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Property Patter: the basics of settlement offers

Settlement offers are often a sensible route for trying to settle disputes, not least because they offer flexibility which may be unavailable from a court judgment. Emma Humphreys and Samuel Lear are joined by Caroline Greenwell of our Commercial Dispute Resolution Team to discuss the differences between Calderbank offers and offers made under CPR Part 36 and the basics of how they work in practice. 

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Action Costs consequences
Part 36 offer for the whole claim, made at least 21 days before trial, is accepted (by claimant or defendant) within the relevant period.

Claimant is entitled to the costs of the proceedings (including their recoverable pre-action costs), to be assessed on the standard basis if not agreed, up to the date of service of notice of acceptance.

Part 36 offer for the whole claim, made at least 21 days before trial, is accepted (by claimant or defendant) after expiry of relevant period.

If the parties cannot agree liability for costs, the court must, unless it considers it unjust, order that the claimant be awarded costs up to the date when relevant period expired and offeree do pay offeror's costs from expiry of relevant period to date of acceptance.

Claimant beats defendant's offer, that is, claimant does not accept defendant's Part 36 offer and obtains a more advantageous judgment.

Costs will be decided in the usual way (see CPR 44.2).

Claimant fails to beat defendant's offer, that is, claimant does not accept defendant's Part 36 offer and fails to obtain a more advantageous judgment.

Unless it considers it unjust to do so, the court must order the claimant to pay defendant's costs (including any recoverable pre-action costs) from date when relevant period expired and interest on those costs.

Claimant equals or beats its own offer, that is, defendant does not accept Part 36 offer and claimant obtains a judgment that is equal to or more advantageous than offer.

Unless it considers it unjust to do so, the court must order the defendant to pay the claimant's costs (including any recoverable pre-action costs) on the indemnity basis from the date the relevant period expired and:

  • Interest on those costs of up to 10% above base rate.
  • Interest on the whole or part of any sum of money (excluding interest) awarded at up to 10% above base rate for some or all of the period starting from the date when the relevant period expired.
  • An additional amount of 10% of the first £500,000 of damages awarded, or 10% of the first £500,000 of costs where there is no monetary award, and 5% of any amount above those figures, subject to the limit of £75,000.
Claimant fails to equal or beat its own offer, that is, defendant rejects Part 36 offer and claimant obtains a less advantageous judgment.

Costs will be decided in the usual way (see CPR 44.2).

Table Credit: Sydney Lee

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