Offers to Settle (Calderbank Offers) and Part 36 offers
CPR Part 36 (Offers to settle)
36.1, Scope of this part
(1) part contains a self-contained procedural code re offers to settle made
pursuant to the procedure in this part (“Part 36 offers”)
(2) Section I contains general rules re Part 36 offers
(3) Section II contains rules about offers to settle where parties have followed
the RATA protocol; or Employers’ Liability and Public Liability claims; and
have started proceedings under Part 8.
36.2, Scope of this section
(1) this section does not apply to an offer to settle to which Section 2 applies.
(2) nothing in this section prevents a party making an offer to settle in
whatever way that party chooses; but if the offer is not made in accordance
with r36.5 it will not have the consequences specified in this Section [[i.e.
in 36.13-17]]
o eg a Calderbank letter will not attract those consequences.
o (r44.2, court’s discretion re costs: requires court to consider an offer
to settle that does not have the costs consequences set out in this
section (i.e. is not a part 36 offer) in deciding what order to make
about costs).
(3) a Part 36 offer may be made in respect of the whole, or part of, or any
issue that arises in:
o (a) a claim, counterclaim or other additional claim; or
o (b) an appeal or cross-appeal from a decision made at a trial.
(r20.2-3: counterclaims and other additional claims are treated as claims; and
references to a C o r D include a party bringing/defending an additional
claim).
Commentary, 36.2.1, general note
Part 36 provides a ‘self-contained procedural code’ for the making,
withdrawal and acceptance of settlement offers.
R36.2(2): preserves the right to make a settlement offer by way of a
Calderbank letter (Calderbank v Calderbank), or in any other way.
A Calderbank offer/letter:
o Is made by letter written “without prejudice save as to costs” or
“without prejudice”;
, o BUT subject to an express reservation of the right to refer to the
letter on the issue of costs should the claim proceed to judgment.
Although the existence of a Calderbank letter may be a very important
consideration in the exercise of the court’s discretion; a Calderbank letter is
NOT to be equated with a Part 36 offer.
Offers that don’t comply with Part 36 will NOT attract the consequences in
36.13-17;
o BUT such offers must be taken into account in the exercise of the
court’s discretion pursuant to Part 44 (court’s discretion as to costs),
court will have regard to any admissible offer to settle which is not a
Part 36 offer [44.2(4)(c)].
o The existence of a Calderbank letter should influence, but not
govern, the exercise of the court’s discretion. Court retains its
discretion.
SC, Summers v Fairclough Homes (2012): SC accepted that Pt 36 may be of
little assistance in protecting Defendants against fraudulent claims since, on
acceptance, D would have to pay C’s costs.
o Lord Clarke: suggested that the D in such a case could make a
Calderbank offer to settle the genuine part of the claim, on terms
that the C pay the D’s cost incurred in respect of the fraudulent or
dishonest aspects of the claim on an indemnity basis.
Commentary, 36.2.4, Formal or technical defects
R36.2(2): if an offer is not made in accordance with the technical
requirements of r36.5 it will not have the usual Pt 36 consequences.
However, if there are formal or technical defects in a Pt 36 offer, provided
they cause no real uncertainty or other prejudice to the offeree the court
may order that the usual Pt 36 costs consequences will follow.
Huntley: court exercised its discretion under Pt 44 to provide for the same
costs consequences as would follow from Pt 36 compliance.
o Re a non-compliant Defendant’s offer.
CA: there may be de minimis errors or obvious slips….but the general rule is
that for an offer to be a Part 36 offer it must strictly comply with the
requirements.
More difficult re a non-compliant Claimant’s offer: more difficult, since one
cannot ordinarily obtain orders, outside Pt 36, for: (1) additional interest; (2)
the ‘additional award’ under r36.17(4)(d); or, absent circumstances taking the
case outside the ‘norm’, (3) indemnity costs.
o So doubtful whether court would uphold award of additional
interest and indemnity costs despite a technical defect in a
Claimant’s Part 36 offer.
