How do Part 36 Offers work? Exploring Hugh Grant’s starring role

The Background to the claim

Hugh Grant is one of several high-profile individuals who has sought to bring claims against NGN in recent years, seeking to fight “…for a free press that does not distort the truth”. He claimed that reporters for The Sun, in an attempt to gain insight into his personal life, had broken into his home in London, placed a tracking device on his car and intercepted his voicemail messages. NGN have consistently denied these allegations.

NGN successfully argued in May 2023 that Hugh Grant should be statute-barred from bringing the phone hacking aspect of his claim against The Sun. NGN fell short however, in respect of the other allegations which the Judge ruled could still be heard, as Hugh Grant did not have sufficient knowledge of these allegations prior to the expiry of the limitation period. The remainder of the claims were set to go to trial in early 2025, until the most recent development which can only be presumed to have been a settlement offer made pursuant to Part 36 based on the comments made by the Notting Hill star himself.

The potential cost implications which Hugh Grant had to weigh up

An offer made in accordance with the criteria set out in the CPR, which is not accepted by the receiving party, will result in cost and interest implications following judgment – the exact nature of these consequences depends upon which party made the offer, the value of said offer and the subsequent judgment.

In its most simplest form however, Hugh Grant neatly sums up the potential implications he was facing when he said “…the rules around civil litigation mean that 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 of both sides”. Whilst the value of the offer is undisclosed, if Hugh Grant went on to succeed at trial but the Judge awarded him damages of a lesser amount, the notion that he would be penalised for doing so as he arguably should have accepted the offer and not gone to trial, is correct.

In this hypothetical scenario, despite Hugh Grant being the ‘winner’, the Judge would likely order a split costs order, meaning that he would only be awarded his costs up to the expiry of the aforementioned relevant period. Contrary to the usual rule, Hugh Grant would then be ordered to pay NGN’s legal costs with interest, from day 22 onwards, despite being the successful party, on the basis that he would have failed to obtain a judgment which was more advantageous than NGN’s offer. Hugh Grant’s lawyers would have advised him of this potential risk, and it is evident that this additional financial penalty heavily influenced his seemingly reluctant decision to accept NGN’s settlement offer.

Is the public interest a sufficient reason to override the legal consequences of Part 36?

Whilst Part 36 offers normally form the subject of strategic positioning discussions that take place between legal advisers and their clients behind closed doors, Hugh Grant’s involvement has brought Part 36 offers into the spotlight. To a non-legally trained eye, the application of Part 36 may be seen to inhibit access to justice if even a high-net-worth individual such as Hugh Grant cannot pursue what he considers to be an injustice.

Technically speaking however, Hugh Grant has not been stopped from having his day in Court, but rather the cost consequences of doing so, as a direct result of NGN’s Part 36 offer, were sufficiently prohibitive for him to settle. It is arguable therefore that this shows Part 36 offers working in the way the legal system intended them to, by encouraging parties to settle and avoiding the unnecessary time and expense of going to court, and celebrities are no exception to the rule. In a statement issued by NGN, this point was emphasised – “…it is in both parties’ financial interests not to progress to a costly trial.”

There is a counter argument which we have seen arise in these circumstances though, namely that allegations of such a nature should be tested in Court and the evidence brought into the public domain. This is especially apparent for those who consider that NGN have misused the application of Part 36, and consequently the legal system is inadvertently enabling parties with ‘deep pockets’ to effectively force the other party’s hand by offering a sum which they cannot, commercially or financially, refuse.

There is no denying that Hugh Grant, will feel shortchanged by this outcome and the inability to have the evidence tested in Court. However, given how Part 36 operates and that the costs consequences which follow are automatic (i.e. there is no judicial discretion to deviate from them if the rules have been followed), any Claimant in a similar position to Hugh Grant would have had to think very carefully before continuing with proceedings, whether their case was being brought in the public interest or not.

Please note that the application of Part 36 and its cost consequences in practice can be far more complex and nuanced than the examples given in this article, so we would recommend seeking appropriate advice before taking any related action. Please do contact one of our team of experts if we can assist.

[1] We have set out here the obligations which apply to an offer being made by a Defendant. However, Claimants can also make Part 36 offers albeit the costs consequences for a Defendant are different.