Part 36

36.2 → does not apply to an offer to settle under Section III (RTA or Pre-action protocol) and
started proceedings under Part 8.

● A party making an offer to settle in whatever way that party chooses but if it is not made
in accordance with r36.5 - the cost consequences of this section will not apply

● Pt 36 offer may be made to the whole or part of or any issue that arises in a
claim,counterclaim, additional claim or appeal,cross-appeal from decision made at trial
Calderbank offers

A Calderbank offer is written 'without prejudice save as to costs'. Its effect is that the court is
unable to refer to the offer except when dealing with the question of costs at the end of the
proceedings. The court has complete discretion to decide what weight should be given to the offer
when considering costs.

A Calderbank offer provides greater flexibility than a Part 36 offer because it is not governed by strict
court rules. This is a great advantage because it allows the party making the offer (the 'offeror') to be
creative when making their offer, especially when putting forward terms about the length of time the
offer remains open for acceptance, costs and payment issues e.g. pay within 14 days. The price for
flexibility is that Calderbank offers, if accepted, create a binding contract between the parties.

A Calderbank offer can be a useful tool to settle disputes where Part 36 does not apply, for
example in cases allocated to the small claims track and arbitration proceedings.

36.2.4 → formal or technical defects

Validate if possible : where faced with 2 reasonable interpretations of the offer,

the court should favour the construction that is compliant to pt36.
➔ An offer that failed to comply with mandatory requirements of r36.5 is not a pt36 offer.
➔ For an offer to be a pt36 it must strictly comply w the requirements !!
➔ There can be de minimis errors or obvs slips which misled no one
➔ Court might overlook a de minimis error but where it is failure to comply w mandatory
requirements
=> There is no possibility of such offer being treated as pt36
=>Non-compliant to be taken into account under pt 44

36.3
SBA : Definitions
Offeror : someone who makes the offer
Offeree : whom an offer is made to
Trial : any trial - trial of all issues or trial of liability, quantum
Trial in progress : from when the trial starts until the time when judgement is given or handed
down
Case decided : all issues in the case have been determined whether at one or more trials
Trial judge : any judge allocated in advance to conduct a trial
Relevant period : in the case an offer made not less than 21 days[ minimum] before a trial or
such longer periods as to the parties agree ; otherwise the period up to the end of such trial [ it
can be more than 21 days so that is what the last bit means ]

36.4
➔ Consequences set out in this section relating to costs of the proceedings is not
applicable to the costs of any appeal from a decision in those proceedings [it applies
until the decision of the judgement not an appeal from the judgement]

★ Terms to note in the paper to understand if it is a hearing or an appeal - P.36 will be

applied accordingly.
Term Corresponding term

Claim Appeal

counterclaim cross-appeal

case Appeal proceedings

claimant Appellant

defendant Respondent

Trial Appeal hearing

Trial judge Appeal judge

MAKING OFFERS
36.5

● Pt36 must follow the conditions (mind map above)

● Contain further information for certain claims such as [personal injury claims for
pecuniary loss], [offer to settle a claim for provisional damages] and [deduction of
benefits]

[4] Pt36 offer which offers to pay or offers to accept sum of money will be treated as inclusive
of ALL interest until :
a. The date which the period specified under 36.1[c] expires ; or
b. if rule 36.5(2) applies, a date 21 days after the date the offer was made.

[5] Pt36 offer to accept a sum of money may make provision for accrual of interest on such
sum after the date specified in para 4. If such an offer does not include this provision then shall
be treated inclusive of all interest up to the date of acceptance if it is later accepted.
 - Because a party is entitled to make a Part 36 offer at any time, including before commencement
of proceedings[36.7], a party is also entitled to make a Part 36 offer before the counterclaim has
been pleaded. - the offer is made when it is served on the offeree
- Where an offer was expressed to relate to an additional claim which the defendants had set out in
draft Amended Particulars of Claim that claim was not yet part of the claim for the purposes.
it related only to a claim put forward in draft amended particulars of claim

Calonne : made an offer before filing defence and counterclaim - although counterclaim was not
pleaded yet
Hertel : claimant seeks permission for an additional claim which the court has not received and
the D made an offer to the additional claim which was intended but was not part of the
proceedings. The issue in this case was whether the offer was indeed a Part 36 offer. CPR r36.2
provides that a Part 36 offer must, amongst other things, state whether it relates to the whole or
the claim or to part of it or to an issue that arises in it and if so which part or issue".

