Part 36 Offers: Should I Make A Part 36 Or A Different Type Of Settlement Offer? Practical Tips From 4 New Square

Hannah Daly and Stephen Innes of 4 New Square consider the pros and cons of different types of settlement offers, following a decision on claimants' Part 36 offers in JLE v Warrington & Halton Hospitals NHS.

We are often asked by professional and lay clients to advise on making settlement offers. The level of the offer may be crucial, but so too will be the type of offer.

Why make an offer?

At the outset, it is helpful to have clearly in mind that there are two distinct purposes for making an offer:

to achieve a settlement and resolve the matter, and to obtain costs protection in the event that the offer is not accepted. Some offers will be made with both purposes equally in mind, and there must always be some overlap - you may be aiming solely for costs protection, but you need to be sure that you can live with the offer being unexpectedly accepted.

But some offers will really only be aiming for a resolution (for example at, or very close to, trial where is too late to achieve meaningful costs protection) whilst others are really only seeking costs protection (such as where you think the other side has unrealistic expectations and is unlikely to be interested in what you consider to be a reasonable settlement).

Types of offer

A Part 36 Offer is an offer which complies with Part 36 of the Civil Procedure Rules. There are particular requirements in certain situations, but in all cases the offer must satisfy the requirements as to form and content prescribed by CPR 36.5, meaning that it must:

be in writing; make clear that it is made pursuant to Part 36; specify a period of not less than 21 days within which the defendant will be liable for the claimant's costs in accordance with rule 36.13 or 36.20 if the offer is accepted; state whether it relates to the whole of the claim or to part of it or to an issue that arises in it and if so to which part or issue; and state whether it takes into account any counterclaim. These requirements must be strictly adhered to: if an offer fails to comply in any respect, it is not a Part 36 Offer and the offeror will not automatically be entitled to the benefits provided for by Part 36 (see Mitchell v James [2004] 1 WLR 158, although the court will still have a discretion to take it into account (and see Huntley v Simmonds [2009] EWHC 406 (QB) for a rare example where it made no difference.

Given the importance of compliance, we recommend, particularly to non-lawyers, that any Part 36 Offer be drafted using the precedent form N242A.

As CPR 36.2(2) expressly states, there is nothing to prevent a party making an offer to settle in whatever way that party chooses.

Different terms are used for offers which are not Part 36 Offers. A "Calderbank offer" takes its name from the offer made by the wife in Calderbank v Calderbank, [1975] 3 All ER 333 in that case in an affidavit, "I am willing, and have always been willing, to make over to the [husband] the house at Alderley Edge".

Such an offer is usually now marked "WITHOUT PREJUDICE SAVE AS TO COSTS" so that it may not be seen by the court or tribunal until the substantive decision has been made and costs are argued. A Part 36 Offer does not need to be marked in that way because it is treated as such already by CPR 36.16.

However, it is worth remembering that it is possible to make an open offer, rather than one which is without prejudice. In detailed assessment proceedings...