04 July, 2019
A Part 36 offer is an offer to settle a case pursuant to Part 36 of the Civil Procedure Rules.
There are unique consequences for an offeree who rejects a Part 36 offer and then fails to 'beat' that offer at trial - both as to costs and damages. For example, an offer is made by a claimant for £50,000 and rejected by the defendant. At trial, the judge awards the claimant £70,000. The claimant has beaten its Part 36 offer. It will be entitled to extra 'bonus' damages on top of the £70,000 (up to 10%), costs assessed on an indemnity basis (which results in a higher recovery rate) and interest on those costs.
This case concerned assessment of costs. The claimant offered to accept £425,000 and the defendant rejected this offer. The court at trial (assessment) awarded £432,000. Therefore, the claimant had beaten its Part 36 offer - but only by a small percentage.
The court refused to award the 'bonus' damages (here costs) of 10% on the grounds that the size of the 'bonus' was disproportionately large when compared to the amount by which the Part 36 had been 'beaten'.
On appeal the judge awarded the 10% additional damages (costs) and held that proportionality was irrelevant. The purpose of the Part 36 consequences was to penalise Parties who did not accept reasonable offers of settlement.
It isn't news that courts take the obligations of litigants to consider settlement seriously.
A well valued and timed Part 36 offer can put litigants in a greatly protected position come trial. Upon receipt of a Part 36 offer, you should consider carefully how likely it is that the offer might be beaten at trial.
Not all offers are Part 36 offers, even if they appear to be. Part 36 sets out prescriptive rules as to the content of Part 36 offers.
A Part 36 offer can be made by a claimant or a defendant. Where a claimant makes a Part 36 offer it includes an offer to pay the defendant's reasonably incurred costs.
These are just some of the complicated rules surrounding Part 36 offer. Expert legal advice is vital.
For more information contact Laura Hallett Lea in our Business Dispute Resolution department via email or phone on 0333 207 1141. Alternatively send any question through to Forbes Solicitors via our online Contact Form.
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