Offers TO Settle - Part 36 PDF

Preview

Summary

Part 36 of the Civil Litigation CPR Rules - Offers to Settle...

Description

OFFERS TO SETTLE -

CPR 36 provides a means for a party to make a formal offer in settlement of the claim which will be treated as without prejudice for the purposes of liability and remedies, but which can be disclosed to the court on a question of costs.

-

Done by making a written offer complying with certain formalities, which has an initial ‘relevant period’ for considering whether to accept of at least 21 days.

-

Function is to place the other side on risk as to costs if it is not accepted amd the offeree then fails to achieve a result in litigation that is more advantageous than the terms of the offer.

-

Part 36 offer that is accepted within that 21 days period produces a contract settling the claim in the terms of that offer. Rejecting the part 36 however, or making a counter offer, does not prevent the offeree later changing his mind and accepting the original offer, provided it has not been expressly withdrawn. So not like contract in that sense. OFFERS TO SETTLE BEFORE THE COMMENCEMENT OF PROCEEDINGS

-

Offer to settle within the meaning of r.36 may be made at anytime including before the commencement of the proceedings (r.36.3(2)(a)) or in appeal proceedings (r.36.3(2) (b)). OFFERS TO SETTLE

-

Parties not obliged to use the Part 36 format when making an offer to settle.

-

BUT if they do not, then the consequences in rr.36.10, 36.11 and 36.14 DO NOT apply. (r.36.1(2)).

a) Formalities -

SEE HANDOUT PAGE 3.

b) Terms of the offer -

Needs to state the terms fo the proposed compromise which should be sufficiently precise and certain for an effective contract to be formed if the offer is accepted.

-

Important to be clear if the offer is in full and final settlement of all matters in dispute between the parties or defined matters between the parties and whether the offer takes into account matters such as cross-claims or previous interim payment.

-

Terms must include costs consequences of acceptance.

c) Additional formalities for money claims -

See page 5 ‘some special rules abt defendants’ offers’.

d) Deduction of benefits in personal injuries claims -

When making Part 36 offer in claim for damages for PI claims, the defendant should state (r.36.15(3)) either: 

That the offer is made without regard to any liability for recoverable amounts under the Social Security (Recovery of Benefits) Act 1997; or



That the offer is intended to include any deductible amounts under the 1997 Act. In such a case, the defendant’s offer should state the amount of gross compensation; the name and amount of any deductible benefit or deductible lump sum; and the net amount after deduction of recoverable amounts (r.36.15(6)).

e) Personal injury claims for future pecuniary loss -

See page 7 “Personal injury claims for future pecuniary loss [36.5]”

f) Offers in provisional damages claims -

Part 36 offer made in a claim which includes a claim for provisional damages must specify whether the offer includes an award for provisional damages (r.36.6(2)).

-

Offer, by r.36.6(3), must also state: 

That the sum offered in satisfaction of the claim for damages on the assumption that the claimant will not develop the disease or suffer the deterioration specified in the offer; and



That the offer is subject to the condition that the claimant must make any claim for further damages within a specified period.

g) Defence of tender before claim -

Defendant who wished to rely on a defence of tender before claim must make a payment into court of the amount said to have been tendered (r.37.2).

-

Payment should be made at the time of filing of the defence.

-

Money paid into the court in support of a defence of tender before claim may not be paid out without the court’s permission, except where it is accepted without needing permission and the defendant agrees that the sum in court can be used to satisfy the offer (r.37.3).

-

The rule that Part 36 offers must not be communicated to the trial judge does not apply to tenders before claim (r.36.13(3)(a)).

h) Clarification -

Offeree can ask the offeror to clarify the terms of his offer if the terms are unclear. (r.36.8).

-

Request should be made within 7 days of service of the offer and the offeror should respond within 7 days of receiving request (r.36.8(2)).

-

If offeror fails to provide the requested clarification, the offeree is entitled to apply for an order that it be provided. Such order will specify the date when the PART 36 offer is treated as having been made. (r.36.8(3)). MAKING A PART 36 OFFER

-

it is made when it is served on the offeree (r.36.7(1)).

-

One of the prescribed methods of service in r.6.20 should be used.

-

Where the offeree is legally represented then the offer must be served on the legal representative (PD 36A, para 1.2). ACCEPTANCE OF A PART 36 OFFER a) Notice of acceptance

-

Part 36 offer is accepted by serving a written notice of acceptance on the offeror (r.36.9(1)). No prescribed form so a letter would suffice.

-

Necessary also to file the notice of acceptance with the court. (PD 36A, para 3.1).

-

In most cases, this notice should be served during the ‘relevant period’.

-

When this happens, the defendant must pay the claimant’s standard basis costs up to the date of notice of acceptance (r.36.10(1),(3)).

-

Claimant entitled to 100% of his assessed costs and the court has no jurisdiction to order a payment of only a proportion of that costs.

b) Late acceptance -

Notice of acceptance may be served after the relevant period, provided that the offer has not been withdrawn in accordance with r.36.3(7). This is because by r.36.9(2) a part 36 offer can be accepted at any time.

-

Where Part 36 offer accepted after the relevant time, the parties may agree liability for costs. But if they don’t, the court will make an order for costs (r.36.10(4)(b)).

-

Costs order by the court will usually provide: 

That the claimant is entitled to costs up to the expiry of the relevant period; and



The offeree will be liable for the offeror’s costs for the period from the expiry of the relevant period to the date of acceptance.

