Offers in disputes involving unmarried couples

If you are married or in a civil partnership and considering or in the process of getting divorced or dissolving your civil partnership you can stop reading now as this article relates to disputes involving unmarried couples and certain types of offers that are discussed in this blog cannot be made in family disputes where parties are married. You should instead read the blog I prepared on Without Prejudice for married couples.

What is without prejudice?

At its most basic meaning “without prejudice” means that any statement made by a party to try to settle a dispute will not be used against them in court. In other words, what is said is without prejudice to their legal position. It is a legal concept that is designed to encourage parties in a dispute to make offers to settle cases as soon as possible, by knowing that these offers cannot be placed before the court.

What is without prejudice save as to costs?

A without prejudice save as to costs offer or a “Calderbank” offer (named after the case Calderbank v Calderbank [1975]) means that while the substantive discussions and offers made during negotiations are protected from being referred to in court, they can later be considered by the court when deciding how to allocate costs at the end of the case.

In circumstances where an order finally made by the court ends up being better for a party than the Calderbank offer they made to the other party, then their Calderbank offer can be referred to the court on the question of costs. The argument would be that they have “beaten” their Calderbank offer by having offered more to the other party than the final order stipulates, and that it was therefore unreasonable for the other party not to accept the Calderbank offer when it was made and avoid the costs of a contested hearing, and that a costs order should therefore be made in their favour to reflect this.

What is a Part 36 Offer?

A Part 36 Offer is a type of offer made on a without prejudice save as to costs basis. It is called Part 36 as it is named after Part 36 of the Civil Procedure Rules which governs the rules and procedures in civil proceedings. Despite a dispute between an unmarried couple, such as one involving a property, often having all the hallmarks of a family law case, it is in fact civil law and procedure which applies to the dispute and in particular the law of property and trusts.

How does a Part 36 Offer work?

A Part 36 Offer is made on a without prejudice save as to costs basis so the offer can only be referred to the court on the questions of costs. Part 36 of the Civil Procedure Rules (CPR) sets out the procedure for making and accepting such offers.

A Part 36 Offer can be made at any stage of a dispute and does not require court proceedings to be commenced. The offer can be made by either the claimant or the defendant. There are different rules and consequences in relation to making a defendant’s Part 36 offer and these will not be covered in this blog.

A Part 36 Offer must be made in writing and can either be made in a letter setting out and satisfying the strict requirements specified in the Part 36 CPR or it can be made in Form N242A. The offer must remain open for 21 days or more.

When a Part 36 Offer is made, it must specify the terms of settlement of the dispute. If the offer is accepted, then the dispute will be settled on the terms specified in the offer. If the offer is not accepted, then the case will continue towards trial, and if not otherwise settled the court will make a decision on the outcome.

Why make a Part 36 Offer?

The purpose of making a Part 36 Offer is to encourage early settlement of the dispute. It is a useful tactic which due to its costs consequences if it is not beaten, imposes the highest level of pressure to settle a case.

If the party making the Part 36 Offer wins their case i.e. the outcome they achieve at court is better, than the Part 36 Offer they made, they are entitled to certain benefits as provided by Part 36. For example, they may be entitled to a substantial proportion of their legal costs and interest on those costs from the other party from the relevant date for acceptance set out in the Part 36 offer to the end of trial.

It is essential to note that there are strict rules and deadlines that apply to Part 36 Offers, as well as important tactical considerations to take into account.

A Part 36 Offer may not be suitable to make in all cases and it may be a Calderbank offer may be more appropriate in the circumstances. Due to this and the penalties and consequences associated with making a Part 36 Offer, please seek legal advice before making a Part 36 Offer or if you have had a Part 36 Offer made against you, please also seek legal advice.

About

Raj Patel is an Associate Solicitor in our Brighton office who specialises in disputes relating to unmarried couples.