer. A Part 36 offer is presented to the court once the case has been decided and the question of costs arises.
Part 36 offers must be taken seriously due to the costs consequences they can carry. A brief summary of the costs consequences are as follows:
- Part 36 offer for the whole of the claim, made at least 21 days before trial, which is accepted by the claimant or defendant within the relevant period = Claimant is entitled to the costs of the proceedings, which includes their recoverable pre-action costs, to be assessed on the standard basis if not agreed, up to the date of service of notice of acceptance.
- Part 36 offer for the whole claim, made at least 21 days before trial, which is accepted by the claimant or defendant after expiry of the relevant period = If the parties cannot agree liability for costs, the court must order that the claimant be awarded costs, (unless it considers it unjust), up to the date when the relevant period expired, and the offeree pays the offeror’s costs from the expiry of the relevant period to the date of acceptance.
- Claimant does not accept the defendant’s Part 36 offer and obtains a more advantageous judgement = Costs will be decided in the usual way.
- Claimant does not accept the defendant’s Part 36 offer and fails to obtain a more advantageous judgment = The court must order the claimant to pay the defendant’s costs, which includes any recoverable pre-action costs, from the date when the relevant period expired and interest on those costs (unless it considers it unjust).
- Defendant does not accept the claimant’s Part 36 offer and the claimant obtains a judgment equal to, or more advantageous than the offer = The court must order the defendant to pay the Claimant’s costs, which includes any recoverable pre-action costs, on the indemnity basis from the date the relevant period expired, plus; interest on those costs of up to 10% above base rate; interest on the whole or part of any sum of money (excluding interest) awarded at up to 10% above base rate for some or all of the period starting from the expiry of the relevant period; an additional amount of 10% of the first £500,000 of damages awarded or 10% of the first £500,000 of costs where there is no monetary award, and 5% or any amount above those figures subject to the limit of £75,000. (Unless it considers it unjust to do so).
- Defendant rejects the claimant’s part 36 offer, and the claimant obtains a less advantageous judgment = Costs will be decided in the usual way.