You Can Rely On Us?

If you look at the “Dispute Resolution” Page of our website, you will note that “we aim to resolve disputes on behalf of clients as quickly and as cost effectively as possible” Whilst this is a boast of many solicitors, we have the track record to back it up.There are several ways in which parties can seek to resolve matters without the need to start or prolong Court proceedings, including what is known as a “Part 36 Offer”. This is a term adopted from that part of the Civil Procedure Rules (“CPR” - which govern the process by which disputes are litigated in England and Wales) setting out the rules in respect of such offers.

Part 36 of the CPR provides a mechanism for encouraging the early settlement of disputes by placing the offeree at risk as to costs from the time the offer is made. Whilst the payment of costs is always within the discretion of the Court, it is usual in England and Wales for the unsuccessful party to be ordered to pay the reasonable costs of the successful party. The guiding principle for the Court in exercising its discretion is the reasonableness or otherwise of the parties. If the Court considers that a successful litigant has been unreasonable in the manner in which the litigation has been conducted, it is likely to penalise that party by not allowing it to recover as much by way of costs as would ordinarily be the case. Conversely, if it considers that the unsuccessful party to the litigation has conducted the litigation unreasonably, it is likely to order that party to pay more by way of costs than would ordinarily be the case.

In broad terms, if a Claimant does not achieve a better result at trial than a Part 36 Offer which he has not accepted, he will not receive payment of his costs from the date of that Part 36 Offer, which he would ordinarily have done because he has been successful. Conversely, a Defendant who does not accept a Part 36 Offer made by a Claimant and then does not achieve a better result at trial, will be ordered to pay the Claimant’s costs on what is known as the indemnity (as opposed to standard) basis. This, in effect, means the recovery of approximately 90% as opposed to 75% of actual costs. In addition “penal” interest (of up to 10% above base rate) can be ordered on the award of damages.

As will be readily apparent, the making of a strategically well pitched Part 36 Offer by either the Defendant or the Claimant is likely to put the other party under pressure to accept, because of the potentially adverse consequences of not accepting, even if ultimately successful at trial. Hence, it is a powerful tool in the hands of both the Claimant and the Defendant.

A Part 36 offer is certainly a tool which we always seek to use on behalf of our clients when appropriate and it will often be at certain specific stages of the dispute. A Part 36 Offer can be made before the commencement of legal proceedings or, indeed, after such proceedings have been commenced and are often made at key stages in that litigation process such as, for example, after disclosure of documents, after exchange of witness statements or after exchange of expert reports.

Within the last four weeks, and after a robust exchange of pre-action correspondence with the Defendant’s solicitors and on the eve of the commencement of proceedings, Robert Johnson made a Part 36 offer on behalf of the client. The claim was for breach of contract and its value in excess of £300,000. The claim has now settled at about 80% of its value and the client has recovered the majority of its legal costs. Hence, the delay, cost distraction, uncertainty et al of litigation have been avoided.