“36.1 Scope of this Part (1) This Part contains rules about – (a) offers to settle; and (b) the consequences where an offer to settle is made in accordance with this Part. (2) Nothing in this Part prevents a party making an offer to settle in whatever way he chooses, but if the offer is not made in accordance with rule 36.2, it will not have the consequences specified in rule[s] … 36.14 … 36.2 Form and content of a Part 36 offer (1) An offer to settle which is made in accordance with this rule is called a Part 36 offer. (2) A Part 36 offer must – (a) be in writing; (b) state on its face that it is intended to have the consequences of Part 36; (c) specify a period of not less than 21 days within which the defendant will be liable for the claimant’s costs in accordance with rule 36.10 if the offer is accepted; (d) state whether it relates to the whole of the claim or to part of it or to an issue that arises in it and if so to which part or issue; and (e) state whether it takes into account any counterclaim … (4) In appropriate cases, a Part 36 offer must contain such further information as is required by rule 36.5 (Personal injury claims for future pecuniary loss), rule 36.6 (Offer to settle a claim for provisional damages), and rule 36.15 (Deduction of benefits). (5) An offeror may make a Part 36 offer solely in relation to liability. 36.4 Part 36 offers – defendants’ offers (1) Subject to rule 36.5(3) and rule 36.6(1), a Part 36 offer by a defendant to pay a sum of money in settlement of a claim must be an offer to pay a single sum of money … 36.8 Clarification of a Part 36 offer (1) The offeree may, within 7 days of a Part 36 offer being made, request the offeror to clarify the offer. (2) If the offeror does not give the clarification requested under paragraph (1) within 7 days of receiving the request, the offeree may, unless the trial has started, apply for an order that he does so … (3) If the court makes an order under paragraph (2), it must specify the date when the Part 36 offer is to be treated as having been made. 36.13 Restriction on disclosure of a Part 36 offer (1) A Part 36 offer will be treated as “without prejudice except as to costs”. (2) The fact that a Part 36 offer has been made must not be communicated to the trial judge … until the case has been decided. (3) Paragraph (2) does not apply – … (c) where the offeror and the offeree agree in writing that it should not apply. 36.14 Costs consequences following judgment (1) This Rule applies where upon judgment being entered – (a) a claimant fails to obtain a judgment more advantageous than a defendant’s Part 36 offer; or (b) judgment against the defendant is at least as advantageous to the claimant as the proposals contained in a claimant’s Part 36 offer. (2) Subject to paragraph (6), where rule 36.14 (1)(a) applies, the court will, unless it considers it unjust to do so, order that the defendant is entitled to – (a) his costs from the date on which the relevant period expired; and (b) interest on those costs. (3) Subject to paragraph (6), where rule 36.14(1)(b) applies, the court will, unless it considers it unjust to do so, order that the claimant is entitled to – (a) interest on the whole or part of any sum of money (excluding interest) awarded 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; (b) his costs on the indemnity basis from the date on which the relevant period expired; and (c) interest on those costs at a rate not exceeding 10% above base rate. (4) In considering whether it would be unjust to make the orders referred to in paragraphs (2) and (3) above, the court will take into account all the circumstances of the case including – (a) the terms of any Part 36 offer; (b) the stage in the proceedings when any Part 36 offer was made, including in particular how long before the trial started the offer was made; (c) the information available to the parties at the time when the Part 36 offer was made; and (d) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer to be made or evaluated …” (a) offers to settle; and (b) the consequences where an offer to settle is made in accordance with this Part. (a) be in writing; (b) state on its face that it is intended to have the consequences of Part 36; (c) specify a period of not less than 21 days within which the defendant will be liable for the claimant’s costs in accordance with rule 36.10 if the offer is accepted; (d) state whether it relates to the whole of the claim or to part of it or to an issue that arises in it and if so to which part or issue; and (e) state whether it takes into account any counterclaim … (a) a claimant fails to obtain a judgment more advantageous than a defendant’s Part 36 offer; or (b) judgment against the defendant is at least as advantageous to the claimant as the proposals contained in a claimant’s Part 36 offer. (a) his costs from the date on which the relevant period expired; and (b) interest on those costs. (a) interest on the whole or part of any sum of money (excluding interest) awarded 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; (b) his costs on the indemnity basis from the date on which the relevant period expired; and (c) interest on those costs at a rate not exceeding 10% above base rate. (a) the terms of any Part 36 offer; (b) the stage in the proceedings when any Part 36 offer was made, including in particular how long before the trial started the offer was made; (c) the information available to the parties at the time when the Part 36 offer was made; and (d) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer to be made or evaluated …”
“(1) The court has discretion as to – (a) whether costs are payable by one party to another; (b) the amount of those costs; and (c) when they are to be paid. (2) If the court decides to make an order about costs – (a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but (b) the court may make a different order. … (4) In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including – (a) the conduct of all the parties; (b) whether a party has succeeded on part of his case, even if he has not been wholly successful; and (c) any payment into court or admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply.” (a) whether costs are payable by one party to another; (b) the amount of those costs; and (c) when they are to be paid. (a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but (b) the court may make a different order. (a) the conduct of all the parties; (b) whether a party has succeeded on part of his case, even if he has not been wholly successful; and (c) any payment into court or admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply.”
