SGS 7: Part 36, Settlement, Trial & Costs

Question 1

Why would a Part 36 offer to settle be given?

Answer 1

• If clients case is strong OR if client case is weak

- Either way serves its use

Question 2

Who can make a Part 36 Offer?

Answer 2

• Made by either side
• Overriding objective - parties that make sensible proposals to settle should get some benefit if the offer is not accepted + turns out @ trial that they should be accepted.
• Party who does not accept, may be subject to penalties - costs / damages / interest
• No downside to making officer.

Question 3

What are the incentives to making a Part 36 Offer?

Answer 3

• Costs / damages / and or interest

Question 4

How should a Part 36 Offer be made?

Answer 4

• CPR 36.5
  • Writing / pursuant to CPR36 / remains open for 21 days / relates to whole or part of claim / if it takes into account any counterclaim.
• Adds if there is any interest included in the sum. If not stated, then assume that is included - CPR 36.5(4)

Question 5

How should the costs of a Part 36 Offer be headed?

Answer 5

• “without prejudice as to costs”
• CPR 36.16 implies that it will be without prejudice except as to costs.
• Address to the legal representatives of the other side: 2 reasons -
  • PCR issue
  • 36A PD 1.2

Question 6

When can the Part 36 Offer be made and which CPR?

Answer 6

• CPR 36.7

- Offer can be made ay any time - but particularly before trial.

Question 7

Does the judge have to be aware of the Part 36 Offer?

Answer 7

• CPR 36.16(d)
• Trial judge must not be aware of offer
• Until the case has been decided
• May be alerted to fact that it exists if the trial is a split trial

Question 8

Regarding timing, when is the Part 36 Offer deemed to be formally made?

Answer 8

• When it is served on the offeree - under CPR 36.7

- They should respond within the relevant period - CPR 36.3

Question 9

How can a Part 36 Offer be changed / withdrawn?

Answer 9

• CPR 36.9
• Within relevant period or after expiry of relevant period
• Only if the offeree has not previously served a notice of acceptance.
  
  • Serve WN on other party
  • Can do so without permission from court, if relevant period has expired / automatically in accordance with terms of offer.
• NB. CPR 36.9(5) where the change is more advantageous to the offeree.
• NB. CPR 36.10 – may change adversely during relevant period, but the original offer will remain open for acceptance.
• NB. If offer is rejected but then remains open, can change mind & accept.

Question 10

What happens if the Offer is more advantageous to the offeree?

Answer 10

• Go to CPR 36.9(5)

Question 11

How should a part 36 offer be responded to?

Answer 11

• Accept / reject within relevant period
• Seek clarification within 7 days of the offer being made
• Under CPR 36.8

Question 12

What happens if there is an early Part 36 offer?

Answer 12

• Court may order early disclosure

- So that offeree has relevant material that it needs to make informed decision.

Question 13

Which steps need to be done to accept a Part 36 Offer?

Answer 13

CPR 36.11
36A PD 3.1

• Serve written notice of acceptance
• File this acceptance with the court

CPR 36.14

• Case = stayed
• Will not continue to trial
  • C then entitled to the amount contained in the offer, and costs of proceedings up to the date of the notice.

When?

• D must pay this within 14 days of the notice of acceptance.
• If it does not, C can enter new judgement to enforce the terms of agreement

Question 14

What happens if a Part 36 Offer is rejected?

Answer 14

• Case continues to trial

- Both parties should continue to consider settlement

Question 15

What are the consequences of rejecting a Part 36 Offer?

Answer 15

• CPR 36.17
• Depends if rejection = unreasonable
• Relationship between offer amount & amount awarded @ trial

1 - Who made offer
2 - Which part of CPR 36.17 applies
3 - Who does court want to penalise?

Question 16

What happens if the Claimant offers and the Defendant rejects?

Answer 16

CPR 36.17(1)(b) D pays the same or more than would have if had accepted offer – ‘unreasonable’ rejection. Go to…
CPR 36.17(4) C is entitled to:
a. Interest on whole/part of sum at a rate not exceeding 10% above base.
b. Costs on indemnity basis from date on which the relevant period expired.
c. Interest on the above costs at a rate not exceeding 10%.
d. An additional penalty amount

Question 17

What happens if the Defendant offers and the Claimant rejects?

Answer 17

CPR 36.17(1)(a)
- C fails to obtain a judgment more advantageous than D’s offer (i.e. at trial gets same or less money than D’s offer) – ‘unreasonable’. Go to…

CPR 36.17(3)

• C wins but gets same as or less at trial – ‘split costs’ penalty:
  a. Would recover its costs up to the last date it could have accepted D’s offer.
  b. But from end of relevant period to trial will have to pay Ds costs & interest on those costs.

C loses:
a. C must pay Ds costs for the whole proceedings
- C may also have to pay interest on the value (unless unjust)

Question 18

What must be noted re costs of a Part 36 offer?

Answer 18

• Court = discretion as to costs
• CPR 36.17(5) - conduct / timing of offer / whether a genuine attempt to settle
• If offeree had sufficient information to make a correct decision.

Question 19

What happens if the open claimants and defendant offers at the same time?

Answer 19

If judge awards £500,000

• C won same / more than his offer
• So C offer takes effect
• D offer does not take effect
• As C has won more than D offer.