-

Even where the late acceptance is of the claimant’s offer to settle (rather than the defendant’s), costs ordered under r.36.10(4) should be on the standard basis, although enhanced interest on costs after expiry of the relevant period may be appropriate. (Fitzpatrick).

-

Permissible for the court to make some other order for costs. (r.36.10(5)). Departure from the general rule will only be when the judge can identify that it would be unjust for the claimant to pay the defendant’s costs after the expiry of the relevant period (Matthews). Not enough for the judge to say that it was reasonable for the claimant not to have accepted the Part 36 offer when it was made, and later to have accepted it.

-

Notice of acceptance served only after trial has started will only be effective if the court’s permission is given (r.36.9(3)(d)). Notice of acceptance served after the trial before the judgment is handed down is only effective if the parties agree. (r.36.9(5)).

c) Acceptance relating to part of the claim -

Acceptance of a part 36 offer relating to only part of the claim results in a settlement of the claim and the claimant’s entitlement to costs only if the claimant abandons the balance of the claim. (r.36.10(2)).

-

If balance not abandoned, that part proceeds to trial, and the court has a discretion on the costs of the compromised part of the claim.

d) Permission to accept -

Court’s permission for Part 36 offer is required where: 

Part 36 offer made by some but not all of the defendants and r.36.12(4) applies.



Any of the parties is a child or protected party.



The trial has started.



An apportionment is required under r.41.3A (Fatal Accidents Claim).



The claim is for damages for PI, the offer is intended to include any deductible amounts, and further deductible benefits or a deductible lump sum have been paid to the claimant since the date of the offer.

e) Stay on acceptance -

If Part 36 offer accepted, claim will be stayed. (r.36.11(1)).

-

Stay will be on the whole of the order if the terms of the offer relates to the whole of the claim. But the stay will only relate to only part of the claim if the offer only relates to part of it.

-

Stay under r.36.11(1) does not affect the power of the court to enforce the terms of the Part 36 offer, nor to deal with any question of costs or interest on costs relating to the proceedings. (r.36.11(5)).

f) Time for payment -

Unless parties agree otherwise in writing, where a Part 36 offer to pay money is accepted, payment must be made within 14 days of the acceptance (r.36.11(6)(a)).

REJECTION, COUNTER-OFFERS AND SUBSEQUENT OFFERS -

Express rejection has no effect. The only way to terminate an offer is by giving written notice withdrawing it under r.36.3(7).

-

Also making a counter-offer does not operate as a rejection of the Part 36 offer.

-

So if no express notice of withdrawal and another party lays out an offer, there would be two ‘live’ offers, because the first offer remains alive until withdrawn. WITHDRAWAL AND AMENDMENT OF PART 36 OFFERS

-

Before the expiry of the relevant period: Part 36 offer may be withdrawn ot its terms changed in a way less advantageous to the offeree only with the court’s permission. Permission sought by making an application in accordance with Part 23. (PD 36A, para 2.2(1)).

-

After the expiry of the relevant period and provided the offeree has not previously served notice of acceptance, the offeror may withdraw the offer or change its terms to be less advantageous to the offeree without the permission of the court. This is done by serving a written notice to the offeree. Change in the terms of the offer takes place when the notice is served to the offeree.

-

Withdrawn Part 36 offer ceases to have effect on costs and interest of the subsisting Part 36 offer. In a suitable case, the court, by their power under the overriding objective and by r.44.3, can even treat a withdrawn Part 36 offer as having the same costs consequences as if it had not been withdrawn. FAILING TO OBTAIN JUDGMENT MORE ADVANTAGEOUS THAN A PART 36 OFFER

-

See notes.

EFFECT OF NON-COMPLIANCE WITH PART 36 -

Part 36 offer should be interpreted as it would be read by a reasonable solicitor.

-

Minor defects of the offer are likely to be corrected under r.3.10, which gives the court the discretion to correct errors in procedure.

-

In Primary Care Trust case, there was a defect in the offer and the offeree saw it but chose to not tell the offeror about it. Court held that it was a failure to cooperate and ignored the defect.

-

Significant departures from formalities laid down in Part 36 will mean that a Part 36 offer is not a Part 36 offer.

-

Gibbon v Manchester City Council; failing to state that an offer was intended to have the consequences in Part 36 and failing to state the relevant period meant that it was not a Part 36 offer.

-

C v D; an offer described as a Part 36 offer but that provided it would expire after 21 days was also held to not be a valid Part 36 offer because a time-limited offer is inconsistent with a Part 36. ADVISING ON PART 36 OFFER

-

Client must be fully informed of the costs implications of the offer. NON-DISCLOSURE TO THE JUDGE

-

The fact that there has been a Part 36 offer (except in a tender before claim case) must not be disclosed to the court at trial until all questions of liability and remedies have been decided. This rule applies to TRIALS not INTERIM APPLICATIONS.

-

Before trial, a request should be made to the court office to remove all reference to any offers to settle from the court file to avoid accidental disclosures to the trial judge. If all parties agree in writing, this embargo can be lifted. (r.36.13(3)(c)).

-

If it is disclosed to the judge, he has a discretion whether to continue or to withdraw. Entitled to continue if he feels there would be no prejudice to either side.

-

Judge should not be to ready to withdraw and if satisfied that no injustice will be done may continue with the trial. PART 36 OFFERS IN APPEALS

-

Part 36 offer which is made before trial has effect in relation to the costs of the proceedings up to the final disposal of the proceedings at first instance (r.36.3(4)).

-

Costs protection for appeal proceedings may be obtained by making a separate Part 36 offer in the appeal proceedings. (r.36.3(2)(b), 36.3(4))....