Cost News

Helen Appleby

As all Practitioners should be aware, the Civil Procedure Rules contain specific Guidelines in relation to Part 36 offers, which was incorporated to provide certainty as to reliance upon the offers made between the parties and the consequences of the same.

Specifically, CPR Part 36.5 states:-

(1) A Part 36 offer must—
(a) be in writing;
(b) make clear that it is made pursuant to Part 36;
(c) specify a period of not less than 21 days within which the defendant will be liable for the claimant’s costs in accordance with rule 36.13 or 36.20 if the offer is accepted;
(d) state whether it relates to the whole of the claim or to part of it or to an issue that arises in it and if so to which part or issue; and
(e) state whether it takes into account any counterclaim.

Seems relatively straight forward….However, unfortunately, as all Claims do not follow the same path, neither do all offers for settlement between the parties and even offers made purportedly pursuant to Part 36, sometimes require the Courts input as to whether or not the same are compliant.

Given the potential costs consequences contained within CPR Part 36 it was inevitable that guidance would be required from the Courts in relation to interpretation.

There have been several cases that have crossed the Court’s doors recently which should be given careful consideration.

Akinola v Oyadare and Anor [2020] EWHC 2038

In this case, Deputy Master Henderson held that although the defendant’s offer met the technical requirements of CPR 36.5, a walk away offer was outside the scope of Part 36 “for a more fundamental reason”.

He stated:

“the usual meaning of “drop hands” is that the claim or claims should be discontinued with each side bearing its own costs. That would be inconsistent with Part 36. Further, there is no procedure for “withdrawing” a claim.”

Part 36 also requires costs consequences to follow as a result of an acceptance. The judge said that an offer to withdraw the claim is inconsistent with the procedure to stay the claim and as such it could not be treated as a valid Part 36 offer.

It is therefore clear to see that a “drop hands” offer cannot be validly made pursuant to Part 36. The court will consider any drop hands offers pursuant to CPR 44.2(4)(c), however the costs consequences will not be automatic.

Blackpool Borough Council v Volkerfitzpatrick Ltd [2020] EWHC 2128 (TCC)

In this case, HHJ Davies considered what the effect of a withdrawn Part 36 offer should be.

CPR Part 36.9 applies in this regard.

(1) A Part 36 offer can only be withdrawn, or its terms changed, if the offeree has not previously served notice of acceptance.
(2) The offeror withdraws the offer or changes its terms by serving written notice of the withdrawal or change of terms on the offeree.

In the instant case, during the substantive action, the defendant had made a Part 36 offer of £750,000. The claimant did in fact recover £631,510.25 at trial, effectively making them the “losing party”. However, the defendant had withdrawn the Part 36 offer before the trial.

The court had to consider whether the Claimant acted reasonably in failing to accept the offer while it was on the table, in line with Thakkar –v- Patel (2017). In this instance, HHJ Davies determined that the Claimant was in an appropriate position to undertake their own assessment and valuation of the case at the time the Part 36 offer was made and therefore they had in fact acted unreasonably in rejecting the Defendant’s Part 36 offer. In this case, the Claimant was indeed the “author of their own misfortune” and therefore the starting point was for the Judge to order the Claimant to pay the Defendant’s costs from 21 days after service of the Part 36 offer.

It is important to note that a withdrawn Part 36 offer can’t be disregarded entirely. The court must put itself into the position of the claimant at the time and not simply decide the case with the benefit of hindsight – it of course still has relevance in line with CPR 44.2 (4) (C ). It is therefore essential that all Part 36 offers are given serious consideration before preparing for and attending Trial.

Rawbank SA v Travelex Banknotes Ltd [2020] EWHC 1619 (Ch)

In this case, the claimant made a Part 36 offer to accept of 99.7% of the claim. Judgment was entered for the claimant on a 100% basis, who thereafter sought the additional costs benefits of beating a Part 36 offer. The defendant argued it was not a genuine offer and referred to AB v CD (2011) in support of their argument, that there must be some genuine element of concession.

The court did consider the factors under CPR 36.17(4) and in this case, rejected the submission that it was not a genuine attempt to conclude matters. The judge decided that he would order the defendant to pay indemnity costs and interest from 25 May 2020, when the offer should have been accepted.

The judgment, in this instance, shows that if there is a genuine concession and therefore attempt at settlement, the court will allow some of the Part 36 benefits to the successful party.


It is therefore my view that whilst CPR Part 36 offers a definitive guideline for offers made between the parties, it is essential to consider not only the format of the same, but also the continued conduct of the parties and subsequent implications concerning the same. One thing that is common through these cases is that the Court continues to consider the reasonableness of the parties conduct, was it “reasonable to reject the offer” “was it reasonable to withdraw the offer” “was it a genuine concession/attempt at settlement”. My hope is that the Court continues to consider the parties conduct when determining cost consequences both in the substantive action and when the issue of costs arise. Genuine attempts at settlement should be explored by both parties.