Legal advice: Part 36 offer to settle

We have received enquiries from readers this week about Part 36 Offers.
This is to do with offers to settle and in these cases it refers to accidents.
Here we offer advice on what to do.

Question: Can Someone enlighten on “Part 36 Offers” I am in dispute with a 4×4 driver who drove into the right-side of my bike while I was parking in a motorcycle bay in central London.

I received a 50/50 settlement offer but declined this and chose to resolve the matter in court.

However since then I have received a Part 36 Offer which means that if I go to court and don’t better a 50/50 settlement I’ll have to pay the defendant’s costs.

I thought I was supposed to be a victim of crime, not the other way around. Surely this is just scaremongering as most people wouldn’t be able to afford the costs. Why should I settle at 50/50 when it was 100 per cent the other person’s fault? By the way the defendant happens to be a solicitor.

Question: I had a bike accident two years ago which I don’t think was my fault. My opponent’s solicitor has made a “Part 36 Offer” of 60/40 and my solicitor recommends that I take 40% of the blame. I don’t understand what the part 36 Offer is

 

Advice: PART 36 OFFER / PAYMENT

There are complicated rules relating to Part 36 Offers and Payments. They are made in an endeavour to settle the action in advance of trial or prior to the issue of proceedings. Here’s a brief explanation of some of the key features of a Part 36 Offer / Payment. If in any doubt as to the implications then please do not hesitate to contact your solicitor in order to discuss matters further.

Part 36 Offer

1. What is a Part 36 Offer?

A Part 36 Offer is an attempt to set out terms which will bring the litigation to a conclusion.  An offer to settle the action is made with provision for payment of costs.

2. Who can make a Part 36 Offer?

Such an offer can be put forward by either the Claimant or Defendant.

3.  When can it be made?

At any time prior to the issue of court proceedings or after court proceedings have been issued.  If a Part 36 Offer is made by a Defendant prior to the issue of court proceedings it must be followed by a Part 36 Payment after court proceedings have been issued.  The Part 36 payment cannot be less than the previous Part 36 Offer.
 
4. What is the purpose of a Part 36 Offer?
 
The purpose of making such an offer is to put pressure on the other party to agree to settle the case on your terms.  If you refer to Section 8 of this information leaflet, you will see that the consequences of refusing to accept a Part 36 Offer can be serious, so the party in receipt of the offer is forced to think seriously about settlement.
 
5. What is the difference between a Part 36 Offer and a Part 36 Payment?
 
A Part 36 Payment involves the relevant sum of money physically being paid into Court.  A Defendant will send a cheque in the required sum to the Court, where the money will be held until trial, or earlier acceptance or withdrawal.
 
6. How long do I have to accept the Offer?
 
The recipient of the Part 36 Offer will have a period of 21 days after the offer was made in which to give notification of acceptance.  Generally the permission of the court will not be required when a party wishes to accept a Part 36 Offer save in specified circumstances where, for example, acceptance is given late or where the offer is made less than 21 days before the start of any trial date.  If you do not accept a Part 36 Offer within the 21-day period, often you will be allowed to accept later, but this can involve unfavourable costs consequences for you.
 
7. What are the consequences of acceptance of a Part 36 Offer or Payment?
 
Where a Part 36 Offer or Payment made by a Defendant is accepted without needing the permission of the court a Claimant will be entitled to payment of his or her legal costs up to the date of serving notice of acceptance.
 
If the offer related to the whole of the claim and approval of the court is not required the action is stayed and any payment made into court by the Defendant (Part 36 Payment) is paid out automatically.
 
If a Defendant accepts a Part 36 Offer made by a Claimant, again the Defendant will normally be liable to pay the Claimant’s costs up to the date of acceptance.
 
8. What are the consequences of refusing a Part 36 Offer or Payment?
 
The consequences will depend upon the eventual outcome of the litigation.
 
a)         Claimant’s Offer
 
If a Claimant puts forward a Part 36 Offer to settle the claim, which is not accepted, and the Claimant goes on to do better than the proposal put forward in the Offer the Defendants may be penalised by order of the Court. 

The Court may require the Defendant to pay interest on the whole or part of any sum of money awarded to the Claimant at a higher rate and/or costs may be paid on a more advantageous basis to the Claimant.

b)         Defendant’s Offer/Payment
 
If a Claimant does not accept a Part 36 Offer or Payment made by a Defendant, and when the matter proceeds to trial or settlement the Claimant fails to do better than the Offer or Payment, then, unless the court considers it unjust, the Claimant will be required to pay  his own costs and costs incurred by the Defendant after the latest date upon which the Payment or Offer could have been accepted without needing the permission of the court. 

The Claimant would therefore be entitled to costs up to a period of 21 days from the receipt of the Offer or Payment but may be liable for costs thereafter.
 
Here are some more examples that may help.
 
Example A
 
Claimant makes Part 36 Offer of £25,000.  Defendant rejects it.  Case proceeds to trial, where Claimant is awarded £35,000.  Defendant is penalised on costs and/or interest.  Claimant receives his damages in full, plus costs and interest.
 
Example B
 
Defendant makes Part 36 Payment of £50,000, (after the issue of court proceedings), on 9 April 2001.  Claimant rejects.  Case proceeds to trial.  Claimant is awarded £40,000.  Defendant will be ordered to pay the Claimant’s costs up to 30 April 2001.  Thereafter the Claimant will be responsible for both his own costs and the Defendant’s costs, up to and including trial.  In this example, the costs of both parties from 30 April 2001 to trial may be very significant.  The costs of trial itself for both parties will be very high, especially in a clinical negligence case.  Potentially the entirety of the Claimant’s damages (£40,000) could be “eaten up” by the costs order, leaving the Claimant with nothing.

Finally, if you are involved in a dispute like this, you can usually get insurance to cover the other side’s costs if you fail to beat their offer. Your solicitor can give you details of the various schemes available.