Part 36 - New rules on settlement offers
Offers of settlement relating to court proceedings are governed by Part 36 of the Civil Procedure Rules. Part 36 was extensively revised in 2007. Those changes have generated a significant amount of case law and Part 36 has now been revised again to, generally, reflect the case law. The changes come into effect on 6 April. A full copy of the new Part 36 can be found here.
One of the most interesting changes is the attempt to deal with settlement offers that are purely tactical in nature. It has become common practice for claimants to make early settlement offers for, say, 95% of the value claimed. The reasoning is simple – all the claimant has to do is beat its offer at trial. A high offer with little concession puts maximum pressure on the defendant to settle the claim early to avoid the risk of being liable for indemnity costs, enhanced interest and an additional amount of up to 10% of the value of the claim.
The new Part 36 tries to address this issue to some extent. It provides a list of factors that the court must take into account in deciding whether it would be unjust to impose the consequences referred to above. One such factor is whether the offer was a genuine attempt to settle the proceedings. In Huck –v- Robson [2002] the court stated “if it was self-evident that the offer was merely a tactical step designed to secure the benefit of the incentives provided by the Rule (eg an offer to settle for 99.9% of the full value of the claim) … the judge would have a discretion to refuse indemnity costs.” The case was decided prior to the 2007 changes but the courts continue to take note of the case and, arguably in relation to this provision, we are reverting back towards a pre 2007 outlook on purely tactical offers. In any event, we anticipate that whether an offer is a genuine attempt to settle will be the subject of substantial satellite litigation as the courts attempt to set some guidelines whilst maintaining that each case will, no doubt, depend upon its own facts.
Posted on 04/02/2015 by Ortolan