“2. Part 36 replaced the provisions of the Rules of the Supreme Court relating to payment into court by way of a formal offer of satisfaction of the claim. It also provided for the first time a means by which a claimant could offer to accept a sum of money less than the amount of his claim with protection in relation to costs comparable to that which had previously been available only to defendants. Its purpose is to encourage settlement and to enable those who make sensible offers to protect themselves against liability for the costs incurred in the continuation of proceedings to no ultimate advantage. … 4. It can be seen from Part 36 as a whole, as well as from the extracts cited above, that it contains a carefully structured and highly prescriptive set of rules dealing with formal offers to settle proceedings which have specific consequences in relation to costs in those cases where the offer is not accepted and the offeree fails to do better after a trial. In cases where there has been no Part 36 offer or a Part 36 offer has been bettered the judge has a broad discretion in dealing with costs within the framework provided by Part 44. Rule 44.3(4) provides that when exercising its discretion as to costs the court will have regard to the general rule that the unsuccessful party should pay the costs of the successful party, but will also have regard to the conduct of the parties and any payment into court or admissible offer to settle made by one or other party which falls outside the terms of Part 36. In seeking to settle the proceedings, therefore, parties are not bound to make use of the mechanism provided by Part 36, but if they wish to take advantage of the particular consequences for costs and other matters that flow from making a Part 36 offer, in relation to which the court’s discretion is much more confined, they must follow its requirements. 5. Part 36 is drafted as a self-contained code. It prescribes in some detail the manner in which an offer may be made and the consequences that flow from accepting or failing to accept it. In some respects those consequences reflect broadly the approach the court might be expected to take in relation to costs; in others they do not … 6. Basic concepts of offer and acceptance clearly underpin Part 36, but that is inevitable given that it contains a voluntary procedure under which either party may take the initiative to bring about a consensual resolution of the dispute. Such concepts are part of the landscape in which everyone conducts their daily life. It does not follow, however, that Part 36 should be understood as incorporating all the rules of law governing the formation of contracts, some of which are quite technical in nature. Indeed, it is not desirable that it should do so. Certainty is as much to be commended in procedural as in substantive law, especially, perhaps, in a procedural code which must be understood and followed by ordinary citizens who wish to conduct their own litigation. In my view, Part 36 was drafted with these considerations in mind and is to be read and understood according to its terms without importing other rules derived from the general law, save where that was clearly intended.”
“This letter is written underCPR Part 36 and is intended to have the consequences of that part. It is an offer on the terms below to settle the claimant’s whole claim and the defendants’ counterclaim. It is open for acceptance within 21 days. If it is accepted then the defendants will be liable for the claimant’s costs underCPR 36.10 , such costs to be assessed if not agreed. The terms of the offer are that: 1. the defendants undertake (i) not to infringe, while they are valid, [trade marks X and Y] and [the UK Registered Trade Mark Z] or any of them and (ii) while the said marks are valid, not to use anywhere in the Community in the course of trade [two out of six of theimpugned signs] ; 2. the defendants will pay to the claimant the sum of [£x]; 3. the defendants will pay the claimant’s costs, such costs to be assessed if not agreed; 4. the defendants will discontinue their counterclaim; and 5. the parties’ agreement is confidential and the parties will consent to an order by which the claim and the counterclaim are discontinued with no order as to costs.”
“1. The Defendants will undertake to the Court not to (i) infringe [trade mark X] (ii) use anywhere in the European Union in the course of trade [the same two impugned signs as set out in the defendants’ letter]; (2) The Defendants will pay to the Claimant an amount in respect of damages or an account of profits, to be assessed by an inquiry as to damages or an account of profits (at the Claimant’s election) if not agreed; (3) The Defendants will pay the Claimant’s costs of the proceedings, to be assessed by detailed assessment if not agreed; (4) The Defendants will discontinue their counterclaim; (5) Save that the undertakings in paragraph (1) above will be recorded in a recital to an Order and that nothing shall affect the nature of any inquiry, account or assessment in paragraphs (2) and (3) above, and subject to legal obligations of disclosure on either party, the parties’ agreement shall be confidential.”
