Parties to any litigation are expected to try to settle disputes where possible. It allows parties to avoid the costs and time in pursuing or defending litigation and in some cases, allows them to continue an amicable relationship.

The ability to make a without prejudice ("WP") offer where the details are not disclosed to the Court except when it comes to the issue of costs (save for exceptional circumstances) can be a powerful tool. In England, a WP offer to settle can be made in two ways: a 'Calderbank' offer or Part 36 offer. In Scotland, a pursuer's offer gives similar benefits to those enjoyed by a claimant using a Part 36 offer. However important distinctions remain between the process North and South of the border.

What is a Part 36 offer?

A Part 36 offer is made pursuant to Part 36 of the Civil Procedure Rules ("CPR"). It can be made at any stage (including pre-action) by either party. There are certain requirements for a Part 36 offer to be valid including that it must:

  • Be in writing;
  • Not be stated to be inclusive of costs;
  • Specify a relevant period of no less than 21 days;
  • State it is an offer made pursuant to Part 36; and
  • State whether it is in relation to all or part of a claim and whether it takes into account any counterclaim.

There are certain cost consequences when a Part 36 offer is accepted or refused, which are set out in detail in the CPR. One of the main consequences is that the offer is accepted within the relevant period, the Claimant is entitled to its costs from the Defendant up to the date of acceptance. If the offer is not accepted and the offeror subsequently improves on its offer at trial, the offeror will be entitled to its costs on the indemnity basis, interest on the amount and its costs as well as a further monetary award.

How does Part 36 compare with 'Calderbank' offers?

The key distinction between Part 36 offers and a 'Calderbank' offer is that the latter is not governed by court rules and is therefore more flexible. The parties can agree any terms in respect of length of time the offer remains open (for example, 7 days), whether the settlement sum is to be paid in instalments and whether either party makes a contribution to the other's costs or each party is to bear their own costs.

A Calderbank offer does not offer the same costs protection as a Part 36 offer and is a good alternative where a Defendant wants to accept a settlement offer but does not wish to be automatically liable for a Claimant's costs. However, Part 36 offers tend to focus the other party's mind on settlement so it is possible that a Calderbank offer would not have the same level of impact.

Pursuer's Offers in Scotland

Compared to England, a pursuer's offer is a relatively new concept, as it was only introduced in April 2017.

To have effect, the offer must be made in accordance with the rules (see Rule 34A of the Court of Session Rules and Chapter 27A of the Ordinary Cause Rules). It must offer:

  • to accept a sum of money, inclusive of interest to the date of the offer; and
  • the taxed expenses of process.

If accepted late, or not accepted, and the pursuer is subsequently awarded at least as much as was offered, the Court can make a further award in favour of the pursuer based on 50% of the pursuer's expenses. Importantly, this is not an uplift on the pursuer's expenses, rather it is an additional payment to the pursuer.

However, unlike a Part 36 offer, a pursuer's offer does not have to specify a relevant period, as the additional payment is calculated by reference to the pursuer's expenses incurred after the "appropriate date" which is the date by which the offer could reasonably have been accepted. The Rules do not set out what this reasonable period is and so each case will be looked at on its own facts. However, it is suggested that the 21-day period required for Part 36 offers will in most situations be a reasonable period.

In contrast to England, the pursuer's offer is made by lodging the offer with the Court and so cannot be made pre-action. Although lodged with the Court, there must be no mention of the offer in the pleadings and unless the offer is accepted, the Court is not informed of the existence of the offer until after judgment has been given. A pursuer's offer is accepted by the defender lodging a minute of acceptance with the Court and as with a Part 36 offer it can be withdrawn at any time prior to its acceptance.

The Rules provide that any supplementary award is made "except on cause shown". In England, the costs consequences of a Part 36 offer follow unless the Court "considers it unjust" to make the order. Therefore, in both jurisdictions, it is open to defender/defendant to argue that the usual rule should not apply, for example where the pursuer's conduct of the litigation has been poor or the litigation itself has been premature.

The ability to make a "Calderbank" offer is also open to parties to a Scottish litigation. Like in England, the potential financial consequences of a pursuer's offer or defender's tender are not available, but in certain cases the flexibility of such an offer might be attractive to the parties. 

Tenders in Scotland

Unlike a pursuer's offer, the ability of a defender in Scottish proceedings to issue a tender is well established. They are extremely useful in achieving settlement without the need for a full evidential hearing as a result of the potential cost consequences if a tender is not timeously accepted. 

While there are no court rules on the form of a minute of tender, like the pursuer's offer it must meet certain requirements to be effective. In particular, it needs to be lodged with the court and intimated to the other parties; it should be in clear and unambiguous terms; and it should make an unqualified offer of expenses to the date of tender. 

There is no set time within which a tender must be made. However, if left late, there is a risk of it having little impact as the pursuer is entitled to a reasonable time to consider the tender and decide whether to accept it. Like the pursuer's offer, what is a reasonable time is not defined and will be looked at case by case. 

It is possible to withdraw a tender but to do so  a minute of withdrawal needs to be lodged with the court and intimated to all other parties. Where there has been a material change in circumstances, it can be argued that the tender has lapsed. 

If the pursuer accepts a tender late, or fails to beat the tender, the consequences are that the defender is able to seek expenses from the date of the tender (i.e. the date on which it was reasonable for the tender to be accepted). If the tender is made at an early stage in proceedings, this could lead to a significant recovery by the defender and so a well-pitched tender can put the pursuer under pressure and force the pursuer to consider their confidence in the strength of their claim.

While both jurisdictions have some similarities, the key differences mean that care needs to be taken and it is important not to assume that the same cost consequences will apply North and South of the border. Legal advice should be sought if an offer to settle is received.


Andrew Scott

Senior Associate