Litigation strategy – part 36 offers

LITIGATION STRATEGY – PART 36 OFFERS

Part 36 Offers are designed to encourage parties to settle a claim outside of court. Under a Part 36 Offer, either a claimant or a defendant informs the other party how much money they are willing to offer to resolve the dispute in an attempt to avoid court. If the party receiving the Part 36 Offer does not accept the offer, they may be ordered to pay more interest or costs than if no offer had been made. This encourages parties to make Part 36 Offers to settle disputes.

As a result, a well-thought out Part 36 Offer can be a very useful tactic to resolve disputes at an early stage and to increase the pressure onto the opponent to settle.

Why make a Part 36 Offer?

Normally, if a Part 36 Offer to settle is accepted within the relevant period, the claimant is entitled to their costs of the proceedings up to the date of acceptance on the standard basis. If a Part 36 offer to settle is accepted after expiry of the relevant period, the parties must agree the liability for costs or, failing agreement, the court decides liability for costs.

However, if a claimant’s Part 36 offer is not accepted and at trial the claimant obtains a judgment at least as advantageous as the terms of its own offer, the claimant will be able to claim an additional sum equal to 10% on damages or costs up to £500,000 and 5% on damages or costs above £500,000 up to £1m. This represents a potential enhancement of up to £75,000 on damages or costs.

Considering a Part 36 Offer is an essential step in the litigation process as a powerful tactical tool and one of many ways to try to apply pressure to your opponent, and to reduce your exposure to the costs risk of being involved in court proceedings.

Without prejudice save as to costs

Part 36 Offers are made on a ‘without prejudice save as to costs’ basis. The court is not made aware of whether a Part 36 Offer is made until after a judgment has been made and the court consider any Part 36 Offers when making an order as to who pays whose costs.

When can you make a Part 36 Offer?

A Part 36 Offer can be made at any time before judgment in a case.

An early offer can be made before court proceedings are issued and may provide the parties with a substantial costs benefit; however, it is important to be well-informed in order to know where to “pitch” the offer.

What are the requirements of a Part 36 Offer?

A Part 36 Offer cannot be made in claims which have been allocated to the small claims track (usually claims under £10,000 in value).

The Part 36 Offer must (amongst other things):

• Be served in writing.
• Be clear that it is made pursuant to Part 36.
• State whether it relates to the whole or part of the claim.
• specify a period of not less than 21 days within which the defendant will be liable for the claimant’s costs if the offer is accepted.

Accepting an offer

A party must accept a Part 36 Offer in writing and it can be accepted at any time.

 Can you withdraw a Part 36 Offer?

A Part 36 Offer can be withdrawn and the party making the offer may change the terms of the offer provided that the offer is not yet accepted. However, if the relevant period (currently, 21 days) has not expired has not expired, the offer cannot be withdrawn or changed to be less advantageous than the original offer without the court’s permission.

For more information, please call us on 020 4571 8633 or email us at hello@birdilaw.com. Alternatively, please take a moment to complete our free enquiry form.

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