Chapter 17: Part 36

• Part 36 offer


  A formal offer to settle a claim, meant to convince the offeree to settle early
• Part 36 offer


  • It is a 'without prejudice' offer, which means it cannot be disclosed to the court until the question of costs is considered
  • If the offer is not made in accordance with the requirements of Part 36, it is unlikely to have the consequences of a Part 36 offer
• Requirements of a Part 36 offer

  1. Be in writing

  2. State clearly that it is made pursuant to CPR Part 36

  3. Specify a period (called the relevant period) of not less than 21 days within which the offeree can accept

  4. State whether the offer relates to the whole or part of the claim

  5. State whether the offer takes into account any counter-claim
• Part 36 offers are normally made inclusive of interest
• If a Part 36 offer is accepted within the relevant period, the defendant will pay the costs of the claim to the point of acceptance and the costs will be assessed on the standard basis (reasonable costs) if the parties cannot agree them
• When can a Part 36 offer be made?

  Part 36 offers can be made in most types of claim, other than small claims, and may be made at any time during the proceedings, including before proceedings are issued and during the trial
• If a party makes a Part 36 offer pre-issue and the parties settle the claim before proceedings begin, a court may award the offeror the pre-issue costs that they incurred
• If a party makes a Part 36 offer pre-issue but it is rejected and the party wins the case, the court may allow the party to recover the cost of pre-action work in addition to the costs of the litigation
• Requests for clarification of a Part 36 offer

  1. If the terms of a Part 36 offer are unclear, the offeree can request clarification within seven days

  2. If the offeror does not provide suitable clarification within seven days, the offeree may apply to the court for an order requiring the offeror to clarify
• Withdrawing a Part 36 offer

  1. A Part 36 offer can be withdrawn as long as the offeree has not served a notice of acceptance

  2. If the notice of withdrawal (or to amend to become less advantageous to the offeree) is served before the relevant period expires, it takes effect upon expiry of the relevant period unless the offeree serves notice of acceptance before expiry of the relevant period

  3. If the offeree serves a notice of acceptance during the relevant period, before the notice of withdrawal can take effect, the offeror may apply to the court for permission to withdraw the offer or change its terms within seven days of the offeree's notice of acceptance

  4. If an offer has not been accepted by expiry of the relevant period, the offeror may withdraw or amend the offer without permission
• Acceptance of a Part 36 offer

  1. A Part 36 offer must be accepted in writing

  2. It can be accepted at any time, even after expiry of the relevant period, so long as the offeror has not withdrawn it

  3. If a claimant accepts a defendant's Part 36 offer outside the relevant period, the defendant's liability to pay the claimant's costs runs only up to the end of the relevant period

  4. Once a trial has started, a party may accept a Part 36 offer only with permission of the judge
• Acceptance of a claimant's Part 36 offer

  • If a defendant accepts a claimant's Part 36 offer within the relevant period, they become liable to pay the claimant's costs of the proceedings up to the date on which the letter accepting the Part 36 offer is served
  • If a defendant accepts a claimant's Part 36 offer after expiry of the relevant period, the court will decide the liability for costs if the parties cannot agree
• Acceptance of a defendant's Part 36 offer

  If a claimant wishes to accept a Part 36 offer from a single defendant when there are multiple defendants, the claimant must obtain the court's permission to accept
• Post-judgment cost consequences of rejecting a Part 36 offer

  1. If a claimant rejects a defendant's Part 36 offer and beats it, the defendant will be ordered to pay the claimant's costs of the entire proceedings

  2. If a claimant rejects a defendant's Part 36 offer and fails to beat it, the court will, unless it considers it unjust to do so, award the defendant their costs on the standard basis from the date when the relevant period for acceptance expired

  3. If a defendant rejects a Part 36 offer made by the claimant and the claimant fails to secure a more advantageous or equal result at trial, the claimant's Part 36 offer will have no effect

  4. If a defendant rejects a Part 36 offer made by the claimant and the claimant secures a more advantageous or equal result at trial, unless it is unjust, the claimant is entitled to interest on the entirety of the claim at an enhanced rate of up to 10% above base rate for the period after the time for acceptance expired, and the defendant will pay the claimant's costs incurred after the relevant period on an indemnity basis
• In damages only claims or mixed claims, the amount to be paid by the defendant will be calculated as a percentage of the damages awarded to the claimant
• In non-monetary claims, the defendant must pay a percentage of the costs that the court has ordered the defendant to pay to the claimant, subject to a cap of £75,000
• When might such orders be unjust?

  The court has discretion not to impose the sanctions described above if it considers it unjust to do so, taking into account factors such as the terms of the Part 36 offer, the stage in the proceedings when it was made, the information available to the parties, the conduct of the parties, and whether the offer was a genuine attempt to settle