A Part 36 Offer is a written settlement offer that provides a period of not less than 21 days in which the offer can be accepted and if the offer is not accepted within that time and the other party subsequently fails to beat the offer, then there will be costs and other consequences.
If a claimant fails to accept a defendant’s Part 36 Offer within the requisite 21-day period, but accepts at a later date, then the claimant will normally have to pay the defendant’s costs from the date when the 21-day period for acceptance expires, through to the date of acceptance or judgment.
However, the present position is that if a defendant fails to accept a claimant’s Part 36 Offer within the requisite 21-day period, but accepts at a later date, the defendant does not face any specific consequences other than the fact that it will have to pay the claimant’s solicitors’ costs for a longer period of time i.e. from the beginning of the proceedings to the date of acceptance and/or judgment.
It is only if a claimant beats its own Part 36 Offer at trial that a defendant can suffer any consequences. These include interest on the whole or part of the sum awarded, at rate not exceeding 10% above the base rate, costs on an indemnity basis from the date on which the 21-day period for acceptance expired, interest on those costs at a rate not exceeding 10% above the base rate, and an additional award of damages up to a maximum of £75,000.
However, from 6 April 2021 the Civil Procedure Rules are being amended such that a Part 36 Offer may make provision for accrual of interest on such sum offered after the 21-day period for acceptance. If it does not make such a specific provision, the offer shall continue to be treated as inclusive of all interest up to the date of acceptance, even if it is accepted outside the 21-day period.
This means that after 6 April 2021, claimants’ solicitors will probably, as a matter of course, include a provision for interest to accrue on the offer if it is accepted late.
The Part 36 Rules do not specify the level of interest that can be claimed, but it is likely that claimants’ solicitors will claim interest of at least 8%.
Therefore, if the additional interest wording is incorporated into the claimant’s Part 36 Offer, a defendant can no longer afford to delay accepting it on the basis that there will be no consequences as long as it is accepted prior to judgment.