This guide is about offers when in dispute with another person, company or entity.
At the start of any dispute generally two bulls go at it and the solicitors makes lots of money assisting both sides. If the matter did go to court there will be a winner and a loser (one might think). That concept is wrong and potential litigants need to address proportionality before the matter commences and before they go charging off down the legal road.
This guide seeks to answer some of the most frequently asked questions about without prejudice communications and offers, including those made under Part 36 of the Civil Procedure Rules 1998.
What is the “without prejudice” rule and what does it mean?
In the context of Court proceedings, without prejudice communications forming part of a genuine attempt to settle a dispute are privileged. This means they cannot be put in as evidence before a Court except in certain circumstances. The purpose of the rule is to encourage litigants to resolve matters between themselves without risking being embarrassed by an admission and without having to litigate the dispute to an end. Without prejudice communications can be in the form of letters, emails, telephone discussions and meetings. They can be brought to the Court’s attention to explain delay and, where an offer made in a without prejudice communication has been accepted by the other party to the dispute, the act of acceptance can create a legally binding contract, upon which the trail of without prejudice communications becomes “open” and can be entered as evidence to enforce a party’s rights.
How does it work in practice?
Parties will often open up two lines of communication, one in which they set out their “open” and official position so that there is something “on the record” which the court can be referred to and one “without prejudice” in which the dispute can be discussed frankly and settlement options explored. Communications (such as letters) which are intended to be part of a genuine attempt to resolve the dispute should be clearly marked “without prejudice”.
However, it is not strictly necessary that every communication must be marked “without prejudice”- it is the purpose of the communication that is relevant and if the communication is a genuine attempt to resolve a dispute it should be privileged even if it is not clearly marked “without prejudice”.
Equally, just because a communication is marked “without prejudice”, this does not mean it is part of a genuine attempt to resolve a dispute, and could be brought to the Court’s attention. What is the difference between communications that are “without prejudice” and those that are “without prejudice save as to costs”? Parties communicating purely on a “without prejudice” basis are deemed to have done so on the understanding that the communications will not be used against them on the issue of costs. This means it is important to make it clear that the party making the offer may bring it to the Court’s attention on the issue of costs. Communications that are not made pursuant to Part 36 should be marked “without prejudice save as to costs”.
Without Prejudice rules and Part 36 offers should made clear in the body of the communication, that it is intended that it may be brought to the Court’s attention on the issue of costs, otherwise it can only be brought to the Court’s attention if both parties agree.
What is a Part 36 offer?
The Civil Procedure Rules 1998 are the rules which govern the conduct of litigation. References to “Part 36” are references to Part 36 of the rules. A Part 36 offer will be treated as without prejudice save as to costs and can encourage settlement and provide the party making the offer with protection on costs. In practice the Court will not usually learn of the details of such offers until the end of the trial when it can take them into account when determining who should pay the legal costs of the action. A Part 36 offer can be made at any time, even before proceedings have been issued. In order to qualify as a Part 36 offer, the offer must meet various criteria, including specifying a “relevant period” (usually 21 days) in which the Defendant will be liable for the Claimant’s costs if the offer is accepted, state whether it relates to the whole of the claim or part of it, and state that it is intended to have the consequences of Part 36.
What are the consequences of making a Part 36 offer?
Where a Defendant’s Part 36 offer is accepted by a Claimant within the relevant period, the Claimant is entitled to his costs of the proceedings up to the date on which the notice of acceptance was served. However, where a Claimant has not accepted a Defendant’s Part 36 offer and fails to obtain a judgment more advantageous than the offer, the Defendant will be entitled to his costs from the date on which the relevant period expired, and interest on those costs. Where a Defendant has failed to beat a Claimant’s Part 36 offer, the Claimant may be entitled to interest on the judgment at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired, costs on an discretionary benefits scheme basis from the date on which the relevant period expired, and interest on those costs at a rate not exceeding 10% above base rate.
A Part 36 offer may be accepted at any time, unless the party making the offer has served a written “notice of withdrawal” which clearly identifies the offer that is being withdrawn. This is the case even if the party who made the offer has made a subsequent offer or if the other party has rejected the offer. About us Members of our Dispute Resolution Group are experienced litigators and will be happy to discuss with you when and if you should be considering making or accepting an offer.
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk