How genuine is genuine?

2nd July 2018

Do you genuinely want to settle? How genuine is that desire and is it demonstrated in any offer you have made?

These are questions considered as part of amendments to Part 36 of the Civil Procedure Rules (CPR) which governs the rules regarding offers of settlement. For those unfamiliar with the legal process in litigation or, have thus far managed to avoid the perils of the CPR black hole. Part 36, available to claimants and defendants, aims to save both parties time, costs and, ultimately, the stress of court proceedings.
If a settlement is reached, both parties avoid trial and Part 36 can be deemed a success. The consequences, however, of refusing a Part 36 offer are as follows:

  • If a defendant rejects a claimant’s Part 36 offer and a claimant does at least as well as that offer at trial, then the defendant can end up paying additional costs and penalty interest to the claimant.
  • Conversely, if a claimant has rejected a defendant’s offer, then they may have to pay the defendant’s costs including up to the end of trial.
A compliant Part 36 offer is made up of the following five core requirements – it must:
  • be in writing
  • make clear that it is made pursuant to Part 36
  • specify a period of no less than 21 days within which the defendant will be liable for the costs of the claimant under CPR 36.13, or 36.20 if the offer is accepted
  • state whether it relates to the whole or part of the claim, or to an issue that arises in it and if so, to which part or issue
  • state whether it takes into account any counterclaim.
Amendments to Part 36 were introduced in April 2015, including the one that gives its name to this article. These amendments include changes such as:
  • 36.9 (4) (b) – a sunset clause. It is now permissible to fix a time limit on offers.
  • 36.9 (5) – if an offer is amended by the offeror, in favour of the offeree, it is not regarded as a withdrawal of the original offer.
  • 36.11 (3) (d) – to accept an offer between trial and judgment, the court’s permission must be obtained.
  • 36.17 (5) (e) – there is now a requirement that the Part 36 offer needs to be a genuine attempt to settle.

Within the above changes, it is arguably the latter that is the most interesting, if not complex or problematic. Assessing whether an offer is a genuine attempt to settle is a subjective assessment, and the court is able to look at not only the present offer but also the communication and proceedings that came before it, as well as the conduct of the parties. In the recent case of JMX (A child by his mother and litigant friend, FMX) v Norfolk and Norwich Hospitals NHS Foundation Trust [2018], Foskett J held that a 90 per cent offer to settle was reasonable and was a genuine attempt to settle, stating:

‘When an offer to accept 90 per cent is made in a case such as this, I would regard it as a case where the claimant’s team regard the claim as very strong, but is prepared to offer a modest discount to secure absolute certainty of obtaining substantial compensation. That is what Mr Nolan says prompted the offer in this case and I have no reason to doubt that that was so.’ [14]

These amendments need to be carefully considered when making an offer to settle or accepting one. Indeed, as Burnton LJ said in Webb v Liverpool Women’s NHS Foundation Trust (2016), ‘Part 36 is highly prescriptive (so that even experienced lawyers may fail to make a compliant offer) and the financial consequences of the application of the provisions of Part 36, or the failure to comply with the requirements of Part 36, may be substantial.’ [1]

If you genuinely want to settle, then make your offer as palatable for your opponent as possible, whilst also taking into consideration your client’s conduct throughout the proceedings.

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