A Part 36 offer in personal injury is normally an offer to settle a claim for compensation. Part 36 offers differ from non Part 36 offers in a number of ways. There are cost consequences in terms of Part 36 offers. I will attempt to explain the nature and consequences of Part 36 offers.
Part 36 offers are set out in the Civil Procedure Rules and can be made by both the Claimant and the Defendant.
Not all offers to settle a claim are Part 36 offers. To be a Part 36 offer the offer normally must:
- Be in writing;
- State that the offer is intended to be a Part 36 offer and to have the consequences of the same;
- Specify a period of not less than 21 days within which the Defendant will be liable for the Claimant’s costs if the offer is accepted;
- State whether the offer relates to the whole of the claim or part of it.
If an offer is to be a Part 36 offer, it must normally be made in writing. This obviously excludes offers made solely over the telephone. If an offer is made over the telephone and then confirmed to be a Part 36 offer, perhaps either in a written letter or email, this would then be written and could therefore qualify as a Part 36 offer, providing that the other points are complied with.
To be a Part 36 offer the offer must state that it is intended to be a Part 36 offer. The written correspondence setting out the offer should include something along the lines of:
“This offer is made in accordance with Part 36 of the Civil Procedure Rules…”
The offer letter must state a period of not less than 21 days within which the Defendant will be liable for the Claimant’s costs if the offer is accepted. This is perhaps the most complicated element. The offer letter will often state something along the lines of:
“This offer is open for a period of 21 days after which it can only be accepted with the Claimant’s consent, subject to agreement in respect of costs.”
The above is a classic example where the Claimant is making an offer to the Defendant to settle the claim. After the 21 day period the offer can be withdrawn. However note that if a Part 36 offer is not withdrawn then it may still be available for acceptance even after the 21 day period has elapsed. In the scenario where the Claimant is making the Part 36 offer to the Defendant, it would be prudent to word the offer as above and then the Defendant cannot simply accept the offer outside of the 21 day period. They can only accept the offer outside of the 21 day period if the Claimant agrees and if the Claimant’s Solicitor is happy that some agreement has been made in respect of the Claimant’s costs in bringing the case.
In personal injury claims the loser pays the winners costs, this is the general rule. A Part 36 offer implies that if the offer is accepted the Defendant also agrees to pay the Claimant’s reasonable costs and disbursements. Although it is implied, if I were making an offer to the Defendant I would still include the following words:
“The Defendant do pay the Claimant the sum of £2,000, the Defendant do also pay the Claimant’s reasonable costs and disbursements to be subject to detailed assessment in default of agreement.”
In this example the amount of the offer is £2,000 but this can obviously be amended to any value. If the Defendant accepted the offer they would pay the Claimant the sum of £2,000 and in addition they would pay the Claimant’s reasonable costs and disbursements in pursuing the case. A disbursement is simply a fee which the Claimant Solicitor has incurred, for example a Solicitor may have paid a fee for GP records or for the medical report. Costs would be negotiated between the Claimant’s Solicitor and the Defendant, the Claimant has no actual involvement in this and as far as they are concerned they have received their compensation and the claim is over. If costs cannot be agreed for whatever reason, the case may go on to detailed assessment, this is where costs are assessed but again there is normally no involvement from the Claimant, it is simply a matter for the Claimant’s Solicitor and the representative of the Defendant.
In terms of how Part 36 offers affect you as a Claimant, if you are making a Part 36 offer you simply have to be aware that for a period of 21 days (or more if this is specified, 21 days is the norm as this is the minimum amount of time that you are able to give) the Defendant has the right to accept the offer. If they seek to accept the offer after the 21 day period then they can only do this with your consent (if the letter is worded as such). It is likely that you would allow the Defendant to accept the offer but you always have to make sure that your legal fees are to be paid in addition to any compensation, your Solicitor would always advise you regarding this. Even after the 21 day period has expired, a Defendant could seek to accept an offer that you have previously made. Therefore if evidence changes and you no longer want the offer to be available for acceptance, the offer must be formally withdrawn in writing as soon as possible.
If a Part 36 offer has been made by the Defendant to you then you always have to consider it carefully. Your Solicitor would advise you whether the offer seems reasonable or whether it seems too low or whether the offer is slightly on the low side etc. Despite this advice the offer is always yours and it is your decision whether to accept it or not. However your Solicitor’s advice should always be considered but in essence it is your choice. Obviously if you receive an offer and your Solicitor advises you that the offer is low but you accept it anyway, you cannot later come back to try and get more money. If you accept a Part 36 offer within 21 days then you will receive the full amount of the compensation offered. In addition to the compensation that you receive, the Defendant would also pay your legal fees to your Solicitor. If you seek to accept the offer outside of the 21 day period, you can only do this with the consent of the Defendant and subject to some agreement in respect of your legal costs.
You could accept an offer months after it was made if the offer was never withdrawn. However you should note the crucial costs consequences of doing this. If an offer of £5,000 was made to you in January 2009 and you did not accept it, if you then sought to accept the offer of £5,000 in say January 2010, then a considerable amount of legal fees may have been incurred by the Defendant and by your Solicitor. The Defendant would may not, in this situation, be liable to pay all of the costs. The costs for the period after the offer expired (i.e. 21 days after the offer) to the date you accepted the offer – you may be liable for these costs. These costs may come out of any compensation that you were awarded. The costs could amount to thousands of pounds and may wipe out your compensation entirely. This is not a scare tactic; if a Part 36 offer is low then a Solicitor would advise you to reject it. If a part 36 offer is reasonable then a Solicitor would advise you of the risks should it be rejected. Sometimes the evidence in a case may change and if it is a change for the worse you may seek to accept a previous offer. The offer may have been considered low at the time but if the medical evidence has changed then the offer may at that stage seem reasonable. However if you seek to accept an offer out of time then you become liable for the legal costs. Therefore you must always consider Part 36 offers carefully due to the costs consequences they impose.
Part 36 offers are quite technical but your Solicitor will always try to explain the consequences carefully.
