So much time and cost is tied up in the process of litigation that the government has, over the years, introduced many schemes to incentivise parties to try and negotiate an early settlement. One such scheme allows a Claimant to make an offer and provides that the value of his claim may be increased at trial if that offer is not accepted. The scheme, which is designed to encourage Defendants to take such offers seriously, is set out in the amendments to Part 36 of the Civil Procedure Rules which came into force in April 2013.
For those who are unfamiliar with litigation, “Part 36” sets out a process by which either party to litigation can make an offer to the other and sets out
- The consequences of the other party accepting the offer; and
- The consequences which arise when the other party does not accept the offer.
The recent amendments apply when the Defendant refuses to accept a “Part 36” offer that a Claimant has made; and the Claimant goes on to trial and obtains judgement for a higher amount. In those circumstances, the court is entitled to order the Defendant to pay the following additional sums
A 10% uplift on the compensation to be paid by the Defendant (up to a maximum of £75,000); and
Interest on the compensation awarded at a rate which can be as high as 10% above base rate; and
“Standard” costs up to the date that the offer should have been accepted; and
“Indemnity” costs from the date that the offer should have been accepted (in practice this can represent a significant increase on the level of costs that might otherwise be awarded at the “standard” rate); and
Interest on the above costs at a rate anything up to 10% above base rate.
The extent to which a judge will be prepared to award these additional sums will still defend upon the exercise of discretion. Although it would appear that these provisions are designed to penalise a Defendant who has failed to accept what would have been a reasonable offer of settlement at an early stage, recent cases suggest that the courts are not yet used to making these orders and will not always be prepared to exercise that discretion entirely in the Claimant’s favour.
Nonetheless, from a Claimant’s perspective there is now every incentive on a Claimant to put forward an offer of settlement which complies with the provisions of Part 36 of the Civil Procedure Rules, at an early stage in the litigation in order to trigger the potential benefits of these recent amendments should the case ever get to trial.
See also
- How to Avoid Court Proceedings
- Litigation cost and funding reforms