★ Terms as to interest : pt36 offer must include all interest up to the end of the relevant period- an
offer that excludes interest is not pt36 offer. Interest is ancillary to and not severable from a
claim
- Inclusion of an additional term as interest payable after the end of the relevant period does not
invalidate pt36 offer - to secure recovery of additional interest on late acceptance

Late offers - pt36 offers to be made at least 21 days before the start of a trial
- Relevant period in such cases is up until the end of the trial - permission will be required to
accept the offer after the start of the trial
- No automatic cost order upon acceptance of a late offer ; instead the court must decide the
appropriate cost order if parties cannot agree the liability for costs

★ PAST YEAR QUESTION : So a pt36 offer includes interest and it should be made not less than
21 days before trial but if you make a late offer it should be made at least 21 days before the start
of a trial . The relevant period if it is made at least 21 days before is up until the end of trial for
them to accept

Terms as to costs : any offer that included terms as to costs was not a valid pt36 offer
Ques : If you make an offer and include the cost - it's not pt36?
Defendant’s offer
C to be paid the cost upon settlement Offer made by D [36.6]

If a Part 36 offer is made 21 days or more before the start of If the Part 36 offer is being made by a defendant and the offer
trial, it must also specify a period (the “Relevant Period”) is to pay a sum of money in settlement of a claim, then the
of not less than 21 days within which the defendant will be offer must be to pay a single sum (not a series of instalments).
liable for the claimant’s costs if the offer is accepted. This is Also the defendant must offer to pay the sum no later than
 based on the principle that a claimant is entitled to be paid its 14 days after acceptance by the claimant, otherwise the
costs upon settlement of the claim. offer will not be treated as a Part 36 offer (unless the claimant
accepts the offer).

Time when a PT 36 offer is made - 36.7

At any time - including before the commencement of the proceedings - it is made when the offer is
served[‘proper format - via DX or post or delivered] on the offeree /
★ PAST YEAR QUESTION: What is the difference between sent to the offeree? Sent is just
informal - DISTINGUISH BETWEEN SENT AND SERVED!

Summary to understand about 21 days concept and when D makes an offer or claimant makes an offer
Settlement before judgement
C serves PT 36 on D - in writing
WITHIN relevant period [MINIMUM 21
days from service of offer] D accepts by
serving written acceptance
PRE ACTION -
POST ACTION -
D serves Pt36 offer on claimant
AFTER relevant period has EXPIRED
[usually expires on 21st day after service of
offer ] claimant accepts by serving written
acceptance
a. Proceedings are stayed
b. D pay money to C within 14 days
c. D pay C’s costs up until the day on
which the relevant period expired -
including that day
d. Claimant pays D costs from when the
relevant period expired to the date of
acceptance
D serves pt36 offer on the
claimant
WITHIN relevant period
[usually minimum 21 days from
service of offer] claimant accepts by
serving written acceptance
a. Proceedings are stayed
b. Defendant pays money to
the claimant within 14 days
c. D pays claimant costs up
until acceptance

If the offer is made and the claimant accepts it within the relevant period, the defendant pays money to the
claimant within 14 days - costs are paid up until acceptance
Claimant pay for the cost when accepts after relevant period expired

36.8
Clarification of a Pt36 offer.

● Offeree may within 7 days of the offer being made request the offeror to clarify the offer but if
clarification is not given within 7 days of receiving the request, the offeree may UNLESS trial has
started apply for an order that the offeror do so - if the court makes an order - MUST specify the
date when pt36 offer is to be treated as having been made.

