How to settle a claim

This guide will help you to understand how to settle your claim. It is part of a series of guides about sorting out a dispute and going to a civil court.
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Introduction

Before you start your civil claim, the court expects you to have made every effort to settle your dispute with the other side. Suing is treated as a last resort. See How to sort out your legal problem before or instead of going to court.

This is just one of our guides about sorting out a dispute and going to a civil court. The rest of the series can be found on our Going to a civil court page.

This guide will help you to understand how to settle your claim. It is part of a series of guides about sorting out a dispute and going to a civil court.

This guide is for you if you:

  • are thinking about suing (starting a civil claim) in either England or Wales, and
  • your case involves a claim for £25,000 or less, and
  • you are representing yourself (you are a litigant in person) and not eligible to have your case paid for by legal aid, a trade union, or insurance.

This guide is also for people supporting litigants in person, for example Support Through Court volunteers, CAB volunteers, housing support workers, advice workers and court staff, as well as relatives and friends.

This guide is not for you if you are involved in:

  • a criminal case,
  • a family case (such as an application for a domestic violence injunction or a divorce),
  • a housing disrepair or housing possession case including mortgage possession,
  • an injunction (including court claims about anti-social behaviour)
  • a medical accident case,
  • a case involving defamation (that is libel or slander) or
  • a tribunal case (such as a discrimination or employment case).

Legal language

We try to explain any legal language as we go along, but there is also a What does it mean? section at the end.

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 April 2020

Thanks to the Bar Standards Board for funding the creation of this guide.

Trying to settle a claim

The court process involves a series of steps which take you towards the final hearing. It is normal to try to sort out your dispute as the claim progresses and more information comes to hand.

You can reach an agreement with the defendant about how to settle your case at any time, either before or after you issue proceedings to start a claim in the court. This can be done through informal discussions either face to face or over the phone, attending mediation (see How to sort out your legal problem before or instead of going to court ), in writing, or a combination of all of these things.

Things to consider when trying to settle your dispute:

  • What are your prospects of your claim succeeding at trial? How likely is it that you will lose?
  • What is the value of the claim? What are you likely to be awarded if you go to trial?
  • What would you be prepared to accept? This might be less than the value of the claim, if it means you save the expense and hassle of going to court.
  • What might the defendant be prepared to pay? This might be more than they think the claim is worth if it means they save the expense and hassle of going to court.
  • What would be the costs / other consequences of going to court and losing?

Even if you do plan on doing most of your case yourself, if you can afford it, it will be helpful to seek some initial legal advice at an early stage, to help you find answers to these questions. This will also help you to decide what you would be prepared to settle for, and help you to understand what your best arguments are, and therefore what you need to say to put pressure on the other side.

Without prejudice communications

All written communications about settlement should be marked “without prejudice” or “without prejudice save as to costs”. The parties should also agree that settlement discussions are “without prejudice” or “without prejudice save as to costs”. If you do end up going to court, neither party will be allowed to tell the judge about “without prejudice” communications. The judge is only allowed to know about “without prejudice save as to costs” communications at the end of a dispute, if they have been asked to consider who pays the costs. It can be useful at that stage to show the judge any “without prejudice save as to costs” communications to show that you have been acting reasonably.

Settle a dispute using the rules in Part 36 of the Civil Procedure Rules

The court rules offer a formal way of trying to settle your claim which deliberately puts pressure on the other side to accept a reasonable offer, by providing financial incentives to do so. You will see this referred to as a ‘Part 36 offer to settle’ which gets its name from the court rule describing the procedure (Part 36 of the Civil Procedure Rules, or CPR).

Part 36 offer to settle

A Part 36 offer to settle can be used:

  • By the claimant or the defendant. So, if you are the claimant, you can consider making a Part 36 offer. You also need to be ready to deal with a Part 36 offer made by the defendant. To do either you will have to carefully and realistically value your case.
  • In fast track and multi-track claims only. You cannot use the Part 36 process in small claims. (In small claims, the parties can make offers to settle, and have “without prejudice” or “without prejudice save as to costs” communications, but the formal rules in Part 36 do not apply.)
  • Before or after the start of court proceedings, right up to near trial (special rules apply close to trial).

Just like informal offers made on a “without prejudice save as to costs” basis, if the attempt to settle formally using Part 36 is unsuccessful, the judge doesn’t get to know that the process has been attempted or what has been offered and rejected until after the trial. This means that they cannot be affected by the value of the Part 36 offer when giving judgment. It only becomes relevant after trial when the judge decides what to do about legal costs.

Tactical and financial advantages

The financial pressure created by a Part 36 offer to settle comes about because of the possible effect on the amount of legal costs you could end up paying.

The costs consequences available under the Part 36 procedure depend on:

  1. which party makes the offer
  2. whether or not the offer is accepted
  3. if it is accepted, whether this was within or after expiry of the Relevant Period (see below)
  4. if it is not accepted, what happens at trial.

