Actor Hugh Grant took to X (formerly known as Twitter) on 17 April 2024 to announce that he had accepted a Part 36 offer and settled his lawsuit against The Sun.
Grant had accused The Sun of phone hacking, unlawful information gathering, landline tapping, burglary of his flat, office and car, illegally obtaining medical records, defamation, perjury and destruction of evidence. He confirmed that whilst he would “love to see all the allegations that they deny tested at court”, he was offered an “enormous” sum of money to keep the matter out of court. He therefore reluctantly accepted, explaining in very simple terms that this was because he would have to pay the legal costs of both sides if the court awarded damages that were even a penny less than the settlement offer (which he had been told would be in the region of £10m!). He wanted his day in court, but not at any cost.
A “Part 36 offer” is an offer made in accordance with Part 36 of the Civil Procedure Rules (“CPR”). It carries struct cost consequences if rejected and the offeror does better than the offer at trial.
If pitched right, a Part 36 offer can put pressure on a party to settle, as it did in Grant’s case.
To be a valid Part 36 offer, the offer must:
As Grant accepted The Sun’s Part 36 offer, his claim would have been stayed, and The Sun would have had to pay Grant’s costs up to acceptance.
Even if Grant had rejected the Part 36 offer, but then gone on to win at trial and been awarded an amount higher than The Sun’s Part 36 offer, the Part 36 offer would not have impacted on Grant’s position on costs, as the usual costs rules apply ie the loser (The Sun in this example) would have to pay the winner’s costs. Likewise, if Grant had rejected the Part 36 offer and gone on to lose at trial, the Sun’s Part 36 offer would have had no impact and the usual cost rule would apply with Grant having to pay The Sun’s costs from the outset.
However, if Grant had rejected the Part 36 offer and won at trial but not "beat" the Part 36 offer, The Sun would have been treated as a "successful party" for the purposes of costs from the date of expiry of the relevant period. Grant would in such a case have had to pay The Sun’s legal costs from that date (as well as his own costs despite winning) together with interest on The Sun’s costs (unless unjust to do so).
This case highlights the tactical use of Part 36.
Pitch your offer high if you want to settle/avoid trial. Likewise, if you are the recipient of a Part 36 offer, think carefully before you reject it. A high offer not only incentivises the other side to accept, it also acts as a deterrent against continuing with the proceedings because the adverse cost consequences if the offer is not beaten can be significant.
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