, Where a party makes an offer that is intended to be a Pt 36 offer, but a
point arises to its construction the court should prefer the construction,
if possible, that would give effect to the stated intention
But fundamental defects (eg a failure to specify at all a period of not less
than 21 days) will preclude an offer being treated as Pt 36 offer.
Shaw: CA: offer failed to comply with mandatory requirements of r36.5(1)
was not a Pt 36 offer. Had no sympathy with attempts to construe the offer
as compliant, observing that Pt 36 is not the only way of settling litigation.
CA has approved strict approach.
36.3, Definitions
In this section:
(a) the party who makes an offer = ‘Offeror’
(b) party to whom an offer is made = ‘offeree’
(c) a “trial” means any trial in a case whether it is a trial of all issues or a trial
of liability, quantum or some other issue in the case
(d) a trial is “in progress” from the time when it starts until time when
judgment is given or handed down.
(e) a case is “decided” when all issues in the case have been determined,
whether at one or more trials
(f) “trial judge” includes the judge (if any) allocated in advance to conduct a
trial;
(g) the “the relevant period” means:
o (i) in the case of an offer made not less than 21 days before a trial
the period specified under r36.5(1)(c) [a specified period of not less
than 21 days (21 days+) within which D will be liable for the C’s costs
if the offer is accepted] or such longer period as the parties agree;
o (ii) otherwise (offer made within 21 days of trial), the period up to the
end of such trial.
36.4, Application of Part 36 to APPEALS
(1) Except where a Pt 36 offer is made in appeal proceedings , it shall have
the consequences set out in this Section only in relation to the costs of the
proceedings in respect of which it is made; and NOT in relation to the costs
of any appeal from a decision in those proceedings.
(2) Where a Pt 36 offer is made in appeal proceedings references in this
section to a term in the first column shall be treated as references to the
corresponding term in the second column (unless the context requires
otherwise):
Term Corresponding Term
Claim Appeal
CPR Part 36 (Offers to settle)
36.1, Scope of this part
(1) part contains a self-contained procedural code re offers to settle made
pursuant to the procedure in this part (“Part 36 offers”)
(2) Section I contains general rules re Part 36 offers
(3) Section II contains rules about offers to settle where parties have followed
the RATA protocol; or Employers’ Liability and Public Liability claims; and
have started proceedings under Part 8.
36.2, Scope of this section
(1) this section does not apply to an offer to settle to which Section 2 applies.
(2) nothing in this section prevents a party making an offer to settle in
whatever way that party chooses; but if the offer is not made in accordance
with r36.5 it will not have the consequences specified in this Section [[i.e.
in 36.13-17]]
o eg a Calderbank letter will not attract those consequences.
o (r44.2, court’s discretion re costs: requires court to consider an offer
to settle that does not have the costs consequences set out in this
section (i.e. is not a part 36 offer) in deciding what order to make
about costs).
(3) a Part 36 offer may be made in respect of the whole, or part of, or any
issue that arises in:
o (a) a claim, counterclaim or other additional claim; or
o (b) an appeal or cross-appeal from a decision made at a trial.
(r20.2-3: counterclaims and other additional claims are treated as claims; and
references to a C o r D include a party bringing/defending an additional
claim).
Commentary, 36.2.1, general note
Part 36 provides a ‘self-contained procedural code’ for the making,
withdrawal and acceptance of settlement offers.
R36.2(2): preserves the right to make a settlement offer by way of a
Calderbank letter (Calderbank v Calderbank), or in any other way.
A Calderbank offer/letter:
o Is made by letter written “without prejudice save as to costs” or
“without prejudice”;
, o BUT subject to an express reservation of the right to refer to the
letter on the issue of costs should the claim proceed to judgment.
Although the existence of a Calderbank letter may be a very important
consideration in the exercise of the court’s discretion; a Calderbank letter is
NOT to be equated with a Part 36 offer.