36.9
withdrawing/ changing the terms of a pt36 offer[ dealing with withdrawing or changing terms of offer
after the expiry of the relevant period provided that the offer has not been accepted]

- Offeror can only withdraw or change terms if the offeree has not served notice of acceptance
- The offeror can withdraw or change terms by serving notice of the withdrawal or change
- This withdrawal and change takes effect when it is served on the offeree
- After the expiry of the relevant period and provided the offeree has not previously served notice
of acceptance . ‘the offer may be automatically withdrawn in accordance with its terms’
- Where the offeror changes the offer to make it more advantageous to the offeree - this shall not be
treated as the withdrawal of the original offer but as making a new pt36 offer on the improved
terms AND subject to r36.5[2] the period specified under 35.5[1][c] shall be 21 days or such
longer period [ if any ] identified in the written notice

36.10
offerror seeks to withdraw a pt36 before the end of the relevant period
- Where the offeror serves notice before expiry of the relevant period of withdrawal of the offer or
change of its terms to be less advantageous to the offeree
- The offeror now serves notice of withdrawal or change and waits - such notice takes effect
automatically without the need for any court application if the offeree does not serve notice of
acceptance of the original offer by the expiry of the relevant period. IF the offeree serves notice of
acceptance before the relevant period expires - such notice has effect UNLESS the offeror makes
an application to the court within 7 days of the offeree’s notice of acceptance or if earlier, before
the 1st day of trial
- For the above point, court may give permission for the original offer to be withdrawn or change
terms if satisfied there has been a change of circumstances since the making of the original offer
and that it is in the interest of justice to give permission

36.11
Acceptance of pt36 offer
- It is accepted by a written notice of acceptance to the offeror
- Subject to xxx - pt36 offer may be accepted at any time unless it has already been withdrawn
- The court’s permission is required
a. Rule 36.15[4] applies
b. Relevant period has expired and further deductible amounts have been paid to the claimant since
the date of the offer
c. Apportionment is required ; or
d. Trial is in progress

- Where permission is given, UNLESS all the parties have agreed costs, the court MUST make an
order dealing w costs and may order that the costs consequences apply
- PT36 offer may be accepted even if the offeree has since made a counter offer

36.13 - costs consequences of acceptance of a part 36 offer

 - Where pt36 offer is accepted within the relevant period, the claimant will be entitled to the
costs of the proceedings including their recoverable pre-action costs up to the date on which
notice of acceptance was served on the offeror.
- It MAY not WILL include pre-action costs
- Where a claimant accepts a defendant’s pt36 offer - a cost order is deemed to have been made on
the std basis w the result that the claimant is entitled to 100% of his or her assessed costs, that is,
the amount payable following a detailed assessment [ subject to where recoverable costs are fixed
then this will prevail ]
- Where D’s pt36 offer relates to part only of the claim and at the time of serving notice of
acceptance within the relevant period the claimant abandons the balance of the claim - claimant
will only be entitled to the cost of the claim to which his part 36 offer related unless the court
orders otherwise
- Where a part 36 offer which was made less than 21 days before the start of a trial is accepted or
which relates to the whole of the claim is accepted after expiry of the relevant period or which
does not relate to the whole of the claim is accepted at any time - liability for costs MUST be
determined by the court unless the parties have costs
- Pt36 offer which relates to the whole of the claim is accepted after expiry of the relevant period
but parties cannot agree the liability for costs, the court MUST unless considers it unjust to do so-
order that
a. Claimant be awarded costs up to the date on which the relevant period expired ; and
b. The offeree to pay the offeror’s costs for the period from the date of expiry of the relevant period
to the date of acceptance
Is it unjust?
The court must take into account all the circumstances of the case including
a. Terms of any part 36 offer
b. Stage in the proceedings when any part 36 offer was made including in particular how long
before the trial started the offer was made
c. Information available to the party at the time the offer was made
d. Regard to the giving of or refusal to give information for the purposes of enabling the offer to be
made or evaluated ; and
e. Whether the offer was a genuine attempt to settle

Scenario
C accepted an earlier offer following an improvement in the prognosis of his injury - C failed to show that
the usual costs order was unjust c/f
r.36.10(5) did not apply when experts were unable to predict the impact of a brain injury until a young
child fully matured.
C had been injured in a road traffic accident caused by D when he was six years old causing a severe head
injury however the experts were unable to predict the impact of the injury until he matured. The C
accepted a Part 36 offer out of time. At first instance it was ordered that C should pay D's costs from the
expiry of the offer. C successfully appealed. It was held that it was unjust to make the normal costs
order. The judge's order was set aside and an order substituted that C should have his costs throughout.
 - Personal injury case where D made an offer knowing the C’s dishonesty - the usual cost order did
not make it unjust

