Part 36 and other offers (Costs)-FS

Question 1

What is a Part 36 Offer

Answer 1

A formal offer to settle made under Part 36 of the CPR, designed to encourage early settlement. It has cost consequences if not accepted and the offeror achieves a better result at trial.

Question 2

What happens if a claimant makes a Part 36 offer, and the defendant fails to beat it at trial?

Answer 2

The claimant may be awarded:

• The judgment sum,
• An additional amount (up to £75,000),
• Enhanced interest (up to 10% above base rate),
• Costs on the indemnity basis post-offer,
• Interest on costs at an enhanced rate.

Question 2

How is the additional amount under Part 36 calculated?

Answer 2

• 10% of the first £500,000 awarded;
• 5% of any amount above £500,000;
• Maximum cap: £75,000.

Question 3

Cost Consequences for Claimant When Defendant Fails to Beat Part 36 Offer

Answer 3

1. Judgment sum awarded
2. Additional amount (up to £75,000)
3. 60% of pre-offer costs on standard basis (example)
4. 80% of post-offer costs on indemnity basis (example)
5. Enhanced interest on judgment sum (e.g., 10%)

Question 4

What are the cost consequences for a claimant who fails to beat a defendant’s Part 36 offer?

Answer 4

The claimant will:

• Still recover the judgment sum,
• Recover pre-offer costs on the standard basis,
• But must pay the defendant’s post-offer costs on the standard basis.

Question 5

What is the main strategic purpose of a Part 36 offer?

Answer 5

To put financial pressure on the opposing party to settle, by creating potential cost penalties if they refuse a reasonable offer.

Question 6

“Failing to beat a Part 36 offer”

Answer 6

Occurs when a party receives less at trial than they were offered under a valid Part 36 offer.

Question 7

Can both claimants and defendants make Part 36 offers?

Answer 7

Yes. Part 36 applies to both sides. The cost consequences depend on who makes the offer and whether it is beaten at trial.