The Part 36 offer

The general rule in civil litigation is that the loser pays the winner’s costs. It is not however an unqualified or absolute rule. The court retains ultimate discretion over costs and might award a different cost. In litigation and dispute resolution, the Part 36 offer stands as a significant tool for settling disagreements. Part 36 of the Civil Procedure Rules contains provisions for the making of offers during litigation which, if made following the formalities set out in Part 36, have specified cost consequences.

The requirements of a part 36 offer

A valid Part 36 offer needs to adhere to specific requirements following CPR 36.5(1). A Part 36 Offer can be made at any time, including before the commencement of proceedings. A Part 36 offer must:

• Be in writing.
• Be a genuine offer to settle.
• Clearly state that it is made following Part 36 of the Civil Procedure Rules.
• Specify at least 21 days within which the other party will become liable for costs (assuming the trial is not within this timeframe)
• State the extent of the offer, i.e., whether it is meant to settle part or all of the claim, and whether it considers any counterclaim.

If a Part 36 offer does not meet these requirements, it may be deemed invalid and will not activate the Part 36 cost consequences.

Hugh Grant’s case

In the Hugh Grant case, he accepted the Part 36 offer put forth by News Group. News Group’s lawyers have utilised the Part 36 regime to bring Grant’s claim to an end. As a result, the proceedings against NGN were paused, provided the terms of the offer were adhered to. This settlement avoided the necessity for the trial judge to determine any wrongdoing by NGN.

Grant voiced his reluctance for the settlement, stating he would rather see the allegations tested in court. However, “The rules around civil litigation mean that if I proceed to trial and the court awards me damages that are even a penny less than the settlement offer, I would have to pay the legal costs of both sides.”

Had Grant proceeded to trial and the outcome was not as favourable, in this case, if the court’s damage award fell short even by a penny compared to the settlement offer, it is likely his opponent would seek their costs from him. According to Grant, this would have amounted to nearly £10 million in costs, a risk he wasn’t willing to take, stating “I would be liable for something approaching £10 million in costs. I’m afraid I’m shying at that fence”.

In settling now, Grant gets the settlement sum and, as Part 36 dictates, his costs from News Group, up to the date of acceptance. Grant has indicated that he will donate the payout to press regulation charities.

The consequences of a Part 36 offer

Part 36 offers can have significant consequences. The cost consequences are deliberately designed as a means of putting pressure on an opponent to settle a case whilst also protecting the offeror’s position on costs. As such, they act as an incentive for both sides to settle the litigation for a realistic figure, having regard to their liability risk. The offeree must carefully consider whether to accept or reject the offer, as failure to achieve a better outcome at trial after rejecting the offer could lead to considerable costs and interest.

How can we help?

Whether you perceive Part 36 offers as a clever tactical maneuver or a denial of justice, they undeniably play a crucial role in dispute resolution. If you have any questions or need more information on this topic, feel free to contact us.

Whether you believe you have a claim or are defending against one, early legal advice is crucial. Our experienced dispute resolution team is here to assist you through every step of the process.

If you need legal help, don’t hesitate to get in touch with us. Email us at disputeresolution@tvedwards.com or call 020 3440 8000.

Disclaimer: The information on the TV Edwards website is for general information only and reflects the position at the date of publication.