36.14 - other effects of accepting a part 36 offer

- Claim will be stayed
- If offer relates to whole claim then stay upon terms of the offer but if part only the claim is stayed
upon part of the terms of the offer
- If the approval of the court is required before a settlement then the stay will only come into effect
once the approval has been given [ as in the case involving a child/protected party]
- The stay does not affect the court’s powers to enforce the settlement terms or to deal with costs
- [6] Where pt36 offer includes an offer to pay or accept a single sum of money is accepted - the
sum MUST be paid to the claimant within 14 days of the date of acceptance or the order when the
court makes an order for an award for provisional damages or for an award of periodical
payments - unless the court orders otherwise
- If such a sum is not paid within 14 days of acceptance of the offer OR such other period - the
claimant MAY enter judgment for the unpaid sum
- Where pt36 offer which is not an offer to which para 6 applies is accepted and a party alleges that
the other party has not honored the terms of the offer - that party may apply to enforce the terms
of the offer without the need for a new claim.

36.15- Acceptance of a Part 36 offer made by one or more, but not all, defendants

(1) This rule applies where the claimant wishes to accept a Part 36 offer made by one or more, but not all,
of a number of defendants.

(2) If the defendants are sued jointly or in the alternative, the claimant may accept the offer if—

(a) the claimant discontinues the claim against those defendants who have not made the offer; and

(b) those defendants give written consent to the acceptance of the offer.

(3) If the claimant alleges that the defendants have a several liability(GL) to the claimant, the claimant
may—

(a) accept the offer; and

(b) continue with the claims against the other defendants if entitled to do so.

(4) In all other cases the claimant must apply to the court for permission to accept the Part 36 offer.
36.16- Restriction on disclosure of a Part 36 offer

(1) A Part 36 offer will be treated as “without prejudice except as to costs”.

(2) The fact that a Part 36 offer has been made and the terms of such offer must not be communicated to
the trial judge until the case has been decided. [ it does not prevent disclosure to a judge dealing with
interim matters in the course of which it may be both necessary and desirable for the judge to know
of the offers made]

(3) Paragraph (2) does not apply—

(a) where the defence of tender before claim has been raised; → defence of tender means the defendant
had unconditionally offered the amount due to the claimant before the claimant commenced court
proceedings

(b) where the proceedings have been stayed under rule 36.14 following acceptance of a Part 36 offer;

(c) where the offeror and the offeree agree in writing that it should not apply; or

(d) where, although the case has not been decided—

(i) any part of, or issue in, the case has been decided; and

(ii) the Part 36 offer relates only to parts or issues that have been decided.

(4) In a case to which paragraph (3)(d)(i) applies, the trial judge—

(a) may be told whether or not there are Part 36 offers other than those referred to in paragraph (3)(d)(ii);
but

(b) must not be told the terms of any such other offers unless any of paragraphs (3)(a) to (c) applies.

36.17-Costs consequences following judgment

(1) Subject to rule 36.21, this rule applies where upon judgement being entered—

(a) a claimant fails to obtain a judgement more advantageous than a defendant’s Part 36 offer; or
(b) judgement against the defendant is at least as advantageous to the claimant as the proposals
contained in a claimant’s Part 36 offer.

(Rule 36.21 makes provision for the costs consequences following judgement in certain personal injury
claims where the claim no longer proceeds under the RTA or EL/PL Protocol.)

(2) For the purposes of paragraph (1), in relation to any money claim or money element of a claim, “more
advantageous” means better in money terms by any amount, however small, and “at least as
advantageous” shall be construed accordingly.

