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LOVE ACTUALLY SETTLING? A LESSON IN “PART 36” OFFERS FROM HUGH GRANT

By Daniel Nancoo

Earlier this year, actor Hugh Grant of Love Actually fame announced on X (formerly known as Twitter) that he had reluctantly agreed to settle his privacy claim against the Sun newspaper. He stated that although he would have loved to see his allegations against the newspaper’s publishers tested in Court, “the rules around civil litigation mean that if I proceed to trial and the court awards me damages that are even a penny less than the settlement offer, I would have to pay the legal costs of both sides.” Mr. Grant was – quite accurately – describing what is known in civil litigation procedure as a “Part 36” offer to settle. In this Article we will explain what Part 36 offers are and the role that they play in the civil litigation process.

In Trinidad and Tobago, as in the UK where Mr. Grant resides, the conduct of civil litigation is governed by a set of written procedural rules known as the Civil Proceedings Rules (“the Rules”). “Part 36” simply refers to the section of the Rules that governs offers to settle out of Court.

Normally, the loser of a civil litigation claim is ordered to pay the winner’s legal costs. However, one of the exceptions to this general rule can arise when a Part 36 offer is made during the course of the proceedings. By way of a simplified example, let’s say that ‘Dick’ brings a claim against ‘Jane’ alleging breach of contract and seeking damages in the amount of thirty thousand dollars. Jane may make a Part 36 offer to settle the claim for twenty five thousand dollars. Dick can choose to reject Jane’s offer in order to have his day in Court. If he wins the case and is awarded the full thirty thousand dollars that he claimed, then Jane would typically have to pay him that thirty thousand dollars, plus the legal fees that he spent in order to bring the claim. However, if he wins but is awarded only twenty four thousand five hundred dollars (i.e. less than the twenty five thousand that Jane had offered him) then, even though he won the case, he would have to pay Jane’s legal fees, while still being responsible for paying his own legal fees as well.

A Part 36 offer can be made at any time throughout the life of a dispute, even before the Court proceedings have commenced. The offer is made “without prejudice save as to costs”, meaning that only the parties (and not the Court) will know that it has been made and that it cannot be used as an admission of guilt during Trial. The offer will only be revealed to the Court once the case has been decided.  

For a Part 36 offer to have effect, it must be compliant with certain requirements as outlined in the Rules, namely –

  1. The offer must be made in writing.
  2. It must clearly state that it is made in accordance with Part 36.
  3. It must be served on the offeree and a copy on all other parties to the dispute.
  4. It must be open for a period of at least 21 days.
  5. It must state the extent of the offer, i.e., whether it is meant to settle part or all of the claim, whether it accounts for any counterclaim etc., and whether it includes interest and costs.  

Failure to comply with these requirements may render the offer invalid as a Part 36 offer and in such a case it would not attract any consequences in costs for the recipient.  

The timing of a Part 36 offer is important. In the interests of simplicity, our example above assumed that Jane would be entitled to recover all of her legal fees, but in reality, the position is more nuanced. Generally speaking, a defendant in Jane’s scenario would only be entitled to recover those legal costs that she incurred after the date that she made the offer. If a Part 36 offer is made at a relatively early stage of the proceedings, then the amount that the recipient might have to pay in legal fees could be quite significant. On the other hand, if it is made just before or during the Trial – after parties have already incurred most of the legal fees that they are likely to spend on the case – then it is unlikely to have any real impact on the financial bottom line for either party.

The amount of the offer is also important. In order to be effective, it must be close to the amount that the claimant is likely to be awarded if they are successful at Trial. Trinidad and Tobago’s Rules are even more tricky than the UK’s Rules in that respect. In the UK, a defendant only has to beat the amount that the claimant is likely to be awarded at Trial. In Trinidad and Tobago however, the defendant will only be entitled to the payment of their legal fees if the Court awards less than 85% of the amount that was offered. This means that, in order to be effective, a defendant’s Part 35 offer must actually exceed the amount that the claimant is likely to be awarded at Trial.

That being said, the Court, once made aware of a Part 36 offer, still retains a discretion to decide whether the general rule should apply to an offer that was not accepted. In deciding whether the general rule should apply, the Court may consider –

  1. The terms of the Part 36 offer;
  2. The stage in the proceedings when the Part 36 offer was made;
  3. The information available to the parties at the time when the Part 36 offer was made;
  4. The conduct of the parties with regard to the giving or refusal to give information for evaluating the offer.

The potential risk to a claimant of being successful but still being ordered to pay the defendant’s legal costs can be a strong incentive to accept a defendant’s Part 36 offer, as evidenced by Mr. Grant’s reluctant acceptance of the Sun’s offer.

On the one hand, some might argue that Part 36 offers have the effect of inhibiting access to justice as parties with ‘deep pockets’ can effectively force others to settle a dispute by offering a sum which they feel compelled to accept for financial reasons.

On the other hand, it is important to bear in mind that litigation is a lengthy, costly and stressful process. The aim of Part 36 offers is to encourage parties to resolve matters out of Court, thereby avoiding the inherent risks, costs and delays of the civil litigation process. At the end of the day, it is for the recipient of a Part 36 offer to weigh their desire to fully ventilate their case in Court, against the potential risks of proceeding to Trial. Part 36 offers can also help to discourage frivolous or exaggerated claims.

Part 36 offers are ultimately designed to reward parties that make genuine efforts to resolve disputes without resorting to judicial intervention, while also penalising those who refuse to engage in settlement negotiations. It is the Court’s stance that settlement should be encouraged so that the parties do not take up the Court’s resources and incur unnecessary legal costs. To that end, whichever way they are perceived, it cannot be denied that the Part 36 offers play a crucial role in dispute resolution and the civil litigation process.

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