10 April, 2013
From 1st April 2013, the Part 36 rules will change once again. Part 36 of the CPR governs the rules for making a formal offer to settle a claim. Where a party makes a Part 36 offer, there are certain cost consequences. Under the old rules, a Claimant could make an offer to settle a claim and where the Part 36 offer was beaten they could be awarded interest at up to 10% above base rate on damages, interest at up to 10% above base rate on costs and costs on the indemnity basis from when the 21 days expired.
Under the new Part 36 rules, the previous penalties remain as discussed above but an additional amount of up to £75,000 calculated by reference to the judgement sum can be awarded. The additional amount is 10% of any figure up to £500,000 and 5% of anything awarded above £500,000.
For example, a Claimant's makes a Part 36 offer to settle the claim in the sum of £10,000. At trial the Claimant beats the offer and is awarded the sum of £20,000 at the trial. In this situation, the Claimant would receive (a) damages of £20,000 and potentially any of the following (b) interest on those damages at up to 10% above base rate (c) costs on the indemnity basis (d) interest on costs up to 10% above base rate and (e) an additional £2,000.
If the Claimant fails to beat the Defendant's Part 36 offer, the Claimant will be liable for the Defendants costs plus interest from expiry of the 21 days. The costs will however be capped at the amount of damages plus interest awarded.
Should you require further information, please contact David Pickford