Actor Hugh Grant, of Love Actually fame, took to X (formerly Twitter) on 17th April 2024 to announce that he had settled his case against The Sun publisher, News Group Newspapers (NGN). The case brought against NGN included allegations of “phone hacking, unlawful information gathering, landline tapping and burglary.”
Grant confirmed that he had reluctantly accepted a form of settlement offer known as a Part 36 offer put forward on behalf of NGN. The consequence of accepting that offer means that the proceedings against NGN are stayed, or paused, provided the terms of the offer are adhered to and avoids the determination of any wrongdoing by NGN by the trial judge.
Grant expressed that he did not want “to accept this money or settle…[and] would love to see all the allegations that they deny tested in court.”
This indicates that the offer must have been pitched at a level that would have meant that there was a very high risk that Grant would have not been able to ‘beat’ the offer at trial, by recovering an amount in excess of the amount offered by NGN, which would have exposed Grant to potentially significant cost consequences due to the way in which Part 36 operates.
This outcome is a reminder of the value of Part 36 and how making a well-judged Part 36 at the right time can put significant pressure on the other party to the litigation to settle.
What is a Part 36 offer?
Found within the Civil Procedure Rules (the procedural rules that govern civil litigation in England and Wales), Part 36 allows a party to a dispute to make an offer to settle, provided it is made in accordance with the requirements of Part 36, has certain defined cost consequences depending on whether the offer is accepted or the other party fails to beat the offer at trial.
Here we are looking at what happens if a Part 36 is made, the dispute proceeds to trial, and the party to whom the offer was made fails to achieve a better or more advantageous outcome at trial. It is at that point that the Part 36 cost consequences become highly relevant and can have potentially dire consequences for the party who declined to accept the offer to settle.
The first point to note is that a Part 36 offer can be made at any stage during the life of a dispute. A party does not have to wait until court proceedings have been issued.
A Part 36 offer is made “without prejudice save as to costs”. This means the offer is made behind a veil, which is not removed until after the claim has been decided. In other words, the offer cannot be used as evidence of an admission during the course of the trial. The trial judge will only be made aware of the offer once the case has been decided and the issue of costs falls to be addressed.
Part 36 offers are often used as a tactical manoeuvre due to their potential cost consequences. Indeed, it is not going too far to say that parties to litigation ought to at least consider making use of Part 36 in most cases, albeit that does not necessarily mean that it will be appropriate to make an offer in every case.
Part 36 offer requirements
To qualify as a valid Part 36 offer the offer must be:
- In writing
- Be a genuine offer to settle
- Make it clear that the offer is made pursuant to Part 36 of the Civil Procedure Rules
- Specify the relevant period within which the other party will become liable for your costs. This must be a period of at least 21 days (assuming the trial is not within that time period)
- State the extent of the offer – i.e. whether it is intended to settle merely part or all of the claim, whether it takes into account any counterclaim etc.
Clarification of a Part 36 offer should be within seven days of service.
It is very important that the offer complies with the requirements of Part 36, otherwise it may be invalid and will not attract the Part 36 cost consequences.
Consequences
The benefit of making an appropriate Part 36 offer is that it puts significant pressure on the other party to settle and it can also provide the offer or with some protection in respect of legal costs. The offeree must carefully weigh up whether to accept or reject the offer, because if the offer is rejected and the offeree fails to achieve a better outcome at trial then they are at high risk of having to pay significant costs and interest.
The Part 36 cost consequences themselves are complex and can depend on several different factors. For that reason we would strongly recommend that proper advice is obtained when considering making a Part 36 offer or responding to such an offer.
However, as an example only, if it is the claimant who makes the Part 36 offer, and that offer is not accepted by the defendant and the claimant then goes on to obtain a judgment that is better than its own offer, the court will order, unless it considers it unjust to do so, the defendant to pay interest of any amounts awarded by the court, costs on the indemnity basis from the expiry of the relevant period plus interest on those costs, and an additional monetary amount depending on the outcome of the case and the type of dispute.
The consequences of getting it wrong can therefore be significant.
Grant tweeted;
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.” This risk, for most parties, is often too high; a fact acknowledged by Grant: “I would be liable for something approaching £10 million in costs. I’m afraid I’m shying at that fence.
The settlement sum is not public knowledge, but Grant has indicated it will be repurposed into his general campaign.
Justice
The Court has some forms of discretion when considering Part 36 offers and the cost consequences.
CPR Part 36.17 states “the court must, unless it considers it unjust to do so, order that the defendant is entitled to
- Costs
- Interest”
The hurdle of “unjust” is a high threshold, somewhat discretionary and unguaranteed. The CPR outlines points the court should take into account when considering whether or not it is unjust. These are outlined in CPR 36.17 (5) and include:
(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;
(d) the conduct of the parties with regard to the giving of or refusal to give information for the purposes of enabling the offer to be made or evaluated; and
(e) whether the offer was a genuine attempt to settle the proceedings.
Whilst Grant wanted a public determination as to The Sun’s potential culpability, this does not necessarily make it “unjust” in consideration of the above circumstances.
Reminder
The public reaction to this Part 36 offer is a timely reminder of the risks in litigation. If the relief you are seeking at court is offered under a Part 36 offer, that offer needs to be carefully considered. Any rejection could lead to expensive consequences.
Parties often favour and seek a prompt settlement, aim to minimise incurring further legal costs, and want to resolve matters without the involvement of a judge, all of which can be achieved with a well-timed and well-crafted Part 36 offer. Sometimes a Part 36 offer also allows as Defendant to be slightly more generous, knowing that the matter comes to a prompt conclusion.
However, in Hugh Grant’s case, who hoped to have a public judgment, the skilful art of Part 36 offers may feel for some like a denial of access to justice and a lost opportunity for the alleged conduct of NGN to held to account in a public forum.
It is important to remember, that if the offer was ignored and the litigation continued utilising court time, Hugh Grant would still have access to public determination, but risked being held responsible for both his own costs but also the costs of his opponent.
If you have any questions or would like further information on the content of this article, please do not hesitate to contact our Dispute Resolution team who will be happy to help.
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