Part 36 Archives

The Offers to Settle in Civil Proceedings Order 2013 has been laid before parliament and comes into force on 1 April 2013.

The Order introduces a new Part 36 sanction which will apply in circumstances where the court gives judgment to a Claimant which is “at least as advantageous” as their own offer, enabling the court to award an additional amount in respect of either costs or damages, to be calculated as follows:

If the claim includes both a claim for an amount of money and a non-monetary claim, a percentage of damages…

Up to £500,000 – 10% of the amount awarded.
Between £500,000 and £1,000,000 – 10% of the first £500,000 and 5% of the amount awarded above that figure.
Above £1,000,000 – 7.5% of the first £1,000,000 and 0.001% of the amount awarded above that figure.

If the claim for non-monetary relief only, a percentage of costs…

Up to £500,000 – 10% of the costs ordered to be paid.
Between £500,000 and £1,000,000 – 10% of the first £500,000 and 5% of any costs ordered to be paid above that figure.

In Lahey v Pirelli Tyres Limited, the Court of Appeal addressed whether costs judges have the power to order a paying party to pay only a proportion of the assessed costs at the outset of a detailed assessment. The claimant had accepted a Part 36 offer, becoming entitled to his costs. The defendant argued that the costs judge could reduce the recoverable costs by a percentage based on the parties’ conduct. The Court held that costs judges do not have jurisdiction to prospectively limit the proportion of assessed costs payable, as they are bound by the deemed costs order following Part 36 acceptance. Unreasonable conduct should be addressed through the line-by-line assessment process, not by imposing a percentage reduction at the outset.