In the decision today in Tuson v Murphy [2018] EWCA Civ 1461 the Court of Appeal allowed an appeal against an order that a claimant accepting a Part 36 offer late should pay costs from a much earlier date than that set out in the rules. The court held that the defendant had known of all relevant matters when it made the offer and there was no good reason for departing from the normal principles. If the defendant had wanted different principles to apply it could have made a Part 36 offer.

“… it seems to me, that in the case of a claimant’s acceptance of a defendant’s Part 36 offer, where the acceptance is given after the expiry of the relevant period, if nothing emerges from the facts to show that the defendant’s assessment of the risks and benefits involved in making the offer he made is in some significant way upset or contradicted or misinformed, it is highly unlikely to be unjust to apply the default rule. The defendant must be taken to have been content to compromise on the basis of paying the claimants’ costs on the standard basis to the end of the relevant period by reference to his assessment of matters as they stood when the offer was made. If nothing is shown to the court clearly to upset or undermine that assessment, there will almost always be nothing unjust about holding the defendant to it.


The claimant was injured on the 19th August 2010 in a riding accident. Liability was agreed with a 15% reduction for contributory negligence. Her case was that in addition to breaking her right arm she had developed Obsessive Compulsive Disorder.

Her claim was initially valued at £1.5 million on the basis that she should never work again.



In November 2013 the claimant obtained a franchise in a playgroup “messy play” workshops for children. The first session began in January 2014.


The claimant served her witness statement in April 2014.  There was no mention of the workshops, although there were descriptions of the effect of OCD. Similarly the claimant’s schedule of loss made substantial claims for future loss of earnings.


The claimant instructed a psychiatric report. No mention was made of the playgroup activity.  Similarly the claimant’s employment expert, who reported on loss of earnings, had not been told about the playgroup.


The defendant found out about the playgroup in June 2015, they informed the claimant’s solicitors.


The claimant then filed a third witness statement.

    1. In her third witness statement dated 7 September 2015 the Claimant set out in detail the involvement she had had with the playgroup. She wrote:-
“6. Whilst searching online for local groups I could attend and keeping in mind my personal CBT goal of taking Harry to ‘messy’ play to challenge myself, I discovered the playgroup organisation Creation Station. I went to a taster session with Paul and Harry in York around October 2013. It was suggested by Creation Station that I could purchase a franchise to run my own group.
7. In one way I was excited and optimistic as I hoped it would benefit my personal CBT focused goals, and give me a reason to get up and do something and that Harry would benefit from mixing with other children. There was also the possibility of making some friends. Getting out of the house would hopefully have its own benefits for me but also give some respite to my parents.
8. I never saw this venture as a way of making any income and in fact I lost money. The purchase was more about me making a playgroup for Harry and me that suited us time-wise and focused upon my CBT goals. I only ever envisaged being able to cover my costs which I failed to do. I feel very guilty about not contributing and Paul and my parents paying for everything.
41. I stopped virtually all activities by the time I was admitted to ADRU which I believe was October 2014. I did the odd party I was committed to and did think about doing something at Christmas but decided against that idea.
42. Creation Station failed in the end and was bound to fail for any of two reasons. On the one hand, it did not make any money and was a financial drain. My OCD restricted what I could attempt to do which meant that it could never make money. On the other hand, even if it was a successful business, regardless of the restrictions of running it during restricted hours, I could not ultimately cope with it because of my OCD. And nothing has changed.”
    1. Under the heading “Why I did not mention the playgroup in my evidence” she wrote:-
“64. I should have raised this matter before. I know that.
65. However, please do not think this means I have misrepresented my health and my claim because I have not.
66. The reasons for not mentioning this before are a little complicated but essentially because I did not want to open myself up to criticism generally but especially in case I failed in attempting to operate the playgroup and then indeed it having failed.
67. I have said that the playgroup was not a business – I believed it was a way to combat/control my OCD in a goal based therapy.”
    1. After strongly criticising the Defendant’s solicitors and insurers, saying that she felt “violated and disgusted by their attacks on her” she continued:-
“76. The point is that my family and I are always just trying to do our best with varying degrees of support and upsetting attacks from the Defendant.
77. Creation Station was not raised in previous statements partly because it was never regarded as gainful employment – it was just a way of giving me something other than OCD to focus on. This is something I feel strongly about when I mentioned that my life is not a case. My feelings of guilt, shame and being a financial burden are some of the main reasons I began to think about starting Creation Station, but the driving force was being personal CBT therapy. I did not want to attract more criticism for my family and I over a course of action that was rehabilitation and not a business.
78. What I was doing with the playgroup was a million miles away from normal, never mind normal paid work. In some sense it does not add anything to the case except perhaps to support it, through highlighting yet again what my OCD prevents me from doing.
79. I should say that I had briefly mentioned to my solicitor the aim to attend playgroups and perhaps looking at an art group.
80.I am sorry that I did not raise the playgroup before because I should have done. In my mind it has very little bearing on what is said about my claim. Whilst this is true I can see that not raising the subject was misguided.
81. Apart from being wrong, the Defendant’s aggressive reaction and their threats have been far more upsetting than would have been the case. They have taken my attempts to improve my condition and suggested I have been deceitful about my health, which is not the case, and this diminished my feelings of progress.
82. The mere fact I have had to write this to justify myself has caused me great stress and anxiety.”



