Part 36 of the Civil Procedure Rules allows parties to a case make formal offers to settle disputes before or during litigation. These offers can be made by either party but retain big cost consequences to the other party. Part 36 offers are a powerful way of pressuring a party to litigation to settle a civil claim. They are more complex than a usual offer and therefore it is key to understand the consequences prior to issuing a Part 36 offer.
Recently, the actor Hugh Grant settled his case against The Sun publisher News Group Newspapers for phone hacking. Hugh Grant explained to his fans through a series of posts of X that he did not want to accept the settlement offer and preferred for the allegations to be tested in court. However, due to the severe cost sanctions and financial risks of turning the settlement offer down were too great to avoid, his solicitors advised him to accept the offer.
Who can make a Part 36 Offer?
The offer can be made by either the Claimant or the Defendant at any time during a dispute, concerning the issue of liability of valuation of the claim or both.
Offers on a value of the claim are intended to be without any admission on liability. Therefore, the party accepting or the party making the offer does not necessarily admit the liability involved. A Part 36 offeree must provide a period of at least 21 days (‘the relevant period’) to consider the offer. After 21 days or the relevant period the offeror has the right to withdraw the offer and continue with the dispute as if the Part 36 offer was never made.
Cost Consequences
As mentioned above, Part 36 offers are intended to put pressure on a party to accept a settlement and there are costs consequences arising from this.
If you receive an award in court which is either the same as or higher in value than the offer you have made:
- the court could award interest on the whole or part of the award up to 10% above the base rate, from 21 days following the offer being made, up to the hearing.
- the court could award your legal costs on an indemnity basis from 21 days after the offer being made, up to the final hearing. This would require the other party to pay up to around 90% of your legal costs. This is more advantageous than the usual costs award in the court, which is usually up to around 2/3 of your legal costs, if you are successful in your claim.
- There would also be interest, up to 10% above the base rate, payable on those legal costs.
- There could also be an additional sum equal to 10% of the award made being payable. For example, if you were awarded £20,000.00, there could be an additional sum of £2,000.00 payable. Making the total award £22,000.00.
If you receive an award which is lower in value:
- The usual cost principles will apply when making a costs order, i.e. up to around 2/3 of your costs.
If you need help with a dispute that needs settling, our solicitors are on hand to help guide you though the process. There are different options available to you and It can be confusing what consequences these may bring, obtaining advice and assistance can make this process easier for you.
Please call 01256 844888, email enquiries@lambbrooks.com or speak to our online chat assistant at any time of day.
