7. Part 36 Offers - Overview PDF

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Part 36 Offers - Overview Formalities

 CPR 36.5(1). The offer must:  Be in writing.  Make clear that it is made pursuant to Part 36.  Specify a period of not less than 21 days during which, if the offeree accepts the offer, the defendant will pay the claimant’s costs under r 36.13 (known as ‘the relevant period’);  State whether it relates to the whole of the claim or to part of it, or to an issue that arises in it, and if so to which part or issue; and  State whether it takes into account any counterclaim.  A Part 36 offer that does not specify that it is open for not less than 21 days is fatal (Phi Group Limited v Robert West Consulting Limited [2012] EWCA Civ 588)  There is no requirement that the Part 36 offer be made using Form N242A, though it can be.

Made When it is SERVED Interest Asking for Clarification

Making More than One Offer Making an Offer Within 21 Days of Trial

Acceptance of the Offer

Consequences of Acceptance of the Offer Within the Relevant Period

 Part 36 offer may 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 crossappeal from a decision made at a trial.  A Part 36 offer is a document OTHER THAN THE CLAIM FORM, and thus the rules for service for other docs apply.  A Part 36 offer is deemed to be inclusive of all interest until the end of the relevant period or the date of acceptance if earlier (36.5(4)).  Offeree can ask for the offeror to clarify the offer within seven days of the offer being made (CPR 36.8(1)).  If the offeree does not give the requested clarification within seven days of the requires, the offeree may apply for an order that it does so (CPR 36.8(2)).  It is possible to make more than one Part 36 offer e.g. make a second offer for a lower monetary sum.  Although an offer must be open for not less than 21 days, by CPR 36.3(g)(ii), it is still possible to make an offer within 21 days of trial.  In those circumstances the relevant period is the period up to the end of the trial (or such longer period as the parties agree).  No explicit rules as to form.  However best practice would be to:  Accept in writing, setting out the claim number and title of the proceedings.  Identify the Part 36 offer to which acceptance relates.  Be signed by the offeree or its legal representative.  Should be served on the offeror’s solicitors (PD 36A para 1.2) and filed at court (PD 36A para 3.1).  The claim is stayed (CPR 36.14(2)).  Where a claimant accepts a defendant’s Part 36 offer whereby the defendant will pay a single sum of money, the defendant must pay that sum to the claimant within 14 days of the date of acceptance.

Costs Consequences of Acceptance of the Offer Within the Relevant Period

Late Acceptance

Like with Like Comparison

 Claimant accepts the Defendant’s offer:  The Defendant will have to pay the Claimant’s costs of proceedings up to the date of which notice of acceptance is served on the defendant. (36.13(1)).  Defendant accepts the Claimant’s offer:  The Defendant will have to pay the claimant’s costs of the proceedings up to the date on which notice of acceptance is served on the claimant (36.13(1)).  If the parties cannot agree the amount of costs, costs will be assessed by the court on the standard basis (CPR 36.13(3)).  If the Claimant accepts a Defendant’s offer AFTER the relevant period has expired, and the parties cannot agree costs, there will be split costs:  The court will order the Defendant to pay the Claimant’s costs up to the date on which the relevant period expired.  The claimant will be ordered to pay the defendant’s costs from the date of expiry of the relevant period up to the date of acceptance.  To make a ‘like with like’ comparison:  (a) calculate the interest that would have accrued on the sum awarded by the judge from the date interest becomes payable up to and including the end of the relevant period (normally day 21); and  (b) add the figure in (a) to the amount of the judgment. 

If the total is LESS than the amount offered by the Defendant, on a like for like comparison C has FAILED to obtain a judgment more advantageous than D’s Part 36 offer.

Example:  C seeks £70,000, having suffered loss in July 2010.  He issues proceedings in July 2013 and claims interest under s35A of the SCA 1981 (8% per annum).  He is offered £50,000 inclusive of interest on 5 Jan 2014.  The relevant period expires on the 26th January. C does not accept the offer.  At trial, he is awarded £38,000 + interest of £15,200 i.e. a total of £53,200. This is larger than D’s offered sum, however this is not a like for like comparison.  On a like for like comparison, if C had accepted the Part 36 offer, he would have been entitled to interest from the date of the loss to the date the relevant period expired i.e. from July 2010 – 26th Jan 2014.  That is three years and 6 months. The interest on the sum of 8%, awarded at trial, for that period, would be £10,640. That plus the judgment sum = £48,640.  This is less than the total amount offered, so C should have accepted the offer, and has failed to obtain a judgment more advantageous than the offer...