For example, if you turn down a Part 36 settlement sum, but don’t get a better result from the judge at the trial than what you have already been offered, you will have to pay all the other side’s legal costs from the end of what is known as the Relevant Period. This is the period (usually 21 days from when the offer was made) during which the offeree can accept the offer and take advantage of the more favourable costs consequences. The Relevant Period has to be set out in the offer

Example

Mark claims £12,600. The defendant, Joan, makes a Part 36 offer to pay Mark £11,000 on 1 February giving Mark a Relevant Period of 21 days to accept. Mark decides it’s not enough, and chooses to let the case go to trial.

At the trial on 10 July he wins. The court awards him £10,900. This award doesn’t beat the Part 36 offer to settle made by Joan. Mark will therefore be very likely to have to pay all Joan’s legal costs from 22 February to 10 July including the costs of the trial, plus interest. Mark needed to be awarded £11,000.01 or more to avoid being ordered to pay any of Joan’s legal costs.

If Joan is a litigant in person, Mark will have to pay her costs of preparation, probably at £19 per hour. If Joan is legally represented, he will have to pay her solicitor and barrister’s costs, which could run to many thousands of pounds.

The tactical advantage of making a Part 36 offer is that it forces the other side to pause and think very hard about the strengths and weaknesses and value of their case.

Receiving a Part 36 offer

It’s more common to get a Part 36 offer if the defendant is legally represented. You need a good idea of what your claim is worth, and what you are prepared to accept. Your ideas about this may change as more evidence comes your way, for example the defendant’s witness statements or expert reports, as the claim progresses.

You must take any Part 36 offer made to you very seriously. You will usually only get 21 days to accept and take advantage of the more favourable costs consequences of doing so (the Relevant Period). Most reasonable defendants will extend that time for a few days if you have a good reason, but you will need to ask – don’t just ignore the deadline! A Part 36 offer can be accepted after the Relevant Period unless it has been withdrawn. But if it is accepted after the Relevant Period, this is on the basis that the offeree accepts the less favourable costs consequences from the end of the Relevant Period to the date they accepted the offer.

It is often very difficult to assess whether an offer is good or reasonable, and a defendant isn’t obliged to explain how they came to the amount. If you can, get legal advice to help you decide, although you will need to find someone who can help within the Relevant Period you have to accept (which is usually 21 days). Needing a short period of extra time to consider the offer with a solicitor would be a reasonable reason to ask the other side to agree to extend the Relevant Period.

One big factor in many cases is that if the defendant says you are partly at fault, and the judge agrees, you are at risk of losing a proportion of the value of your claim. For example,  if you are found to be one third to blame, you will lose one third of the value of your claim. This is often known as 'contributory fault' or 'contributory negligence'.

Example 1

You slipped on a wet floor at work and fell injuring your leg. You were off work and lost earnings, and had other losses and expenses. You used the Judicial College Guidelines for the Assessment of General Damages in Personal injury Cases and valued your leg injury at £6,000 and your loss of earnings and other losses and expenses at £5,000, totalling £11,000. The defendant said despite the floor being wet (which was their fault), you were 50% at fault for running and not looking where you were going, that your leg injury was less serious, and that you were off work longer than you medically needed to be. They offered £4,800 to settle. You didn't agree, and have issued proceedings. They have now made a Part 36 offer of £7,000.

If the judge decides the defendant was at fault, you were not at fault at all, and you were reasonably off work, you could get the full £11,000. But if the defendant is successful in what they say about you at trial, you might end up, for example, with:

  • as little as £5,000 if the judge decides you were 50% to blame, and that you should have been back at work sooner, or
  • £7,260 if the judge accepts the amounts you have claimed, but decides you were one third to blame, or
  • just under £7,000 if the judge decides you were one third to blame, but slightly reduces your losses and expenses claim (for example deciding you could have been back at work a few weeks earlier). This award fails to beat the Part 36 offer.

Any award that does not beat the £7,000 Part 36 offer will be very likely to result in you paying the other side's legal costs and interest on those costs, from the end of the Relevant Period. How confident are you about the amounts you have claimed? And about a judge agreeing or disagreeing about the accident being partly your fault and the level of deduction that might follow on from that?

Some claims are simpler to assess, as they don't involve any possible contributory fault, and are simply a matter of value.

Example 2

Your caravan was written off when parked in your driveway by your neighbour's builder's digger. You have claimed £15,000. The builder's insurers have made a Part 36 offer of £14,000. Are you prepared to accept less than the value of your claim to put an end to all the risks involved in going to trial? How confident are you that you will get the full £15,000? Any award that does not beat the £14,000 Part 36 offer will result in you paying the other's side's legal costs and interest from the end of the Relevant Period.

Making a Part 36 offer

A claimant can also make a Part 36 offer to encourage the defendant to agree a settlement. Again, the costs consequences depend on whether or not the defendant accepts and, if so, when.

If the defendant accepts the offer, the defendant will be very likely to have to pay the claimant’s costs.

