‘Part 36 Offers’ – what are they and why make them?26 Sep, 2019 - Civil Litigation | by Grosvenor Law
There are various types of offers that a party can make when attempting to resolve a dispute and one of them is a Part 36 Offer. If accepted, such an offer will result in the settling of proceedings.
This blog offers a brief insight into what Part 36 Offers are and why they are made
What is a Part 36 Offer?
Part 36 Offers are governed by Part 36 of the Civil Procedure Rules and they are made on a without prejudice save as to costs basis. If the offer is compliant with the rules of Part 36, then the offer will carry certain costs consequences if, and when, it is accepted. The costs consequences will depend on whether the offer is accepted within or outside of the Relevant Period (which is a period of not less than 21 days from the making of the offer).
There are particular requirements that the Part 36 Offer must meet in order to be deemed a valid offer. The Part 36 Offer must:
- Be a genuine offer to settle the dispute;
- Be in writing;
- Be clear that it is being made pursuant to Part 36;
- State whether the offer relates to the entirety of the claim or whether it relates to only parts of the claim;
- State whether the offer takes into account any counterclaims; and
- Specify a period of not less than 21 days (that is, the Relevant Period) within which the defendant will be liable for the claimant’s costs if the offer is accepted.
It is crucial that these requirements are adhered to because if they are not, and the offer fails to be a valid Part 36 Offer, then the offeror will not be entitled to the benefits provided for by Part 36.
Why make a Part 36 Offer?
The courts encourage that parties attempt to settle cases from an early stage thereby avoiding the need for time consuming and expensive trials and Part 36 Offers are an important feature of the litigation strategy. A Part 36 Offer can be made at any time (including before proceedings have been started) and an early offer can provide the offeror with costs benefits and costs protection.
A Part 36 Offer can be made by either party. A claimant may wish to make a Part 36 Offer because if the defendant accepts the offer within the Relevant Period, then this would bring an end to the dispute and the claimant would receive its costs up to the date of service of the notice of acceptance by the defendant. Alternatively, if the claimant makes a Part 36 Offer, and it is not accepted by the defendant and the claimant obtains a judgment that is at least as advantageous as the Part 36 Offer, then there will be costs consequences for the defendant (including being liable to pay interest on those costs).
From a defendant’s perspective, if the claimant does not accept the defendant’s Part 36 Offer by the date of expiry of the Relevant Period, but decides to accept the offer at a later date, the claimant will have to pay the defendant’s costs from the date of expiry of the Relevant Period. Furthermore, if the claimant does not accept the offer and fails to obtain a judgment more advantageous than the defendant’s offer, then the claimant will have to pay the defendant’s costs from the expiry of the Relevant Period (with interest on those costs).
There are several ways to settle a dispute and a Part 36 Offer is just one of those ways. The benefit of Part 36 is that it puts the offeree under pressure to seriously consider the offer given the costs consequences that it could face in the event it rejects the offer, and/or fails to obtain a result at trial which is on terms with, or better than, the offer that has been made.
Ganesh Nanwani is a senior associate at Grosvenor Law, and regularly works on complex litigation matters.
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