Hacked off claimant settles

Hugh Grant has recently (17 April 2024) spoken about how he has reluctantly settled his claim against News Group Newspapers (NGN), publishers for The Sun newspaper, for an “enormous” sum of money. Mr Grant’s claim is just one of several brought by celebrities in recent years over the alleged phone hacking scandals by some newspapers. Mr Grant has reported that NGN made him an offer to pay him an undisclosed amount of money which would have made it too risky for him to go to trial because the costs consequences would have been too severe if he was awarded damages any less than the offer. Mr Grant’s statement refers to the rules around civil litigation and this particular type of settlement offer is known as a “Part 36 Offer”. 

The Courts in England and Wales expect parties involved in disputes to try and settle their claims without recourse to formal litigation which can incur significant costs to have the matter decided by the Courts. There are several methods available to parties to assist them with settlement, often referred to Alternative Dispute Resolution (ADR). 

ADR aims to bring the parties together and encourage settlement discussions, each with their own advantages and disadvantages depending on the parties’ needs. Popular options include arbitration, mediation and private negotiations or settlement offers made between the parties, including Part 36 offers. 

What is a Part 36 Offer? 

A Part 36 offer is a particular type of settlement offer which has been made privately between the parties in accordance with Part 36 of the Civil Procedure Rules (CPR). Unlike other settlement offers, Part 36 offers carry a series of costs consequences with them which can be a useful tool in your armoury if correctly deployed against your opponent. 

For an offer to be a ‘true’ Part 36 offer, it must comply fully with the conditions set out in Part 36 of the CPR. A failure to comply fully with the Part 36 rules will be fatal for the party making the proposed Part 36 offer as the offer will not carry with it the costs consequences for the party receiving the offer.  This negates the potential benefits of making the offer to begin with. 

The consequences of a Part 36 offer will depend on who made the offer, when it was made, whether the offer is accepted and if so, when. We have briefly summarised some of the main consequences in the scenarios below in general terms.

Offers made by claimants which are accepted

The general rule is that if a Part 36 offer to settle all of a claim is made, the party receiving the offer (“the Offeree”) will have 21 days to accept it; this is known as the ‘Relevant Period’. If a defendant accepts an offer made by a claimant within the Relevant Period, the claimant will be entitled to its costs in the proceedings to be paid by the defendant up to the date on which the defendant accepted the offer. This includes costs which were incurred before the claim was issued at Court (provided they are deemed recoverable). If the parties cannot agree on the amount of costs to be paid to the claimant, the Court will assess the claimant’s costs on a standard basis unless other rules apply fixing the amount of costs that are recoverable from the defendant. 

If the claimant makes a Part 36 offer less than 21 days before trial or the defendant accepts an offer to settle the whole claim after the Relevant Period has expired (irrespective of when the offer was made), the Court will determine whether the defendant is liable to pay the claimant’s costs unless the parties reach an agreement. 

If the parties cannot agree and an offer is accepted outside of the Relevant Period, the Court must order that the defendant pays the claimant’s costs up to the date upon which the Relevant Period expired and the defendant pay the claimant’s costs from when the Relevant Period expired up to the date the offer was accepted.  

Offers made by claimants which are not accepted 

If the defendant does not accept the claimant’s Part 36 offer, the costs consequences will depend on whether the claimant wins its claim at trial, and if so, whether they ‘beat’ their Part 36 offer. It is therefore important to make an offer which is reasonable and referable to the value of the claim. 

Generally, if the claimant wins at trial and the judgment is “at least as advantageous” to it as its Part 36 offer, it will benefit from additional costs consequences. If the dispute involves a monetary award such as damages, this means the claimant must be awarded an amount which is better than the amount it proposed to the defendant in its Part 36 offer. If the claimant is successful, the Court must order (unless it believes it is unjust to do so) that the claimant is entitled to: 

• Interest on all or part of the amount awarded at a rate not exceeding 10% above base rate for all or some of the period from the date the relevant period expired; 
• Costs on an indemnity basis from the date the relevant period expired; and 
• An additional lump sum capped, at £75,000. 

If the claimant wins at trial but does not obtain a judgment better than the offer, the costs consequences above will not apply. 

Offers made by defendants which are accepted

A claimant will also be entitled to their costs to be paid by a defendant if it accepts a Part 36 offer made by a defendant within the relevant period to settle all of a claim. 

If a Part 36 offer is made less than 21 days before trial or a claimant accepts an offer after the Relevant Period has expired, the Court will be required to determine costs unless the parties reach their own agreement.

If the parties cannot agree and a claimant accepts an offer outside of the Relevant Period, the Court must order that the defendant pays the claimant’s costs up to the date the Relevant Period expired but the claimant pays the defendant’s costs from when the Relevant Period expired to the date the offer was accepted. 

Offers made by defendants which are not accepted 

If a claimant does not accept an offer made by a defendant and the case proceeds to trial where the claimant does not win, or they win but they are not awarded a judgment which is better than the defendant’s Part 36 offer, adverse costs consequences will apply to the claimant. The Court will order that the claimant pay the defendant’s costs from the date the Relevant Period expires plus interest. 

If the claimant wins and obtains a judgment which is better than the defendant’s offer, the above costs consequences will not apply. 

Conclusion

A Part 36 offer can be a very useful tool for either party in a dispute. The main benefit of making such an offer is the certainty over costs the parties may be able to recover from their opponent or be liable to pay. 

Whilst claimants may want their case to be heard and proven at trial, Mr Grant’s case highlights the importance of Part 36 offers and assessing the strength of your claim. Indeed, offers made by defendants to settle claims in good time before a trial is due to commence can be risky for claimants to ignore. Unless claimants are extremely confident in not only winning their claim but also beating defendants’ Part 36 offers, the consequences of not accepting an offer can prove to be extremely expensive.

NGN appears to have successfully achieved this in Mr Grant’s claim. We can infer from Mr Grant’s comments that NGN’s Part 36 offer was pitched at the right level to cause enough risk of an adverse costs order to him should the claim have proceeded to a full trial and Mr Grant fail to beat NGN’s offer. 

Clearly the risk of failing to beat the offer made by NGN was too high for Mr Grant to accept given the likely level of costs involved in the claim and ultimately he has decided against proving his case at trial.

Please note that this article does not constitute legal advice and outlines in general terms only some of the benefits and risks of settlement offers made pursuant to Part 36 of the CPR.