If you sue or are sued and there is a trial the Judge will
usually order the loser to pay the winner's costs. In relation to
most claims, particularly claims for damages, the parties can
attempt to protect themselves from the risk of having to pay their
opponent's costs. This is done by making costs protection offers.
The easiest way to illustrate such an offer is in relation to a
claim for damages. In such a case either or both parties can offer
the other an amount that is less than the amount claimed. The
general position is that if the Court awards damages equal to or
less than the amount offered then the court will order the party
who rejected the offer to pay the offeror's costs from or shortly
after the date of the offer.
Costs protection offers can be made either within the framework
of the court rules [the Civil Procedure Rules ("CPR")] or outside
them. An offer made within the framework is called a Part 36 offer.
An offer made outside the framework is often called, a "Calderbank"
offer. Amongst other things Part 36 of the CPR sets out the costs
consequences of not beating a Part 36 offer at trial.
Parties to a dispute should consider whether it would be in
their interests to make a cost protection offer as soon possible.
Offers can be made at any time, even before proceedings have been
Another way of obtaining costs protection is by obtaining legal
expenses insurance. This can be done after a dispute has