Part 36 offers in housing disrepair claims: a guide for housing professionals

Part 36 of the Civil Procedure Rules (CPR) provides a formal mechanism for making settlement offers in civil proceedings that carry specific costs consequences. In housing disrepair claims, Part 36 offers are an important tactical tool for both claimants and defendants. This article outlines how they work and what housing professionals need to understand.

What is a Part 36 offer?

A Part 36 offer is a formal offer to settle a claim (or part of a claim) made in accordance with the requirements of CPR Part 36. It is distinct from a without-prejudice offer because it carries automatic costs consequences if the party receiving the offer does not beat it at trial.

Part 36 offers can be made by either side in a disrepair claim, by the claimant tenant (offering to accept a certain sum) or by the defendant landlord (offering to pay a certain sum and/or undertake to carry out specified works).

Requirements for a valid Part 36 offer

To be a valid Part 36 offer under CPR 36.5, the offer must:

• Be in writing
• State that it is intended to have the consequences of CPR Part 36
• Specify a period of not less than 21 days within which the defendant will be liable for the claimant's costs if the offer is accepted (the "relevant period")
• State whether it relates to the whole or part of the claim or any counterclaim
• State whether it takes into account any counterclaim

If any of these requirements are not met, the offer is not a valid Part 36 offer and does not trigger the Part 36 costs consequences, it will be treated as a without-prejudice save as to costs offer instead.

Costs consequences of Part 36 offers

The key feature of Part 36 is the costs consequences it carries:

Where a claimant's offer is not beaten at trial: if the defendant fails to obtain a judgment more advantageous than the claimant's Part 36 offer, the court must, unless it considers it unjust, order the defendant to pay:

• Interest on the judgment sum at up to 10% above base rate from the date the relevant period expired
• The claimant's costs on an indemnity basis from the same date
• Interest on those costs at up to 10% above base rate
• An additional amount of up to 10% of the judgment sum (or £75,000, whichever is less)

Where a defendant's offer is not beaten at trial: if the claimant fails to obtain a judgment more advantageous than the defendant's Part 36 offer, the court must, unless it considers it unjust, order the claimant to pay the defendant's costs from the expiry of the relevant period.

Tactical considerations in disrepair claims

In housing disrepair claims, Part 36 is used strategically:

For the claimant: an early, well-calibrated Part 36 offer creates significant pressure on the defendant to settle, since a failure to beat it carries enhanced costs penalties. Where the disrepair is clear and liability is unlikely to be disputed, an early Part 36 offer maximises the costs risk to the defendant.

For the defendant: a defendant's Part 36 offer (for example, offering to pay compensation and carry out agreed works) can limit costs exposure if the case goes to trial. If the defendant's offer exceeds the judgment, the claimant faces adverse costs consequences.

Timing: Part 36 offers can be made at any stage, including before proceedings are issued. The costs consequences, however, only bite at trial, the offer does not limit recovery before trial.

Interaction with the Pre-Action Protocol

The Pre-Action Protocol for Housing Disrepair Cases encourages early settlement and contains its own provisions on offers and costs. A Part 36 offer made in compliance with the protocol at an early stage, and not accepted, is relevant to the court's assessment of costs at the end of the case, even if the formal Part 36 costs consequences require proceedings to be on foot.

Withdrawal and amendment of Part 36 offers

Part 36 offers can be withdrawn or amended, but once a relevant period has expired and the offer has not been accepted, withdrawal requires the court's permission, and the original offer remains relevant to the court's discretion on costs. Housing professionals should advise clients carefully before withdrawing a Part 36 offer that has been in place for some time.

When should you contact Support for Tenants?

Support for Tenants handles housing disrepair claims on behalf of tenants. We work with housing professionals and refer complex legal strategy questions to instructed solicitors. If you are a housing professional dealing with a disrepair claim and need to discuss the tenant's position, call us.

Call us on 0800 030 4669.

Sources

• Pre-Action Protocol for Housing Conditions Claims, England (justice.gov.uk)
• Landlord and Tenant Act 1985, Section 11 (legislation.gov.uk)
• Homes (Fitness for Human Habitation) Act 2018 (legislation.gov.uk)