Jaw Jaw better than War War
Written by Michael Coyle on 13 October 2013« Return to Reading Room
Making a Part 36 offer is often considered to be one of the most important tactical steps that a party can take. It will make the recipient focus on the offer as if a settlement is not achieved, it should protect you, the maker, on costs.
If your adviser has not made a Part 36 yet, then ask why and do it! If you have received an offer then give it serious consideration.
You can make an offer to settle at any stage in legal proceedings in whatever form you wish. However if you make an offer which is not in the Part 36 format then the court can only exercise its discretion whereas it forces the court's hand to take advantage of the costs benefits if a formal Part 36 offer is made. As an offer made in accordance with CPR 36.2 will have a knock on affect on CPR 36.10, CPR 36.11 and CPR 36.14. A part 36 offer since April 2013 gives the court an additional discretion to order interest on any sum of money awarded, as well as to order costs and interest on costs and to order a defendant to pay an amount to the claimant as an additional sanction.
The formal requirements for a Part 36 offer are set out in CPR 36.2, CPR 36.4 and PD 36A.1.
Here is a draft:-
Dear Sirs, Without prejudice save as to costs/ Offer to settle under Part 36
As we have made clear in our open correspondence our client is confident that it will be successful against your client, and will be entitled to substantial damages in respect of both the Patent and Copyright claims.
Nevertheless, our client has always expressed a desire to resolve this matter amicably and is fully aware of the costs and risks involved. We are, therefore, authorised by our client to make your client, the following offer to settle under Part 36 (Offer).
This Offer is intended to have the consequences set out in Section I of Part 36 of the Civil Procedure Rules. In particular, your client will be liable for our client's costs up to the date of notice of acceptance which must be in writing (notice of acceptance), in accordance with CPR 36.10, if the offer is accepted within 21 days (the relevant period).
TERMS OF THE OFFER
Our client is willing to settle the entire proceedings, on the following terms: Your clients shall pay our client within 14 days of accepting this Offer, the sum of £500,000 (the settlement sum), to the account as provided below. This Offer takes in to account your client's counterclaim, yet does not include costs as your client will be liable to pay our client's costs on the standard basis, to be assessed if not agreed, up to the date of service of notice of acceptance if this Offer is accepted within the relevant period.
The settlement sum is inclusive of interest until the relevant period has expired. Thereafter, interest at a rate of 8% p.a. will be added.
FAILURE TO ACCEPT THIS OFFER
If your client does not accept this Offer, and our client obtains a judgment which is equal to or more advantageous than this Offer, our client intends to rely on CPR 36.14. In other words, our client will be seeking an order in the following terms:
• Your client to pay our client's costs up to the expiry of the relevant period.
• Your client to pay our client's costs on the indemnity basis from the date on which the relevant period expired, with interest on those costs of up to 10% above base rate and interest on the whole or part of any sum awarded at up to 10% above base rate for some or all of the period starting from the same date.
• An additional amount of 10% of the first £xxxx of damages awarded by the Court. We are confident that our client shall be successful at trial but if you think otherwise please let us know within the relevant period.
We look forward to hearing from you.
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