(3) Subject to paragraphs (7) and (8), where paragraph (1)(a) applies, the court must, unless it considers it
unjust to do so, order that the defendant is entitled to—

(a) costs (including any recoverable pre-action costs) from the date on which the relevant period expired;
and [ normally it will be awarded on the std basis but may be awarded on the indemnity basis in ltd
circumstances]

(b) interest on those costs.- it does not allow the court to award interest on costs in excess of a normal
commercial rate

(4) Subject to paragraph (7), where paragraph (1)(b) applies, the court must, unless it considers it
unjust to do so, order that the claimant is entitled to— this is when D does not accept PT36 of C’s
offer

(a) 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;

(b) costs (including any recoverable pre-action costs) on the indemnity basis from the date on which the
relevant period expired;

(c) interest on those costs at a rate not exceeding 10% above base rate; and

(d) provided that the case has been decided and there has not been a previous order under this
sub-paragraph, an additional amount, which shall not exceed £75,000, calculated by applying the
prescribed percentage set out below to an amount which is—

(i) the sum awarded to the claimant by the court; or

(ii) where there is no monetary award, the sum awarded to the claimant by the court in respect of costs—
 Amount Prescribed percentage
awarded by the
court

Up to £500,000 10% of the amount awarded

Above £500,000 10% of the first £500,000 and (subject to the limit of
£75,000) 5% of any amount above that figure.

(5) In considering whether it would be unjust to make the orders referred to in paragraphs (3) and (4), the
court must take into account all the circumstances of the case including—

(a) the terms of any Part 36 offer;

(b) the stage in the proceedings when any Part 36 offer was made, including in particular how long before
the trial started the offer was made;

(c) the information available to the parties at the time when the Part 36 offer was made;

(d) the conduct of the parties with regard to the giving of or refusal to give information for the purposes of
enabling the offer to be made or evaluated; and

(e) whether the offer was a genuine attempt to settle the proceedings.

(6) Where the court awards interest under this rule and also awards interest on the same sum and for the
same period under any other power, the total rate of interest must not exceed 10% above base rate.

(7) Paragraphs (3) and (4) do not apply to a Part 36 offer—

(a) which has been withdrawn;

(b) which has been changed so that its terms are less advantageous to the offeree where the offeree has
beaten the less advantageous offer;

(c) made less than 21 days before trial, unless the court has abridged the relevant period.

(8) Paragraph (3) does not apply to a soft tissue injury claim to which rule 36.21 applies.

(Rule 44.2 requires the court to consider an offer to settle that does not have the costs consequences set
out in this Section in deciding what order to make about costs.)
 more advantageous → pt 36 offer is deemed to include interest to the end of the relevant period - interest
after that date MUST be ignored

D’s offer

Claimant fails to obtain a judgement ‘more advantageous’ than the D’s Pt 36 offer - court must unless it
considers unjust to do so - order that D is entitled to costs including any recoverable pre-action costs from
the date on which the relevant period expired and interest on those costs

What are the ltd circumstances that costs awarded to the d indemnity basis ?

- C had acted unreasonably by failing to take up D’s various attempts to resolve the dispute

- An indemnity cost order is of the court’s general discretion

- Balmoral

Summary : At trial C fails to obtain judgement more advantageous than D’s PT36 offer → SPLIT
ORDER → usual order [ D pays C costs on a std bases up to and including the day the relevant
period expired - usually day 21 ] → C pays D costs on the std basis from and including the day after the
relevant period expired - usually day 22 until judgement ; and claimant pays interest on those costs]

C’s offer

Claimant makes a pt36 offer -> D does not accept offer and case proceeds to trial -> CLAIMANT
ESTABLISHES LIABILITY AT TRIAL AND OBTAINS JUDGEMENT AT LEAST AS
ADVANTAGEOUS AS CLAIMANT’S OWN PT36 OFFER [ this is where indemnity basis comes in ]

1. Cpr 36.17[4][a] - Enhanced interest on money award

Interest on the whole or part of any sum of money excluding interest at a rate max 10% above base rate

From the day after the relevant period expires [ usually day 22 ]

Interest up to expiry of RP will be at the court’s discretion

2. CPR36.17[4][B] indemnity costs

From and including the day after the relevant period [ usually day 22 ]
CPR 36.17[C] - Interest on those indemnity costs

Up to a maximum of 10% above base rate and

3. CPR 36.17[D] - Additional amount

10% of any amount awarded up to £500,000

10% of the first £500,000 and 5% of any amount above that figure

In both cases, up to a maximum sum of £75,000

- The jurisdiction arises upon judgement being entered

- Not to designed to punish unreasonable conduct but to encourage claimants to make and
defendants to accept appropriate offers of settlement

QUESTION : Must the court always consider whether Part 36 costs consequences may
be 'unjust'?

