Hugh Grant, 63, was due to see his claim against The Sun publisher, News Group Newspapers (NGN), tried at the High Court in January next year. The actor, known most famously for classics such as Notting Hill, and Love Actually; and more recently for The Gentlemen, and last year’s Wonka, brought the claim alleging he was the target of phone hacking, unlawful information gathering, landline tapping, the burglary of his flat, office, car, and the illegal blagging of medical records, lies, perjury, and the destruction of evidence. NGN denied any unlawful activity took place.
In a series of recent posts on X (formerly Twitter), Grant confirmed that the matter had now settled for ‘an enormous sum of money’. He went on to state, ‘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,’. ‘My lawyers tell me that that is exactly what would most likely happen here. Rupert Murdoch’s lawyers are very expensive. So even if every allegation is proven in court, I would still be liable for something approaching £10m in costs. I’m afraid I am shying at that fence.’
Used tactically, this is the power of a Part 36 Offer.
What is a Part 36 offer?
Part 36 of the Civil Procedure Rules in England and Wales serves as a mechanism to promote settlement in litigation – designed as a potent catalyst for dispute resolution. It is essentially an offer to settle which is accompanied by serious and automatic potential consequences if not rightly considered. It raises the bar for what must be achieved by the parties at trial.
Cost consequences – an example
If you decide to make a Part 36 offer, the offer must specify a period of at least 21 days within which the offer must be accepted. This is known as the ‘relevant period’.
Imagine Party Y (Defendant) makes a ‘Part 36 offer’ to Party X (Claimant) to settle the case for £100. If Party X accepts the offer within the relevant period, Party Y will have to pay the £100, as well as Party X’s legal costs on the ‘standard basis’ up to the date of acceptance.
If Party X refuses and takes the matter to trial (perhaps thinking they can do better), they must win for £100 or more. If they win, but for even a penny less than £100, they will face the consequences which accompany a Part 36 offer. These are;
- Interest on the whole or part of the £100 at a rate of up to 10% above base rate from the date on which the relevant period expired.
- Legal costs, with those costs incurred after the expiry of the relevant period being assessed on what is called the ‘indemnity basis’ as opposed to the ‘standard basis’. This means that Party X would have to pay all the legal costs for that period save to the extent that they were unreasonably incurred, with any doubt in relation to those costs being resolved in Party Y’s favour.
- Interest on those costs at a rate of up to 10% above base rate for the same period.
- An additional amount of 10% of the damages awarded for awards of up to £500,000. For awards above £500,000, 10% of the first £500,000 of damages awarded and 5% of any damages awarded above that figure, up to an overall limit of £75,000.
What does this mean?
Costs are an important and often consequential part of litigation. They may be the biggest factor when deciding whether to bring or continue pursuing your case. Part 36 capitalises on this to push for settlement – wielding the sword of the onerous cost penalties. On receipt of a Part 36 offer, the offeree must reassess – it is now not enough to win at court, they must do better or win for more than the Part 36 offer.
Grant expressed he did not want to accept the undisclosed amount and settle the case; he much preferred seeing the allegations tried and determined before a judge. But the potential consequences of choosing to proceed to trial were now too severe.
This settlement demonstrates not only the advantages of making a Part 36 offer that is tactically positioned in the litigation timeline, but also the advantages of settling despite however strong you believe your case may be – lest you face the sword.
Disclaimer:
The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Connaught Law and authors accept no responsibility for loss that may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please don’t hesitate to contact Connaught Law. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Connaught Law.
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