Q&As

If a claimant accepts a defendant Part 36 offer pre-action but the parties fail to agree costs, what does the claimant need to do seek recovery of its costs?

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Produced in partnership with Ryan Turner of Lamb Chambers
Published on LexisPSL on 29/07/2019

The following Dispute Resolution Q&A produced in partnership with Ryan Turner of Lamb Chambers provides comprehensive and up to date legal information covering:

  • If a claimant accepts a defendant Part 36 offer pre-action but the parties fail to agree costs, what does the claimant need to do seek recovery of its costs?

If a claimant accepts a defendant Part 36 offer pre-action but the parties fail to agree costs, what does the claimant need to do seek recovery of its costs?

The Part 36 regime is a self-contained code which allows parties to make offers of settlement that are without prejudice save as to costs. Such offers are commonly used after the commencement of proceedings but, as set out in CPR 36.7(2), they can be made in pre-action correspondence to avoid incurring additional costs.

The general rule is that, where a Part 36 offer is accepted, the recipient party is entitled to the costs of the ‘proceedings’. The costs of the ‘proceedings’ expressly includes recoverable pre-action costs.

The Court of Appeal confirmed the scope of the predecessor rules to CPR 36.13 (which did not expressly provide for recovery of pre-action costs) in Solomon v Cromwell Group plc; Oliver v Doughty. The Court of Appeal held that the effect of accepting a Part 36 offer made before a claim had been issued was that the claimant was entitled to recover costs they had incurred in contemplation of the proceedings up to the date of acceptance, in so far as they would have formed part of their recoverable costs if proceedings had already been issued.

The problem that arises for parties who are to receive sums under a Part 36 compromise, is

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