If judge awards £300,000 - Neither offer has effect.

• C has won less than his own offer.
• C has also not won less than D offer
• Therefore D offer does not take effect

If judge awards £100,000

• C has won same / less than D offer
• So D offer takes effect.

Question 20

Explain how parties might enter into settlement negotiations: WITHOUT PREJUDICE?

Answer 20

– whatever may be said by the parties without prejudice cannot be used in court. Means can discuss settlement openly without fear that anything said might subsequently be used against them.

Essential to label such correspondence clearly & separate it from open correspondence for the following reasons:
- To ensure WP correspondence is not made available for inspection by the other side.
- To enable you to keep track of open position and WP position.

Question 21

For without prejudice settlement negotiation, explain how you have to look at substance and not form?

Answer 21

• essential to look at the surrounding circumstances e.g. genuine attempt to settle?

Question 22

When will settlement be binding?

Answer 22

• Settlement may be binding, provided there has been offer, acceptance, ITCLR & consideration.
  9 Final settlement will be a carefully drafted settlement agreement/deed
  9 “Subject to contract” will usually be treated as excluding legal effectiveness unless there is clear evidence to the contrary.

Question 23

Is settlement a legally binding contract?

Answer 23

• Yes
• Court must be notified so that a court order can be given. Needed because (1) There are existing proceedings which must be ended, and (2) A court order may assist in enforcing the agreement reached.

Question 24

What are the four settlement and existing proceedings?

Answer 24

1 - Stay
2 - Dismissal
3 - Discontinuance – CPR 38
4 - Judgment/Consent Order

Question 25

What is a consent order?

Answer 25

- Settlements to be recorded in a consent order - This indicates that parties agree the terms it sets out: there are two types - 1) Those based on a contract 2) Those which are NOT a contract, but simply parties agreeing terms of settlement.

Question 26

What is a Tomlin order? In which two situations are they used?

Answer 26

- Type of consent order used when: 1) Parties wish for a key settlement term to be confidential 2) When agreed settlement terms go beyond what the court could generally order. - Tomlin order contains a schedule - 3.5 PD40B - any direction for: - Payment of money out of court e.g. any sums previously paid into court, or - The payment and/or assessment of costs …must be contained in the main body of the order. Because these two need action from the court .: must be in the ‘public part’ of the order.

Question 27

What are the two parts of Tomlin Order?

Answer 27

* Order – public, contains actions to be taken by the court, stay of proceedings etc. * Schedule – confidential, contains terms of agreement – enforceable with further court order, enables parties to include provisions beyond the limits of the dispute.

Question 28

What are the three steps of enforcement of a Tomlin Order?

Answer 28

1. Breach of agreement – commence proceedings for breach of contract, usually by way of summary judgment. 2. If terms are embodied on face of court order, then non-defaulting party can proceed to enforcement immediately. 3. If in a Tomlin Order, an order for breach of the terms of the schedule must be obtained before the parties can enforce.

Question 29

Where is the pre-trial checklist found?

Answer 29

- Form N170: court sets filing deadline in standard directions. This is part of case management. - Checklist is sent to parties at least 14 days before the filing date - . Filing date will be at least 8 weeks prior to the trial date or start of trial period. 29 PD 8.1(3)-(4). Parties should exchange checklists before to ensure they are compatible. If no parties file, an unless order will be made for the case to be struck out unless filed within 7 days from service of the order. CPR 29.6(3). Claimant pays fee on filing.

Question 30

explain preparation for costs?

Answer 30

- @ end of trial - court should address costs - If not agreed: court has discretion as to CPR 44.2(1) † Whether costs are payable by one party to another GR: Unsuccessful party pays costs of successful party – CPR 44.2(2), but court has discretion. - Factors in exercise of discretion CPR 44.2(4)-(5): Conduct, partial success on part of case, any offer to settle? - Types of orders – CPR 44.2(6) – E.g. proportion, specified amount, particular period, interest

Question 31

How do the courts decide the amount of costs?

Answer 31

CPR 44.3 – Court must specify the basis of assessment: Š Standard Basis – CPR 44.3(2) and 44.4(1) o Costs which have been proportionately and reasonably incurred, and o Are proportionate and reasonable in amount With any doubt resolved in favour of the paying party. NB – commonly 60-70% recovered   Š Indemnity Basis – CPR 44.3(3) and 44.4(1) o Costs which have been reasonably incurred, and o Are reasonable in amount With any doubt resolved in favour of the receiving party. This will á the amount of costs a party should expect to recover. Usually recover 70-80%. 9 Usually awarded where a party’s conduct deserves a mark of disapproval. NB. CPR 3.18 regarding costs payable and costs management orders – if there is a difference of 20% or more between costs claimed & costs shown in budget, must provide a statement of reasons for the difference – 44 PD 3.2  

Question 32

What happens if there is a difference of 20% or more between costs claimed and costs shown in the budget?

Answer 32

- CPR 3.18 - must provide a statement of reasons for the difference - 44 PD 3.2

Question 33

When should the parties be paid?

Answer 33

- CPR 44.6 and 44.7 - Summary assessment – immediately at end of hearing - Detailed assessment – decided by an authorized court officer – when parties do not agree on what costs should be - Generally: payable within 14 days of the order / certificate - Unless a later date is specified - CPR 44.7