“Our client is not in a position to evaluate your clients’ offer to pay [£x]. Furthermore, our client would not ordinarily be in such a position by the end of any trial on liability. We refer to paragraph 40 of [Gibbon v Manchester City Council] which notes that “a party faced with a Part 36 offer ought to be entitled to evaluate it by reference to a rational assessment of his own case”
“We have already outlined the value to our client of a public finding of infringement, and that remains a difference between the parties. Our client will undoubtedly achieve that at trial if it is successful in respect of any of the marks alleged to be infringed. The parties also appear to be in agreement in relation to costs of the proceedings. In relation to monetary compensation, your clients appear to concede that a payment by way of damages or an account of profits is appropriate. However, the difference between the parties on this issue appears to be only one of quantum. Our client’s offer was intended to provide a means by which the quantum can be assessed whilst avoiding the costs of a trial on liability. Our client does not believe the figure of [£x] bears any resemblance to the scale of operations undertaken by your clients and/or the damage caused to our client as a result … [With regard toCPR 36.14 (4)], we consider that your clients are duty bound to co-operate in providing the information requested. To reiterate, our client is not in a position to evaluate your clients’ offer to pay [£x] by reference to a rational assessment of our client’s case for damages or account of profits in the absence of any relevant information from your clients. Our client has indicated repeatedly that in order to do so it requires information relating to the scale of your clients’ activities under the [defendants’ business name], not least on [various specified dates]. However, your client has consistently refused to provide any such information. We consider that the most appropriate course towards avoiding the significant costs of a trial on liability would be for the parties to seek to agree a monetary sum. The only rational basis upon which that can be done is if the parties are in possession of the relevant information. We therefore invite your client once again to provide (on a confidential and without prejudice save as to costs basis if necessary) the following information in relation to the operation in the European Economic Area under the [defendants’ business name] sign: The [turnover, number of customers and Earnings Before Interest Tax and Amortisation (EBITA)]. Should you wish to provide only part of this information, our client would of course consider its position.”
“36.19 Restriction on disclosure of a Part 36 offer or a Part 36 payment (1) A Part 36 offer will be treated as “without prejudice except as to costs”. (2) The fact that a Part 36 payment has been made shall not be communicated to the trial judge until all questions of liability and the amount of money to be awarded have been decided. (3) Paragraph (2) does not apply – … (c) where – (i) the issue of liability has been determined before any assessment of the money claimed; and (ii) the fact that there has or has not been a Part 36 payment may be relevant to the question of the costs of the issue of liability.” (c) where – (i) the issue of liability has been determined before any assessment of the money claimed; and (ii) the fact that there has or has not been a Part 36 payment may be relevant to the question of the costs of the issue of liability.”
“35. In my view rule 36.19 does not allow for the disclosure of the amount of a payment in. On its language it allows simply the disclosure of the fact that there has been one or the fact that there has not. The consequences of that being the correct interpretation of rule 36.19 seem to me to be as follows. If the court is told that there has been no payment in, then the court is free to exercise its discretion to award costs in relation to the preliminary issue and there is no difficulty with rule 44.3(4)(c). If however it is told that there has been a payment in, then, in any but perhaps the most exceptional case, I find it very difficult to think that there could be circumstances where if the issue of damages remains to be decided, the judge can do otherwise than to reserve the question of costs until after the determination of that issue.”
“The position where there has been a split trial is not specifically addressed as it was under the forerunner of this provision … and absent agreement under the present r.36.13(3)(c) a strictly literal interpretation of the phrase “until the case has been decided” would result in an embargo which might well result in the court being denied information material to deciding what order as to costs if any was appropriate at the split trial stage.”
“In a simple case this rule raises no problem, but more complex cases may arise in which it is necessary to investigate with some care who is really the winner and who is really the loser or, as it is sometimes put, to identify the event which costs are to follow.”
“The upshot of these cases is in my judgment clear. The judge must look closely at the facts of the particular case before him and ask: who, as a matter of substance and reality, has won? Has the plaintiff won anything of value which he could not have won without fighting the action through to a finish? Has the defendant substantially denied the plaintiff the prize which the plaintiff fought the action to win?”