Offers that don’t comply with Part 36 will NOT attract the consequences in
36.13-17;
o BUT such offers must be taken into account in the exercise of the
court’s discretion pursuant to Part 44 (court’s discretion as to costs),
court will have regard to any admissible offer to settle which is not a
Part 36 offer [44.2(4)(c)].
o The existence of a Calderbank letter should influence, but not
govern, the exercise of the court’s discretion. Court retains its
discretion.
SC, Summers v Fairclough Homes (2012): SC accepted that Pt 36 may be of
little assistance in protecting Defendants against fraudulent claims since, on
acceptance, D would have to pay C’s costs.
o Lord Clarke: suggested that the D in such a case could make a
Calderbank offer to settle the genuine part of the claim, on terms
that the C pay the D’s cost incurred in respect of the fraudulent or
dishonest aspects of the claim on an indemnity basis.
Commentary, 36.2.4, Formal or technical defects
R36.2(2): if an offer is not made in accordance with the technical
requirements of r36.5 it will not have the usual Pt 36 consequences.
However, if there are formal or technical defects in a Pt 36 offer, provided
they cause no real uncertainty or other prejudice to the offeree the court
may order that the usual Pt 36 costs consequences will follow.
Huntley: court exercised its discretion under Pt 44 to provide for the same
costs consequences as would follow from Pt 36 compliance.
o Re a non-compliant Defendant’s offer.
CA: there may be de minimis errors or obvious slips….but the general rule is
that for an offer to be a Part 36 offer it must strictly comply with the
requirements.
More difficult re a non-compliant Claimant’s offer: more difficult, since one
cannot ordinarily obtain orders, outside Pt 36, for: (1) additional interest; (2)
the ‘additional award’ under r36.17(4)(d); or, absent circumstances taking the
case outside the ‘norm’, (3) indemnity costs.
o So doubtful whether court would uphold award of additional
interest and indemnity costs despite a technical defect in a
Claimant’s Part 36 offer.
, Where a party makes an offer that is intended to be a Pt 36 offer, but a
point arises to its construction the court should prefer the construction,
if possible, that would give effect to the stated intention
But fundamental defects (eg a failure to specify at all a period of not less
than 21 days) will preclude an offer being treated as Pt 36 offer.
Shaw: CA: offer failed to comply with mandatory requirements of r36.5(1)
was not a Pt 36 offer. Had no sympathy with attempts to construe the offer
as compliant, observing that Pt 36 is not the only way of settling litigation.
CA has approved strict approach.
36.3, Definitions
In this section:
(a) the party who makes an offer = ‘Offeror’
(b) party to whom an offer is made = ‘offeree’
(c) a “trial” means any trial in a case whether it is a trial of all issues or a trial
of liability, quantum or some other issue in the case
(d) a trial is “in progress” from the time when it starts until time when
judgment is given or handed down.
(e) a case is “decided” when all issues in the case have been determined,
whether at one or more trials
(f) “trial judge” includes the judge (if any) allocated in advance to conduct a
trial;
(g) the “the relevant period” means:
o (i) in the case of an offer made not less than 21 days before a trial
the period specified under r36.5(1)(c) [a specified period of not less
than 21 days (21 days+) within which D will be liable for the C’s costs
if the offer is accepted] or such longer period as the parties agree;
o (ii) otherwise (offer made within 21 days of trial), the period up to the
end of such trial.
36.4, Application of Part 36 to APPEALS
(1) Except where a Pt 36 offer is made in appeal proceedings , it shall have
the consequences set out in this Section only in relation to the costs of the
proceedings in respect of which it is made; and NOT in relation to the costs
of any appeal from a decision in those proceedings.
(2) Where a Pt 36 offer is made in appeal proceedings references in this
section to a term in the first column shall be treated as references to the
corresponding term in the second column (unless the context requires
otherwise):
Term Corresponding Term
Claim Appeal
