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Offers to Settle (Calderbank Offers) and Part 36 offers
CPR Part 36 (Offers to settle)
36.1, Scope of this part
-(1) part contains a self-contained procedural code re offers to settle made pursuant to the procedure in this part ("Part 36 offers")
-(2) Section I contains general rules re Part 36 offers
-(3) Section II contains rules about offers to settle where parties have followed the RATA protocol; or Employers' Liability and Public Liability claims; and have started proceedings under Part 8.
36.2, Scope of this section
-(1) this section does not apply to an offer to settle to which Section 2 applies.
-(2) nothing in this section prevents a party making an offer to settle in whatever way that party chooses; but if the offer is not made in accordance with r36.5 ? it will not have the consequences specified in this Section [[i.e. in 36.13-17]]
o eg a Calderbank letter will not attract those consequences.
o (r44.2, court's discretion re costs: requires court to consider an offer to settle that does not have the costs consequences set out in this section (i.e. is not a part 36 offer) in deciding what order to make about costs).
-(3) a Part 36 offer may be made in respect of the whole, or part of, or any issue that arises in:
o (a) a claim, counterclaim or other additional claim; or
(b) an appeal or cross-appeal from a decision made at a trial.
-(r20.2-3: counterclaims and other additional claims are treated as claims;
and references to a C
r D include a party bringing/defending an additional claim).
Commentary, 36.2.1, general note
-Part 36 provides a 'self-contained procedural code' for the making,
withdrawal and acceptance of settlement offers.
-R36.2(2): preserves the right to make a settlement offer by way of a
Calderbank letter (Calderbank v Calderbank), or in any other way.
-A Calderbank offer/letter:
o Is made by letter written "without prejudice save as to costs" or
o BUT subject to an express reservation of the right to refer to the letter on the issue of costs should the claim proceed to judgment.
-Although the existence of a Calderbank letter may be a very important consideration in the exercise of the court's discretion; a Calderbank letter is NOT to be equated with a Part 36 offer. ?Offers that don't comply with Part 36 will NOT attract the consequences in 36.13-17;
o BUT such offers must be taken into account in the exercise of the court's discretion pursuant to Part 44 (court's discretion as to costs), court will have regard to any admissible offer to settle which is not a Part 36 offer [44.2(4)(c)].
o The existence of a Calderbank letter should influence, but not govern, the exercise of the court's discretion. Court retains its discretion.
SC, Summers v Fairclough Homes (2012): SC accepted that Pt 36 may be of little assistance in protecting Defendants against fraudulent claims since, on acceptance, D would have to pay C's costs.
o Lord Clarke: suggested that the D in such a case could make a
Calderbank offer to settle the genuine part of the claim, on terms that the C pay the D's cost incurred in respect of the fraudulent or dishonest aspects of the claim on an indemnity basis.
Commentary, 36.2.4, Formal or technical defects
-R36.2(2): if an offer is not made in accordance with the technical requirements of r36.5 ? it will not have the usual Pt 36 consequences.
-However, if there are formal or technical defects in a Pt 36 offer,
provided they cause no real uncertainty or other prejudice to the offeree ? the court may order that the usual Pt 36 costs consequences will follow.
-Huntley: court exercised its discretion under Pt 44 to provide for the same costs consequences as would follow from Pt 36 compliance.
o Re a non-compliant Defendant's offer.
-CA: there may be de minimis errors or obvious slips....but the general rule is that for an offer to be a Part 36 offer it must strictly comply with the requirements.
-More difficult re a non-compliant Claimant's offer: more difficult, since one cannot ordinarily obtain orders, outside Pt 36, for: (1) additional interest; (2) the 'additional award' under r36.17(4)(d); or, absent circumstances taking the case outside the 'norm', (3) indemnity costs.
o So doubtful whether court would uphold award of additional interest and indemnity costs despite a technical defect in a
Claimant's Part 36 offer.
-Where a party makes an offer that is intended to be a Pt 36 offer, but a point arises to its construction ? the court should prefer the construction, if possible, that would give effect to the stated intention
-But fundamental defects (eg a failure to specify at all a period of not less than 21 days) ? will preclude an offer being treated as Pt 36 offer.
-Shaw: CA: offer failed to comply with mandatory requirements of r36.5(1)
-was not a Pt 36 offer. Had no sympathy with attempts to construe the offer as compliant, observing that Pt 36 is not the only way of settling litigation.
-CA has approved strict approach. 36.3, Definitions
-In this section:
-(a) the party who makes an offer = 'Offeror'
-(b) party to whom an offer is made = 'offeree'
-(c) a "trial" means any trial in a case whether it is a trial of all issues or a trial of liability, quantum or some other issue in the case
-(d) a trial is "in progress" from the time when it starts until time when judgment is given or handed down.
-(e) a case is "decided" when all issues in the case have been determined, whether at one or more trials
-(f) "trial judge" includes the judge (if any) allocated in advance to conduct a trial;
-(g) the "the relevant period" means:
o (i) in the case of an offer made not less than 21 days before a trial ? the period specified under r36.5(1)(c) [a specified period of not less than 21 days (21 days+) within which D will be liable for the C's costs if the offer is accepted] or such longer period as the parties agree;
o (ii) otherwise (offer made within 21 days of trial), the period up to the end of such trial.
