Part 36 offers are made on a ‘without prejudice save as to costs’ basis. This means the Court is not made aware of a Part 36 offer until after costs have been assessed, but before it has made an order in relation to the Costs of Assessment (costs of costs).
Part 36 offers can also be made at any time. This includes prior to the issue of Part 8 costs Proceedings (in un-litigated matters), and at any point during Assessment but ideally no later than at least 21 days prior to Costs determination (Judgment on Costs) takes place.
“Why?”
The benefits of a Part 36 offer on costs?
- Where a Part 36 offer is accepted within the relevant period, the Claimant will be entitled to the costs of the proceedings (costs of costs) up to the date on which notice of acceptance was served on the offeror.
- Where a Part 36 offer is accepted out of the ”Relevant Period” the court must order that the Claimant be awarded costs up to the date on which the relevant period expired; and the offeree do pay the offeror’s costs for the period from the date of expiry of the relevant period to the date of acceptance.
THE BEST BIT:
Where judgment (determination of the Bill of Costs) against the Defendant is at least as advantageous to the Claimant as the proposals contained in a Claimant’s Part 36 offer, the Court must (unless it considers it unjust to do so) order that the Claimant is entitled to:
- Interest on the whole or part of any sum of money (excluding interest) awarded, at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired;
- Costs (including any recoverable pre-action costs) on the indemnity basis from the date on which the relevant period expired;
- Interest on those costs at a rate not exceeding 10% above base rate; and
- An additional amount, which shall not exceed £75,000 of the determined costs award (on the Bill of Costs) calculated as 10% of up to £500,000.00 or 10% of the first £500,000.00 and 5% of any amount above that figure.
- (In the instance of agreement of a Defendant Part 36 offer) The Defendant must pay the sum agreed within 14 days of the date of acceptance (or any other date agreed between the parties), otherwise the claimant can enter judgment against the Defendant for that sum.
“How to” :
The Requirements of a valid Part 36 offer:
In accordance with CPR 36.5 (link here), an offer must:
- Be in writing
- State that it is made pursuant to Part 36/that it is intended to have the consequences of Part 36
- Specify a period (the “Relevant Period”) of not less than 21 days
- State whether the offer is made to settle the whole claim or only part of it (and if so which part)
- State whether it takes into account any counterclaim
Part 36 is widely understood to be a “self-contained code”. If you ensure you have covered the above within your offer, without variation, you should have made a valid Part 36 offer.
Also note CPR 36.11 – Acceptance - must be in writing.
Part 36 – Other points to note:
Interest:
- Never make a Part 36 offer on costs exclusive of interest. See King v City of London Corporation [2019] EWCA Civ 2266 (or read the Judgment here). In accordance with CPR 36.5(4) A Part 36 offer will be treated as inclusive of all interest until the date of expiry
- BUT
- To also ensure you are entitled to interest in the event that costs are settled after the relevant period, please also be aware of CPR 36.5(5) and ensure you include provision for accrual of interest after the date of expiry to enable recovery of the same (in the event of late acceptance)
Defendant’s offer:
- In accordance with CPR 36.6(2) A Defendant’s offer that includes an offer to pay all or part of the sum at a date later than 14 days (thinking NHSR matters where payment is often stated as being in 28 days), will not be treated as a Part 36 offer unless the offer is accepted by the Claimant.
Clarification:
- A party can (within 7 days of receiving the offer) request clarification of the offer to enable it to consider the offer properly, and if it does not receive such clarification it can ask the court to make an order requiring the party making the offer to supply it.
Withdrawing or changing the terms of a Part 36 offer:
- A Part 36 offer can be withdrawn at any time but cannot be withdrawn or changed to be less advantageous to the other party until the Relevant Period (referred to above) has expired, unless the court’s permission to do so is obtained. Once the Relevant Period has expired, however, the offer can be withdrawn or changed at any time (unless the other party has already accepted the offer), without permission of the Court.
Accepting Part 36 offers:
- A party who wants to accept a Part 36 offer can do so in writing at any time. Note that if a party makes more than one offer, the other party can still accept an earlier offer, as long as that earlier offer has not been withdrawn or changed.
- Where a Part 36 offer is accepted after expiry of the relevant period, the liability for costs must be determined by the Court unless the parties have agreed the costs.
In summary, if you follow the above “How to”, a well-pitched Part 36 offer could well be the key to not only securing ones costs of Assessment, but as a Claimant, it will likely mean that the burden of any shortfall (on costs being determined at a sum less than those claimed in the Bill of Costs) is reduced, eased by the recovery of the additional 10% lump sum.
If you have any questions or would like to discuss the above further, please contact the author, Charlene Turner here.
