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Costs and Part 36 Offers

Wednesday, 1 February 2012

Early settlement and negotiation is encouraged under the Civil Procedure Rules by providing mechanisms for offers to be made and properly considered.

If a Part 36 offer of settlement is made by a Defendant and rejected, but is subsequently found to have been more than reasonable in light of a later Court judgment, there can be costs implications for the Claimant. The Claimant is entitled to properly assess the value of their claim before reaching a decision on acceptance.

In Thompson v Bruce [2011] the Defendants took some 14 months to respond to a letter of claim denying liability in a medical negligence case. On the same date, they made a Part 36 offer which would remain open for 21 days. It was also stipulated that if the offer was accepted, the Defendant would pay the Claimant's reasonable costs up to the deadline date or the date of acceptance, whichever was the earlier.

Approximately 4 months after the deadline, the Claimant sought to accept the offer on condition that their costs were paid up to the date of an associated Infant Settlement Hearing that was yet to be listed. The Defendants refused to agree to this on the grounds that the offer was accepted out of time under Rule 36.10(5). They argued that the Claimant's costs should be payable only up to the date of the deadline 4 months previously and that the Claimant should pay costs incurred after that date.

The way in which the Part 36 rules are drafted, gives a certain implication that there are proceedings under way at the time of the offer. The Claimant therefore argued that the Rule 36.10(5) did not apply as there were no proceedings.

However, to hold that Rule 36.10 did not apply to pre-proceedings would frustrate the general purpose of the rules. The Court therefore confirmed that an out of time acceptance would trigger the default position as explained whether pre or post-proceedings.

That said, the Court then went on to consider the general conduct of the litigation and found that considering the delay of the Defendant's in denying liability and the need for the Claimant to properly investigate the value of the claim before accepting or rejecting the offer, costs should be paid by the Defendant up to the date of the Settlement Hearing.

Rollingsons Solicitors advise on all matters of personal injury for both claimants and defendants and in general litigation. If you wish to discuss any issues that concern you arising from this article or your own case then contact us at Rollingsons on 020 7611 4848 or