Part 36 offers; implications & tactics

[photoman]

Just found this interesting article on a website.

Very interesting for anyone in pre-trial negotiations with their banks.

It gives an insight into some of the reasonings and methods used by banks solicitors when making offers, and also presents some useful advice for those receiving offers, as well as some useful tactics to use if your proposing offers of your own, or negotiating upon offers.

I think this could warrant a thread to discuss this.


With credit acknowledged to Glovers Solicitors LLP, the original authors:

26 December 2007
Article by Catherine Connolley


Part 36 of the Civil Procedure Rules allows a party to litigation to make a settlement offer before trial on terms that if the offer is not accepted and the opposing party fails to beat the offer at trial the Court is likely to impose severe costs and/or interest penalties. The Part 36 offer procedure can, if used wisely, be a very powerful negotiating tool and it provides a great incentive to settle.

Part 36 offers can be made by both Claimants and Defendants so either party can put its opponent at risk of serious costs or interest penalties by refusing to accept a well-pitched offer.
There is no longer a requirement to support a Part 36 offer with a payment into court which means an increasing number of Defendants are using this procedure.
If an offer is made by a Defendant who is then unable to pay within 14 days of its acceptance, judgment will be entered against him without the need for a trial.
If the offer is not accepted and a trial takes place the offer remains "without prejudice as to costs" during the proceedings i.e. the court will not be aware of it until the outcome of the case has been decided and the issue of costs is being determined.
There are a number of different scenarios, which could occur where a Part 36 offer is made, the most common of which are described below:

The Defendant Makes A Part 36 Offer


The Claimant Accepts The Offer Within 21 Days
Outcome – The Defendant pays the offer figure and the Claimant’s standard costs up to the date on which the offer was accepted.

The Claimant does not accept the offer.
The Claimant wins at trial but is awarded less than the amount that the Defendant offered.

Outcome – Even though the Claimant has won the case it will recover standard costs only to the last date the Part 36 offer could have been accepted. The Claimant will normally be ordered to pay the Defendant’s standard costs from the last date on which the offer could have been accepted plus interest on those costs*. In this scenario, as trial costs are high, the Claimant could end up paying more of the costs of the action than the Defendant.

The Claimant does not accept the offer.
The Claimant wins at trial and is awarded more than the amount that the Defendant offered.

Outcome – the Defendant will be ordered to pay the Claimant’s standard costs in the usual way (i.e. as if no Part 36 offer had ever been made).

The Claimant makes a Part 36 offer


The Defendant Accepts The Offer Within 21 Days.
Outcome – the Defendant will be ordered to pay the Claimant’s standard costs up to the date on which the offer was accepted.

The Defendant does not accept the offer
The Claimant wins at trial but is awarded less than the amount that the Claimant offered to accept.

Outcome – the Defendant will be ordered to pay the Claimant’s standard costs in the usual way (i.e. as if no Part 36 offer had ever been made).

The Defendant does not accept the offer.
The Claimant wins at trial and is awarded more than the amount of the offer.

Outcome – The Claimant may be awarded interest of up to 10% above the base rate on any damages and costs on an indemnity basis and interest on costs from the last day after which the Defendant was expressed to be able to accept the offer*.

* If a party fails to beat a Part 36 offer, when considering the costs award to be made, the Court will take into account the stage in the proceedings when the offer was made; the information available to the parties at the time; and the conduct of the parties in giving or refusing to give information for the purpose of enabling the offer to be made or evaluated.

The offer will usually remain open for acceptance for a period of 21 days on terms that costs will be paid by the Defendant up to the date of acceptance within that period. An offer will remain in force beyond the 21-day limit unless the offering party has withdrawn it and therefore both parties should review an unaccepted offer as each stage of the litigation unfolds.

Tactics

A Defendant will aim to pitch his offer at a level that is just high enough for the Claimant to be worried about the risk of not accepting it.

A Claimant will try to pitch an offer low enough that the Defendant would be unwise to refuse but that is not significantly below what they could realistically expect to receive at trial.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

[hsbcfiddled]

AMAZING.....subscribing

[caro]

The offers that Yorkshire Bank made to me were Part 36 offers subject to costs. Once I found out what it meant from the Patricia Pearl Small Claims book I found it quite intimidating, especially as it's not meant to be used in small claims cases where costs should not be an issue.