“That authority concerned two actions, one for passing off and one for infringement of trade marks. In accordance with the established practice in intellectual property cases of that kind, a two-stage procedure was adopted. At the first stage the plaintiff sought to establish his right to relief. If he succeeded, an injunction would be granted and an inquiry as to damages would be ordered (unless damages were accepted as nominal). The second stage, if the plaintiff succeeded at the first and claimed more than nominal damages, would be the inquiry into the quantum of damages. The issue in the case as reported arose because the defendant, unsuccessful at the first stage, resisted an application by the plaintiff for the costs thus far: the defendant argued that, as there was a payment into court of undisclosed amount, and as it could not be known until after the inquiry whether the plaintiff had recovered more or less than the sum paid in, costs should be reserved until the outcome of the inquiry was known. The judge rejected that argument and awarded the plaintiff its costs of the first stage. He did so because of the established practice in such cases, because a plaintiff was entitled to come to court to establish his right and his claim to an injunction irrespective of any payment into court and because a separate hearing for the assessment of damages was throughout contemplated. I do not doubt the correctness of this decision on its facts. But procedurally it was far from the present case, in which there was no question of the plaintiff’s right to relief being determined in one proceeding and his claim to damages in another. Although the damages were a matter for the jury and the injunction (if the jury found for the plaintiff) was a matter for the judge, both matters were to be determined at the end of a single trial. This procedure in intellectual property cases has never applied in defamation cases. In my judgment the learned judge in this case paid much more attention than he should have done to the reasoning of Falconer J in a case which was by no means analogous.”
“The usual procedure in [the] Chancery Division in such a case is, of course, for the plaintiff to establish his right and his entitlement to an injunction against the defendant who has infringed that right in the trial of the action, leaving any claim as to damages to be dealt with in an inquiry as to damages … the costs of the action being dealt with in the order made upon judgment in the action and the costs of the inquiry being reserved to the inquiry so that the plaintiff prosecutes the inquiry at his own risk …”
“(3) The high point of the plaintiff’s argument on costs was, and remains, that in obtaining the injunction he had obtained more than what was expressly offered to him in the proceedings. There had been no equivalent of a Calderbank letter [i.e. a letter written without prejudice save as to costs]. Accordingly he should be regarded as the victor and held entitled to recover his costs. (4) In my judgment, however, that is to take an altogether too simplistic view of success in this litigation. For the plaintiff to be entitled to recover his costs – in this or any other litigation – he must show at least that he has obtained at the hearing something of value which he could not otherwise have expected to get. Only that justifies his proceeding with the action to trial. That I conclude is the test to be applied. … (6) … It is, I think, necessary to be a little wary about how precisely one determines which party in proceedings is successful. In the first place it is important to adopt an approach which does not dilute the important certainties inherent in the payment-in machinery … Secondly, it seems to me important to recognise that on occasion it will be impossible to regard either party as the substantial winner … (7) [The plaintiff] got nothing from the hearing that was not in any event obviously available to him. Not only, therefore, should he not have been awarded his costs; he had no answer to the defendants’ application for their costs since the date of payment in.”
“Civil litigation is now developing into a system designed to enable the parties involved to know where they stand in reality at the earliest possible stage, and at the lowest practicable cost, so that they may make informed decisions about their prospects and the sensible conduct of their cases. Among other factors the judge exercising his discretion about costs should consider is whether one side or the other has, or has not, conducted litigation with those principles in mind.”
“The principle to which Judge LJ referred as to the parties conducting their litigation making full and proper disclosure is even more important now that [the CPR] have come into force. Under the CPR it is possible for the parties to make offers to settle before litigation commences. As to the disclosure required in relation to that procedure, protocols in specific areas of litigation make express provision. Even where there is no express provision contained in a relevant protocol which applies to the particular litigation, the approach reflected in the protocols should be adopted by parties generally in the conduct of their litigation. If the process of making Part 36 offers before the commencement of litigation is to work in the way which the CPR intend, the parties must be provided with the information which they require in order to assess whether to make an offer or whether to accept that offer. Where offers are not accepted, the CPR make provision as to what are to be the cost consequences … Both those rules deal with the usual consequences of not accepting an offer which, when judged in the light of the litigation, should have been accepted. I also draw attention to the fact that the rules refer to the power of the court to make other orders and make it clear that the normal consequence does not apply when it is unjust that it should do so. If a party has not enabled another party to properly assess whether or not to make an offer, or whether or not to accept an offer which is made, because of non-disclosure to the other party of material matters, or if a party comes to a decision which is different from that which would have been reached if there had been proper disclosure, that is a material matter for a court to take into account in considering what orders it should make. This is of particular significance so far as defendants are concerned because of the power of the court to order addition interest in situations where an offer by a claimant is not accepted by a defendant. We have to move away from the situation where litigation is conducted in a manner which means that another party cannot take those precautions to protect his or her position which the rules intend them to have.”