In the world of litigation and dispute resolution, the Part 36 offer stands as a significant tool for settling disagreements. The name may seem somewhat abstract for those unfamiliar, but its implications are far-reaching. The recent case of celebrated actor Hugh Grant, known globally for his roles in films like “Love Actually”, “Notting Hill”, “The Gentlemen” and many more, has brought the Part 36 offer into the spotlight. Grant, on the popular social media platform X (previously Twitter), tweeted on 17th April 2024, that a settlement had been reached in his case against The Sun publisher, News Group Newspapers (NGN).
The Part 36 Offer
A Part 36 offer is a concept embedded within the Civil Procedure Rules, the procedural laws that oversee civil litigation in England and Wales. This rule permits a disputing party to propose a settlement offer. If the conditions of Part 36 are met, the offer can have certain cost consequences, depending on whether the offer is accepted or the other party fails to better the offer at trial.
A Part 36 offer can be made at any point during a dispute – even before court proceedings have been initiated. It is made “without prejudice save as to costs”, meaning it is offered behind a veil and cannot be used as an admission of guilt during the trial. The offer is only revealed to the judge once the case has been decided and costs need to be addressed.
The Requirements of a Part 36 Offer
A valid Part 36 offer needs to adhere to specific requirements:
- It must be in writing
- It must be a genuine offer to settle
- It must clearly state that it is made in accordance with Part 36 of the Civil Procedure Rules
- It must specify a period of at least 21 days within which the other party will become liable for costs (assuming the trial is not within this timeframe)
- It must state the extent of the offer, i.e., whether it is meant to settle part or all of the claim, and whether it takes into account any counterclaim, etc.
If a Part 36 offer does not meet these requirements, it may be deemed invalid and will not activate the Part 36 cost consequences.
Hugh Grant’s Case
In the Hugh Grant case, he accepted the Part 36 offer put forth by NGN. As a result, the proceedings against NGN were paused, provided the terms of the offer were adhered to. This settlement avoided the necessity for the trial judge to determine any wrongdoing by NGN.
Grant voiced his reluctance for the settlement, stating he would rather see the allegations tested in court.
“The rules around civil litigation mean that if I proceed to trial and the court awards me damages that are even a penny less than the settlement offer, I would have to pay the legal costs of both sides.”
However, had he proceeded to trial and the outcome was not as favourable i.e. in this case if courts damages award fell short even by a penny compared to the settlement offer, it is likely his opponent would seek their costs from him.
According to Grant, this would have amounted to nearly £10 million in costs, a risk he wasn’t willing to take, stating “I would be liable for something approaching £10 million in costs. I’m afraid I’m shying at that fence”.
The Consequences of a Part 36 Offer
Part 36 offers can have significant consequences. They can apply pressure on the other party to settle and provide some protection in respect of legal costs for the offeror. The offeree must carefully consider whether to accept or reject the offer, as failure to achieve a better outcome at trial after rejecting the offer could lead to considerable costs and interest.
The Court’s Discretion
The court has some discretion when considering Part 36 offers and their cost consequences. According to CPR Part 36.17, the court must, unless it deems it unjust, order the defendant to pay costs and interest. However, “unjust” is a high threshold and is rarely met.
The court considers several factors when determining whether or not it’s unjust, as outlined in CPR 36.17 (5):
- The terms of the Part 36 offer
- The stage in the proceedings when the Part 36 offer was made
- The information available to the parties at the time when the Part 36 offer was made
- The conduct of the parties with regard to the giving or refusal to give information for evaluating the offer
- Whether the offer was a genuine attempt to settle the proceedings
A Reminder of the Risks
Hugh Grant’s case serves as a reminder of the risks involved in litigation. If a Part 36 offer matches the relief sought at court, it must be carefully considered, as rejection could lead to costly consequences.
Part 36 offers are often favoured by parties seeking a prompt settlement, wanting to minimise further legal costs, and preferring resolution without judicial involvement. However, for those hoping for public judgment, like Hugh Grant, Part 36 offers can seem like a denial of justice and a missed opportunity for alleged misconduct to be held accountable publicly.
Commentating on the news story, James Charters (Head of Department for Housing Conditions / Solicitor) said:
“The rules of Part 36 are rather complex, but the overarching aim is to avoid un-necessary Court hearings. Under the rules, parties are under real pressure to consider reasonable Offers which on the whole encourages early Offers and mediation.
In our day to day, we seek to explain the risks to tenants in a real-world context but it certainly helps when celebrities shine a light on the process.
Litigation according to the Pre-Action Protocol for Housing Conditions Claims (England) (4.1) should be the last resort and so settling on a Part 36 basis is a handy tool for bringing claims to a conclusion swiftly and amicably.”
James Charters, Head of Department for Housing Conditions / Solicitor, FDM Solicitors
Conclusion
Whether you perceive Part 36 offers as a clever tactical manoeuvre or a denial of justice, they undeniably play a crucial role in dispute resolution. If you have any questions or need more information on this topic, feel free to contact us.
Disclaimer: Although accurate at the time of publication, the contents of this article are intended for general informational purposes only and do not constitute legal advice. We cannot accept responsibility for any actions taken based on this article. Please consult us directly for specific legal advice.
