Court rules allow a party to litigation to make an offer to settle the claim at any stage of the proceedings. Indeed you will be encouraged throughout to make an offer to settle the claim and agree an out of court settlement. There is no need to pay the money offered to settle into court to show you are good for the amount as was once the case. All that is needed is to make what is known as a ‘Part 36 ‘ offer, as it is known, in writing to the other side. They may then either accept or reject the amount offered at any time before commencement of the trial. The permission of the court is not required. Unless agreed otherwise the party accepting the offer will be required to pay the other side’s legal costs.
A Part 36 offer can be a really useful tool in the armoury to resolve a dispute without incurring the costs of a trial. However care needs to be taken. An offer will remain in place and be binding until withdrawn. Although the withdrawal of an offer can be made at any time before acceptance, formal written notice of withdrawal must be given. Therefore if an offer is made, often in the early stages of a dispute and sometimes even before commencement of the claim, it must not be forgotten about.
Often as a case progresses the weaknesses or strengths of the other side will become apparent. A party may then have second thoughts about the offer they made. What can happen is well illustrated in one case which involved a claim for industrial injury.
In this case the claimant issued proceedings for a substantial amount in respect of injuries he had suffered. The defendants made an early Part 36 offer to ‘ buy off ‘ the litigation and to dispose of the claim before substantial costs were incurred. The offer was rejected. The case proceeded and as it did so it became increasingly obvious that the claimant had a poor case and that if he recovered anything it would not be very much. He therefore made a number of increasingly reduced counteroffers which were in turn refused by the defendant. The defendant’s solicitors then telephoned and wrote to the claimant’s solicitors saying that no offers would be made or accepted and that unless the claim was discontinued the case would go to trial. The response of the claimant was to argue that the original offer still stood and to try and accept it.
Part 36 rules require that offers, withdrawals and acceptances have to be in writing. It was argued that a telephone call and correspondence not using the actual word ‘ withdrawal ‘ was insufficient and that the offer was therefore still open to acceptance.
This argument was accepted by the court to a certain extent. It was held that a telephone call and correspondence which did not specifically withdraw the offer were insufficient. However against the general background of the case and the letter from the defendant saying that no offers of settlement would be made or accepted it was found that just enough had been done to kill off the original Part 36 offer.
The case is however a warning to litigants not to forget any offers made during the course of litigation. The offer may well live on notwithstanding changes in the strength of a case. It will not lapse as at one time after 21 days. If you make an offer to settle and then change your mind on the basis of further evidence make sure that clear written notice of withdrawal is given.