=> No. It is only when the court is required to determine the costs liability for:

● late acceptance under CPR 36.13(4)(b) (Part 36 offer for whole claim accepted outside the
Relevant Period) or
● non-acceptance under CPR 36.17(1)

In such cases, the court is obliged to make certain costs orders (the 'default Part 36 costs orders') unless
it considers it unjust to do so (see Practice Notes: Part 36 offers—deciding whether to accept a Part 36
offer and Part 36 offers—costs consequences of rejection or non-acceptance). Where this occurs,
whether or not such default Part 36 costs orders are 'unjust' is a matter to be determined by the judge in
each case who is required to take into account each of the factors listed under CPR 36.17(5) in reaching
his determination.
QUESTION :What factors must the court take into account when deciding whether Part 36 costs
are 'unjust'?

Pursuant to CPR 36.17(5), the factors the judge must take into account when deciding whether or not

the default Part 36 costs orders is unjust in a particular case are ‘all the circumstances of the case’

including:

1. the terms of any Part 36 offer

2. the stage in the proceedings when any Part 36 offer was made, including in particular how

long before the trial started the offer was made

3. the information available to the parties at the time when the Part 36 offer was made

4. the conduct of the parties with regard to the giving of or refusal to give information for the

purposes of enabling the offer to be made or evaluated

5. whether the offer was a genuine attempt to settle the proceedings

- emphasised the importance of the parties' conduct and that parties should lose the usual Part 36

cost advantages where they have obstructed the other side from assessing whether or not to

accept the offer (Ford v G. K. R. Construction).

- It also reflects the general rule when making any order as to costs, ie that the court must have

regard to all the circumstances, including the conduct of the parties, whether a party has

succeeded on part (if not all) of its claim and any admissible offer to settle brought to the

court’s attention.

- As an example of ‘all the circumstances’ a decisive factor in the court’s decision in Head v The

Culver Heating not to award the claimant Part 36 costs, despite beating her own offer, was her

late introduction of evidence which had changed the litigation landscape to the extent that it

would be unjust to punish the defendant for its failure to accept the claimant’s earlier Part 36

offer.

- A party who makes a well-judged Part 36 offer and is substantially successful might not

recover its costs in circumstances where its conduct of the case was insensitive or unjust

(Walsh v Singh).
What is a genuine attempt to settle the proceedings?

- for the court to consider whether the late accepted or unaccepted Part 36 offer was a 'genuine

attempt to settle the proceedings'.

- Claimants make very high settlement offers - up to 95% not in a genuine attempt to settle the

claim BUT to place D at risk of indemnity cost -

- Question is whether it was an offer to genuine settle not tactical

How to get to 36.17?

Where a party (the ‘Offeror’) makes a Part 36 Offer which is not accepted by the other side (the
‘Offeree’) within the ‘relevant period’ under CPR r.36.3 (g) and r.36.5(1)(c), and the Offeror
achieves a qualifying result at trial (‘more advantageous’ or ‘at least as advantageous’, as the
case may be, as defined by CPR r.36.17), the Court must impose the prescribed costs
consequences in favour of the Offeror and against the Offeree, ‘unless it considers it unjust
to do so’. CPR r.36.17 (5) provides that ‘in considering whether it would be unjust to make the
orders…the court must take into account all the circumstances of the case including…’ five
express considerations:

‘(a) the terms of any Part 36 offer;

(b) the stage in the proceedings when any Part 36 offer was made, including in particular how
long before the trial started the offer was made;

(c) the information available to the parties at the time when the Part 36 offer was made;

(d) the conduct of the parties with regard to the giving of or refusal to give information for the
purposes of enabling the offer to be made or evaluated; and

(e) whether the offer was a genuine attempt to settle the proceedings.’

The recently handed down case of JMX involved discussion on the recently introduced[1] fifth
consideration, (e) ‘whether the offer was a genuine attempt to settle the proceedings’
Note : you can make an offer at the door of court but not necessarily it will be part 36!

Indemnity basis - proportionality does not apply - only needs to be necessary unlike standard
basis

Std basis of assessing cost - judge will take in consideration of the costs