Should you settle a claim early to restrict costs?
14 April 2015
Litigation is a very expensive way of resolving disputes and it is not uncommon for the cost of issuing, or defending, a claim to exceed the damages. One way of trying to limit your exposure to costs is to use Part 36 of the Civil Procedure Rules.
Under this rule one party makes a formal without prejudice offer to the other party to settle the dispute. It can be made at any time, whether or not proceedings have been issued. If the offer is accepted, the defendant is required to pay the claimant’s costs up to the date of acceptance. However if an offer is not accepted you should consider the cost consequences bulleted below.
Note that costs are awarded on either a standard or an indemnity basis. In the case of the former, the party receiving their costs must prove the reasonableness and proportionality of the amount claimed. In the case of the latter, there is no requirement for the costs to be proportionate, which means that it is for the paying party to show that the costs claimed are unreasonable.
The claimant succeeds but fails to beat his own offer – the claimant is awarded costs on the standard basis
The claimant equals or beats his own offer – from the expiry of the relevant period the claimant is likely to be awarded interest on the whole or part of the sum awarded to him; costs on the indemnity basis; interest on those costs and (as a penalty) an additional percentage of the amount awarded
The claimant loses – the claimant pays the defendant’s costs on the standard basis plus interest from expiry of the relevant period until judgement
The claimant beats the defendant’s offer – the claimant is awarded costs on the standard basis
The claimant fails to beat the defendant’s offer – the defendant pays the claimant’s costs on the standard basis up to the expiry of the offer; thereafter the claimant pays the defendant’s costs on the standard basis plus interest
The claimant loses at trial – the defendant is awarded costs on the standard basis plus interest from the expiry of the relevant period until judgement
For the defendant in particular, where there is a concern over liability, and in order to protect their position on costs, it is important to put forward a reasonable offer to settle the claim in accordance with Part 36 as soon as possible.
Disclaimer: All legal information is correct at the time of publication but please be aware that laws may change over time. This article contains general legal information but should not be relied upon as legal advice. Please seek professional legal advice about your specific situation - contact us; we’d be delighted to help.
In a new series – ‘What does the law say?’ – our property litigation specialists discuss the key parts of residential possession law landlords and tenants should be aware of.…
In November 2023, HM King Charles delivered the King’s speech which set out the government’s planned legislative programme for the coming year. Our litigation specialists summarise the proposed bills that…
The Leasehold Reform (Ground Rent) Act 2022 came into force in June 2022 to ensure ground rent does not exceed one peppercorn per year. This only applies to new leases…
Our website uses cookies to improve your experience while you navigate through our website. Out of these cookies, the cookies that are categorised as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyse and understand how you use our website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies but it may affect your browsing experience on our website. You can find our cookie policy here.
Necessary cookies are absolutely essential for our website to function and enable core functionality such as security and accessibility. These cookies do not store any personal information. You can block these cookies by changing your browser settings, but this may affect how the website functions.
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Cookie
Duration
Description
__cf_bm
30 minutes
This cookie, set by Cloudflare, is used to support Cloudflare Bot Management.
mgref
1 year
This cookie is set by Eventbrite to deliver content tailored to the end user's interests and improve content creation. It is also used for event-booking purposes.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Cookie
Duration
Description
_ga
2 years
The _ga cookie, installed by Google Analytics, calculates visitor, session and campaign data and also keeps track of site usage for the site's analytics report. The cookie stores information anonymously and assigns a randomly generated number to recognize unique visitors.
_gat
1 minute
This cookie is installed by Google Universal Analytics to restrain request rate and thus limit the collection of data on high traffic sites.
_gid
1 day
Installed by Google Analytics, _gid cookie stores information on how visitors use a website, while also creating an analytics report of the website's performance. Some of the data that are collected include the number of visitors, their source, and the pages they visit anonymously.
G
1 year
Cookie used to facilitate the translation into the preferred language of the visitor.
vuid
2 years
Vimeo installs this cookie to collect tracking information by setting a unique ID to embed videos to the website.
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.