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Potential ability to recover pre-action legal costs29th February 2012 Commercial
Generally a party pursuing a claim is not entitled to recover its pre-action legal costs from the other party where both parties agree to settle a claim prior to proceedings being commenced. The general exception to this rule is where the claiming party has a contractual right to recover costs.
However, in the recent case of Solomon v Cromwell Group Plc, the Court of Appeal has confirmed that where an offer is made pursuant to the provisions of Part 36 of the Civil Procedure Rules and such an offer is accepted before proceedings are commenced, the claiming party will be entitled to recover the costs it has incurred up to the date of acceptance of the offer, even though proceedings have not been and never will be commenced.
A Part 36 offer is an offer made by one party to another party in an effort to try and settle a dispute in advance of trial and/or prior to the issue of proceedings. The making of a part 36 offer automatically includes a provision for the payment of the claiming party's costs which are incurred in the proceedings and, now, in contemplation of proceedings.