Commercial Angles' Newsletter - August 2001
Out of court settlements
In proceedings under English Civil law, it is common for the judge to award costs against the losing party. In many cases the losing party will pay not only the settlement ordered by the court and his own legal costs but also the legal costs of the winner. The Civil Procedure Rules 1999, introduced a mechanism for settling cases - Part 36 offers. A Part 36 offer enables one party to make a without prejudice offer to settle a claim. If the offer is not accepted and the offeror does better than his offer when the case goes to court, the recipient of the offer will suffer from a reduction of the costs awarded by the court. If the recipient of the offer is a defendant there may also be an adverse effect in the interest awarded.
Part 36 offers
A part 36 offer:
If the Part 36 offer is made not less than 21 days before the start of the trial it must:
If the Part 36 offer is made less than 21 days before the start of the trial it must state that the offeree may only accept it if:
Scammell v. Dicker
The defendant's solicitors sent a Part 36 offer to the claimant's solicitors on 9 March 2000, less than 21 days before the start of the trial. The claim related to a boundary dispute and the offer was expressed to be open for 21 days even though this was not necessary under the CPR rules. On 13 March the defendant instructed his solicitor to withdraw the offer. The claimant's solicitors replied that a Part 36 offer, expressed to remain open for 21 days, must remain open and their client wished to accept the offer, subject to adding some clarifying words.
At the trial the judge held that the offer made on 9 March 2000, expressed to be open for 21 days, could not be withdrawn. The offer therefore remained open for acceptance and had been accepted by the claimant. His reasoning was that a party should not be able to use the Part 36 offer as a bargaining tool to tempt the other party to settle and then withdraw the offer to negotiate a better settlement.
The Court of Appeal's decision was given on 21 December 2000: the appeal was upheld and the defendant's Part 36 offer could be withdrawn even though it was expressed to be open for 21 days. The reasoning given was as follows:
The potential costs saving available to both claimants and defendants who make properly pitched offers complying with CPR Part 36 is high, particularly where it can be done at an early stage of the proceedings. A Part 36 offer should be expressed in very clear terms and in a form that complies with the requirements of Part 36. If the recipient requires clarification on certain points, this should be given because failure so to do might reduce the effectiveness of the offer. Litigants should review their settlement strategy regularly at specific stages in the proceedings, e.g. disclosure or exchange of witness statements, since these often affect a party's appreciation of the merits of his case.
Articles from previous newsletters
Acquisitions & Mergers | Big Brother | Business Plans | Climate Change Levy | Company Car Tax | Contracts of Employment | Corporate Immigration | Corporate Responsibility | Data Protection | Energy Audits | Environmental Liability | Euro Notes & Coins | Exports to Germany | Export procedures | Fraud recovery | Out of Court Offers | Payroll Review | Prevention of Fraud I | Prevention of Fraud II | Prevention of Fraud III | Product Liability | Redundancy | Stakeholder Pensions | Temporary Contracts | Travel Expenses | Value of the Euro | Work Permits | More articles |
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