36.4, Application of Part 36 to APPEALS
-(1) Except where a Pt 36 offer is made in appeal proceedings, it shall have the consequences set out in this Section only in relation to the costs of the proceedings in respect of which it is made; and NOT in relation to the costs of any appeal from a decision in those proceedings.
-(2) Where a Pt 36 offer is made in appeal proceedings ? references in this section to a term in the first column shall be treated as references to the corresponding term in the second column (unless the context requires otherwise):
36.5, Form and content of a Pt 36 offer
-(1) A Pt Offer MUST:
a) be in writing;
b) make clear that it is made pursuant to Pt 36;
c) specify a period of not less than 21 days [i.e. 21 days+] within which D will be liable for C's costs in accordance with r36.13 or
36.20 IF the offer is accepted; ?a. 36.5(2): this para does NOT apply if the offer is made less than 21 days before start of trial.
d) state whether it relates to the whole or part of the claim or to an issue that arises in it; and if so to which part or issue;
e) state whether it takes into account any counterclaim.
(3) In appropriate cases, a Pt 36 offer must contain such further info as is required by:
o r36.18 (PI claims for future pecuniary loss);
o r36.19 (offer to settle a claim for provisional damages)
o r36.22 (deduction of benefits)
o [[none of these on syllabus]]
(4) A Pt 36 offer which offers to pay or offers to accept a sum of money, will be treated as inclusive of all interest, UNTIL:
o (a) the date on which the period specified in 36.5(1)(c)
[specified period of 21 days+] expires; OR
o (b) if 36.5(2) applies [where offer made less than 21 before trial] ? a date 21 days after the date the offer was made.
36.6, Defendant's Offer (Part 36 offer)
-Subject to rules 36.18(3) [PI claim for future pecuniary loss] and 36.19(1)
[provision damages] ? a Pt 36 offer by a Defendant to pay a sum of money in settlement of a claim ? MUST be an offer to pay a single sum of money.
-(2) A D's offer that includes an offer to pay all or part of the sum at a date later than 14 days following the date of acceptance ? will NOT
be treated as a Pt 36 offer, UNLESS the offeree accepts the offer.
36.7, Time when a Part 36 offer is made
-(1) a Pt 36 offer may be made at any time, including before commencement of proceedings.
-(2) a Part 36 offer is "made" when SERVED on the offeree. [See Part 6 re service of documents]
36.8, Clarification of a Pt 36 offer
-(1) The offeree may, within 7 days of Pt 36 offer being made?
request the offer to clarify the offer.
-(2) If offeror does not give the clarification requested under (1)
within 7 days of receiving the request ? the offeree may, unless the trial has started, apply for an order that the offeror do so
(will be Part 23 procedure for such an application)
-(3) if the court makes an order under (2) ordering offeror to give clarification ? it must specify the date when the Pt 36 offer is to be treated as having been made.
Withdrawing/Changing terms of a Pt 36 offer
36.9, Withdrawing or changing the terms of a Pt 36 offer generally ???
(1) A Pt 36 offer can only be withdrawn, or its terms changed, IF: the offeree has not previously served notice of acceptance.
I.E. if offeree has already served notice of acceptance ? cannot withdraw/change terms.
(2) The offeror withdraws the offer or changes the terms BY: serving written notice of the withdrawal or change on the offeree.
o See r36.17(7) re costs consequences following judgment of an order which is withdrawn ? it means that 36.17(3) and (4) do not apply to the Pt 36 offer
(3) Subject to 36.10 [withdrawal/changing terms before expiry of the relevant period], such notice of withdrawal/change of terms takes effect when it is served on the offeree.
o 36.10: makes provision re when permission is required to withdraw/change terms of an offer before expiry of the relevant period.
(4) Subject to para (1), i.e. if offeree has not served notice of acceptance ? then AFTER expiry of the 'relevant period':
o (a) the offeror may withdraw offer/change terms WITHOUT
PERMISSION of the court; OR
o (b) the offer may be automatically withdrawn in accordance with its terms.
o ((NB the "the relevant period" means)):
-(i) in the case of an offer made not less than 21 days before a trial ? the period specified under r36.5(1)(c) [a specified period of not less than 21 days within which D will be liable for the C's costs if the offer is accepted] or such longer period as the parties agree;
-(ii) otherwise (offer made within 21 days of trial), the period up to the end of such trial.
(5) where the offeror changes the terms of Pt 36 offer to make it more advantageous to the OFFEREE:
-[i.e. in this situation the offeree would never want to accept the original offer over the new offer]].
-(a) such improved offer shall be treated not as the withdrawal of the original offer; but treated as the making of a NEW Pt 36 offer on the improved terms;
-(b) subject to r36.5(2) [offer made less than 21 days before trial] the period specified under 36.5(1)(c) shall be 21 days or such longer period (if any) identified in the written notice referred to in para (2)
[written notice of withdrawal/change of terms].
36.10, Withdrawing or changing terms (to be LESS ADVANTAGEOUS to offeree) of a Pt 36 offer BEFORE the expiry of the relevant period
-(1) subject to 36.9(1) [cannot withdraw/change if offeree has served notice of acceptance] ? this rule applies where the offeror, before expiry of the relevant period, serves notice of:
o (a) withdrawal or
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