If the defendant does not accept the offer and the dispute goes to trial, the court is likely (unless it is unjust) to order the defendant to pay the claimant’s costs on an indemnity basis (which is likely to be higher) from the end of the Relevant Period, plus interest on costs and the sum awarded. The defendant also pays an additional amount of a percentage of the amount awarded, up to £75,000, calculated by applying rules set out in Part 36.

Be aware!

If you are a successful claimant and a litigant in person, you will only get your costs for preparing the case at £19 per hour, or whatever your earning loss rate is if that is higher. However, a represented defendant may be incurring costs at between £100 and £400 per hour, depending on the charging rate and location (central London or elsewhere) of their solicitor and barrister, if they have one.

Part 36 and personal injury and road traffic claims

Part 36 can be used in fast track and multi-track personal injury and road traffic accident claims but operates slightly differently, because costs in fast track personal injury and road traffic cases are fixed on a scale (see Low value Personal Injury Guide).

How do I make a Part 36 offer to settle?

I am the claimant

The offer must be in writing. It is best to use the form (N242A) in the box below to do this. This way you can be sure not to leave anything out. You can do it by letter if you prefer but you run the risk of not including all the relevant information required by court rules.

If you make the offer by letter you must make it clear that you intend your letter to have the effect of a Part 36 offer.

You must explain that if the defendant accepts your offer within the Relevant Time, which is the time allowed for them to consider it (and this cannot be less than 21 days) then you will be entitled to your legal costs up to the date when the defendant serves notice of acceptance on you. So, if the defendant decides that the best thing to do is to accept the offer then the quicker they do this, the quicker they can stop the bill for your legal costs going up and up.

You must explain clearly what part of your case the offer relates to. Is it some of it or all of it? Usually it will be all of it. Does the offer include interest?

Explain clearly whether it takes into account any counterclaim made by the defendant.

I am the defendant

As well as giving the same information as the claimant (see above box), you must also:

Explain that you will pay the money you have offered the claimant within 14 days of the claimant accepting the offer.

How do I accept a Part 36 offer to settle?

By serving a written notice of acceptance on the party making the offer. You should also file a copy with the court. There is a simple notice of acceptance form at the end of the N242A form you can use. You can just write a letter but if you do, you run the risk of not including all the relevant information required by court rules. Your letter must include the claim number and title (if court proceedings have been started) and refer to the offer.

How long do I have to accept or refuse a Part 36 offer to settle?

As long as it has not been withdrawn (and sometimes one party threatens this and then does it – again as a way of forcing the other party to think hard about accepting their offer) then you can accept an offer at any time. But if you accept it within the Relevant Time, the time limit allowed by the other party (which will be at least 21 days but may be more depending on what it says in the Notice of offer to settle ) the costs consequences will be more favourable. The precise costs consequences will depend on whether you are the claimant or the defendant – see above.

Forms and rules

You can make a Part 36 offer to settle using the notice form N242A 

The rules about offers to settle are in Part 36 of the civil procedure rules

There are also additional rules called practice directions that go with the Part 36 rules

I have not been able to settle the dispute – what next?

Even if you have been unable to settle the dispute, the court expects you to have co-operated with the other side in trying to agree exactly what is in dispute, and in providing each other with information. They also expect you to follow court rules, called civil procedure rules. In particular, before you actually issue your claim, the court expects you to have followed any relevant pre-action protocol or, if none applies, the general rules for pre-action conduct - the procedure for communication and information exchange with the other side. You will find more information about these rules and protocols in another guide in this series Before you sue – things you need to know about court procedure.

What does it mean? (How to settle a claim)

Civil procedure rules – the court rules that you have to follow when you sue someone.

Costs on an indemnity basis, or indemnity costs – although this is not the norm, the judge can order that costs are to be assessed on an indemnity basis. This involves the costs being determined with any doubt as to whether the costs have been reasonably incurred or were reasonable in amount being resolved in favour of the receiving party. This is likely to result in a higher overall costs bill than if costs are assessed on the standard basis.

Costs on a standard basis, or standard costs - the usual rule is that successful party is entitled to their costs on the standard basis. This means that any doubt as to whether or not the costs are recoverable is resolved in favour of the paying party.

Pre-action conduct – the name of the process the court expects you to follow before you issue your claim if there isn’t a pre-action protocol that applies to your case.

Pre action protocol - the name of the process the court expects you to follow before you issue your claim. There are specific pre-action protocols for many types of case.

About this guide

Disclaimer

The information in this guide applies to England and Wales only. The law may be different if you live in Scotland or Northern Ireland. The law is complicated. We have simplified things in this guide. Please don’t rely on this guide as a complete statement of the law. We recommend you try and get advice from the sources we have suggested.

The cases we refer to are not always real but show a typical situation. We have included them to help you think about how to deal with your own situation.

Acknowledgements

This guide was produced by Law for Life's Advicenow project, with additional material from Laura Bee. Thanks to everybody who commented on this guide and to Laura Bee who peer reviewed it.

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Thanks to the Bar Standards Board for funding the creation of this guide.

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