[TANZARELLI]

Yep was just about to point that out re no costs in SCC.

Interesting reading though.

Cheers Photoman.

[TANZARELLI]

http://www.dca.gov.uk/consult/civilp...les_part36.pdf

For info

[Gez]

This is all assuming that there might be some risk that you could lose the case at trial. As is overwhelmingly proven, you can only do that if you don't understand properly what you are doing.

Even now, I think if the OFT dropped the case & let us all get on with it as before, I don't believe there is much risk of losing at trial now that penalties have been universaly disguised as 'services fees'.

Perhaps if the OFT do what consumers fear most and approve the 'service fee' crap and officially put banks above the law, then this part 36 may be of consequence.

Now Im another 2p poorer

[photoman]

Originally Posted by caro

The offers that Yorkshire Bank made to me were Part 36 offers subject to costs. Once I found out what it meant from the Patricia Pearl Small Claims book I found it quite intimidating, especially as it's not meant to be used in small claims cases where costs should not be an issue.

Yes,
Lloyds solicitors tried pulling the same scare tactics upon me too.

Fortunately, they blinked first

PM

[caro]

Originally Posted by photoman

Yes,
Lloyds solicitors tried pulling the same scare tactics upon me too.

Fortunately, they blinked first

PM

Now there's a co-incidence. So did YB's legal department.

[jody123]

interesting - subscribing - as boot on other foot in my case!

Jody

[zootscoot]

Part 36 offers are more relevant to cases where the damages are at large eg personal injury or defamation claims, rather than where you are claiming a fixed sum.

They replace the old system of 'payment into court' and can operate extremely harshly as William Roache (Corrie's Ken Barlow) found out in his libel action against The Sun. The Sun made a payment into court of £50,000 which was not accepted. The jury found that the comments by The Sun were defamatory and awarded him damages of £50,000. As the sum awarded by the jury was equal to the payment into courtunder the old rules he was automatically liable to pay his own and the Sun's legal costs. He ended up having to pay a six figure sum for winning his case!

The new rules under part 36 are less harsh. Now the court has a discretion over the awarding of costs and it is open to both parties to make an offer, previously it was only the defendant that could. It can still be quite unfair if a party is pressured into accepting less than they are entitled to.

[photoman]

In my own case, the size of my claim probably did make it a likely candidate for a track other than SCC.

However, offers started to arrive well before allocation, in which the Solicitors started using the scare tactics of taking it upon themselves to inform me that the offers would have consequences under Rule 36.14 of CPR36.

This was clearly an attempt at intimidation.

As I've said, eventually I did get a satisfactory offer, which I accepted, and this case is done and dusted.

However, it is now interesting to get from the above article an insight into the considerations they probably took in when determining this offer.
It was clearly pitched at being a figure that they evaluated as being close to what the court would have actually awarded had it gone to trial.
This is particularly interesting given the fact that I was pleading sec32 of the Statute Of Limitations in order to apply for pre 6 years charges.
Their first offers tried to contest this, but then their subsequent offers did also include a repayment of all charges including pre 6 years.
It could be easy to conclude from this that they saw real merit in the reasonings for applying for invocation of Sec32, and that a court would also agree.

PM

[caro]

They may have seen merit photoman, or they may have hoped that the scare tactic might be enough to put you off pursuing it further. Had they been 100% confident in their case they would not have paid up IMO and seen you in court. They could have agreed to pay you everything within 6 years in court as a gogw, but then fought the limitations stuff. As you said, they blinked first, and it would have depended on the judge on the day if they'd get away with that strategy.

[photoman]

Yes indeed, it depends upon the judge......

Well, when allocation Q's were completed and sent in, I received correspondence from the court informing me that Judge Mackie (Yes indeed, the very same judge who already gained notoriety by being very outspoken against the Banks litigation practices) had chosen to deal with the case.

Within 2 days I received a full offer !

[jody123]

where does Judge Mackie practice - and can I get a case transferred to his jurisdiction!?!?

Jody

[jody123]

p.s. do CAG have a database of judges who have been sympathetic to either litigants in person - or as Judge Mackie - outspoken against the banks litigation practices...