There are various methods a party can use to attempt to resolve a dispute, if previous negotiations have not resulted in a settlement, a party may consider making a Part 36 offer.
A Part 36 offer can be made at any time and can be made by either party, i.e. claimant or defendant. The offer can be of monetary value, an offer of admission of liability or a portion if there is an element of contributory negligence.
A Part 36 offer is governed by Part 36 of the Civil Procedure Rules and is made on a ‘without prejudice save as to costs’ basis. In order to be a compliant Part 36 offer there are a number of rules that need to be adhered to, such as;
The offer must be in writing
The offer must state that has been made pursuant to Part 36
Specify a relevant period (not less than 21 days)
State whether the offer is in relation to whole of the claim, part of the claim, or an issue in the claim (further specifying which part/issue)
State whether it takes into account any counterclaim
If an offer has not been made in accordance with the rules and associated content, then it will not be a valid Part 36 offer.
In personal injury claims, further information must be set out in the offer if the claim for damages involves future loss.
If the claimant has received certain state benefits the offer should state whether the offer is made including deductible benefits or not.
If the claim is not capable of settlement at this stage because there is risk of further damage, the offer must say whether any award is provisional or not.
What are the consequences of not accepting a Part 36 offer?
The most attractive benefits to using a Part 36 offer centre around costs. Depending on whether the offer was made by the claimant or defendant, there will be different cost consequences.
A defendant who has made a Part 36 offer, but the claimant has then failed to obtain a more advantageous judgement at trial than the offer, the defendant is able to seek to recover costs from the claimant from the time the offer could have been accepted until judgement. Those costs will then be deducted from the final award.
If the offer is accepted within the relevant period, the damages offer will be paid within 14 days and standard costs will be payable to the receiving party.
If the claimant makes an offer that is not accepted by the defendant and the claimant obtains judgement against the defendant that is less advantageous to the claimant, then there will be cost consequences for the defendant. Examples include costs on the indemnity basis from the date on which the relevant period expired, interest on costs, interest on the whole or part of any sum of money, as well as an additional amount not exceeding £75,000 on the basis the case has been decided and no previous order has been made. Therefore, for claimants the benefits of a Part 36 offer can be significantly more than any costs they may hope to achieve at trial.
When correctly used Part 36 offers can be a useful tool. However, the strict requirements associated with drafting and serving mean that care must be taken, otherwise parties face losing associated benefits.
If you have received a Part 36 offer or require further advice. Please contact Richard Harriman at email@example.com