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Offers to settle a dispute before it proceeds to trial
Oct 11, 2007
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Historically, a litigant who refused an offer that was not beaten when the case went to trial could incur adverse costs orders and substantial interest. Part 36 offers were introduced to help avoid this trap. By providing costs protection if an offer is made and then unreasonably refused, the device encourages litigants to settle their claims. Charlotte Mitchell reports.
One of the most notable features of Part 36 offers was that a defendant had to make a payment into court to support an offer, whereas a claimant did not have to.
Recent changes
Following an update to the rules in April this year, there have been significant changes. These resulted from the appeal court’s decision in Trustee of Stokes Pension Fund v Western Power Distribution.
Most importantly, it is now no longer necessary for a defendant who wishes to make a Part 36 offer to make a payment into court. This puts defendants and claimants on a more level footing.
There are other changes that affect both claimants and defendants.
• Both parties now need the court's permission to withdraw or alter a Part 36 offer during the period for acceptance of such an offer (but not after the period expires).
• If the offer has not been withdrawn, in most cases it can now be accepted after the offer period of 21 days or more, without the permission of the court, even if the parties cannot agree liability as to costs. In fact, a Part 36 offer can be accepted by a party even after he has made a counter offer.
• For a defendant to make a valid Part 36 offer in a money claim, it must be an offer of a single sum of money, payable within 14 days of acceptance. If payment is not made within that time, judgment can be entered for the unpaid sum.
• Offers are considered open until they are withdrawn. So if an offer is not withdrawn after 21 days, the other party can still accept, even after expiry of this period.