Part 36 Offers
What is a Part 36 Offer?
Part 36 of the Civil Procedure Rules allows a party to litigation to make a settlement offer before trial on terms that if the offer is not accepted and the opposing party fails to beat the offer at trial the Court is likely to impose severe costs and/or interest penalties. The costs consequences depend on whether the offer is accepted within or outside the ‘Relevant Period’, which is a period of not less than 21 days from the making of the offer (or, if the offer is made less than 21 days before trial starts, then until the end of the trial). The Part 36 offer procedure can, if used appropriately, be a very powerful negotiating tool and it provides a great incentive to settle.
Who can make a Part 36 offer?
A Part 36 offers can be made by both Claimants and Defendants so either party can put its opponent at risk of serious costs by refusing to accept an offer.
A Part 36 offer can be made in respect of the whole or part of, or any issue that arises in:
- a claim, counterclaim or other additional claim, or
- an appeal or cross-appeal from a trial
Why make a Part 36 Offer?
A claimant might make a Part 36 offer because:
- If the defendant accepts the offer within the Relevant Period this would bring the dispute to an end and the claimant would receive its costs (assessed on the standard basis, if not agreed) up to the date of service of the notice of acceptance by the defendant, or
- If the defendant does not accept the offer and at trial the claimant obtains a judgment ‘at least as advantageous’ as the proposals in its Part 36 offer, then there are serious costs and interest implications for the defendant
A defendant might make a Part 36 offer because:
- If the claimant accepts the offer the dispute ends. If accepted within the Relevant Period the defendant pays the claimant’s costs up to that date. If accepted after expiry of the Relevant Period then generally the claimant will pay the defendant’s costs from expiry of the Relevant Period.
- If the claimant does not accept the offer, it risks the court awarding it nothing, or even if the claimant is successful but obtains a judgment which is no more advantageous to it than the defendant’s Part 36 offer, the defendant is entitled to its costs (and interest on them) from the date of expiry of the Relevant Period
When can you make a Part 36 offer?
A Part 36 offer can be made at any time. However, note the following:
Before commencement of proceedings
A Part 36 offer may be made before proceedings start. The court’s permission is not needed to accept an offer which was made before proceedings started after they have commenced, unless permission is required in certain special circumstances.
Just before trial
If a Part 36 offer is to be made less than 21 days before the start of a trial or during the course of a trial, then the court’s permission will be required before the offer can be accepted after the trial has started.
Counterclaim or other additional claim
You can make a Part 36 offer in respect of the whole or part of, or any issue that arises in a claim, counterclaim or other additional claim.
You can make a Part 36 offer in respect of the whole or part of, or any issue that arises in an appeal or cross-appeal from a decision made at trial. Note, therefore, that you cannot make a Part 36 offer in relation to an appeal from an interlocutory application. Note also that a Part 36 offer made in first instance proceedings does not follow through to any appeal so you will need to make a fresh offer for the purpose of the appeal proceedings.
You can make a Part 36 offer in detailed assessment proceedings.
Please note that this information is provided for general knowledge only and therefore specific advice should be sought for individual cases.
For further information please contact Andrew Strong or Sonia Cusack