Under many circumstances you can be presented with ‘Part 36 offers’ but perhaps you are unsure as to the exact implications of accepting or rejecting such an offer? We’ll get to that part…
This blog explains what a Part 36 offer is and what the cost implications can be, particularly in light of the recent case of Sugar Hut v AJ Insurance  EWCA Civ 46.
What is a Part 36 Offer?
Part 36 Offers are made pursuant to Part 36 of the Civil Procedure Rules which govern the litigation process. A Part 36 will deal with making offers to settle the claim.
This is encouraged by the courts as an alternative to litigation.
Making a Part 36 offer is considered a tactical move as essentially Party A will make an offer to encourage Party B to settle or face having to pay Party A’s costs from the date the offer expired onwards (providing Party B does not do better than the offer at trial).
The Part 36 Offer can be made by both Claimant and Defendant
What if the Part 36 Offer is not accepted?
Party B’s failure to accept the offer will enable the claim to continue and if Party B does better than the offer at trial, there are no specific cost implications and the court will assess costs in the usual way. If Party B does not do better at trial, they will be liable for Party A’s costs from the date that the offer expired.
And if the Part 36 Offer is accepted?
If Party B accepts the offer, then the claim is ‘stayed’ (meaning it will go no further) and the parties can come to an agreement about costs. Failing this, the court may need to become involved again to make an order as to costs.
So what happened in Sugar Hut v AJ Insurance?
The appeal decision in Sugar Hut v AJ Insurance has clarified that if a Part 36 Offer contains one offer with separate limbs that are not separate offers in themselves that are capable of individual acceptance, then the court must not treat it as such. Therefore the court must not deny the winning party their costs on the basis that the winning party has acted unreasonably in persisting in pursuit of the claim (or in particular, that limb of the offer) and not been awarded as much as was offered.
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Trainee Solicitor Amarjit Atwal