The defendant made a Part 36 offer. The terms of that offer are significant.

“We are instructed by Debbie Murphy t/a Angel Riding Centre Defendant to offer £352,060 gross in full and final settlement of this claim.
This offer is made in accordance with Part 36 of the Civil Procedure Rules. The terms of the offer are as follows:

1. Our client offers £352,060 gross of apportionment by way of a lump sum in full and final settlement of your client’s claim. This offer is made in relation to the whole of your client’s claim.

2. The sum is gross of benefits repayable to the CRU. Accordingly, if the offer is accepted, any such benefits will be deducted from this sum. We have obtained an up to date CRU certificate confirming nil recoverable benefits are owing.

3. This offer is intended to take account of the 85:15 liability apportionment and is NET of interim payment previously made totalling £72,600. The net amount offered is therefore £299,251.00.

4. If the offer is accepted within 21 days, our client will pay your client’s legal costs in accordance with Part 36 Rule 20 of the Civil Procedure Rules.

If your client accepts the offer after the 21 day period then either we will need to agree the costs liability or the court will have to make an order as to costs.”


Time for acceptance of the Part 36 offer expired on 8 October 2015.  The claimant did not accept the offer.  The defendant was given permission to instruct a new psychiatrist whose report, served on 23 November 2015, disputed causation of the claimant’s OCD.

This may have been a factor in the claimant accepting the defendant’s offer on the 1st December 2015. The trial of quantum was set for the 9-11 December 2015.


The Circuit Judge held that the defendant had been misled. He made an order that the claimant pay the defendant’s costs from 1st April 2014, the date on which the claimant had began to mislead the defendant.


The Court of Appeal overturned the decision of the Circuit Judge and made a more “conventional” costs order.

“Grounds of Appeal
The availability of an alternative form of offer
    1. The Claimant’s principal ground of appeal is that where a Defendant’s Part 36 offer (relating to the whole claim and made more than 21 days before the start of a trial) is accepted within 21 days of being made the Claimant is entitled by virtue of CPR 36.13(1) to her costs up to the date on which notice of acceptance is served on the offeror. Thus, if the Claimant had accepted the offer of £352,060 on or before 8 October 2015 she would have been entitled to her costs as of right.
    2. Where a Part 36 offer is accepted outside the 21 day period CPR 36.13(5) provides that:-
“… the court must, unless it considers it unjust to do so, order than a) the claimant be awarded costs up to the date on which the relevant period expired; and (b) the offeree do pay the offeror’s costs for the period from the date of expiry of the relevant period [of 21 days] to the date of acceptance.”
    1. CPR 36.13(6) states that in considering whether it would be unjust to make the orders specified in paragraph (5) the court must take into account all the circumstances of the case including the matters listed in Rule 36.17(5). One of these is “the information available to the parties at the time when the Part 36 offer was made“.
    2. It is now accepted that the Claimant must pay the Defendant’s costs in the court below from 8 October 2015 until her belated acceptance of the offer on 1 December 2015. Mr Mallalieu, however, submits that the judge’s order that the Claimant should pay the Defendant’s costs from April 2014 onwards was a retrospective penalty which was unjust and disproportionate. Before considering this issue I will deal with the judge’s characterisation of the Claimant’s conduct as dishonest and misleading.
Dishonest and misleading conduct?
    1. In his skeleton argument in this court counsel for the Claimant submitted at paragraph 5:-
“The judge penalised the Claimant for conduct – her non-disclosure of her attempt to run a playgroup (Creation Station) for a few hours a week which had failed and resulted in a loss. This was despite the Defendant having full knowledge of this conduct at the time that the Part 6 offer was made and despite the evidence not proving that the Claimant had exaggerated her claim (her contention was that it in fact supported her case that she was not able to undertake paid employment).”
    1. In his witness statement of 3rd March 2016 the Claimant’s solicitor, Mr Richard Brooks submitted at paragraph 20:-
“The non-disclosure plainly opens up the Claimant to questions about her credibility, but, as I put to BLM solicitors, it is a very long way from demonstrating the Claimant has in fact fabricated her disability.”
    1. I agree with Mr Brooks that the Claimant’s modest attempts to run a playgroup do not amount to evidence that the Claimant’s disability was fabricated. If they had, the Defendant’s would not have made an unconditional Part 36 offer in excess of £350,000 (allowing for the contributory negligence deduction, valuing the claim at over £400,000). This is not a case of gross exaggeration on the scale of Summers v Fairclough Homes Ltd [2012] 1 WLR 2004. But the Claimant’s attempts to run the playgroup were certainly material to her argument that she was, and might remain for a long period, incapable of any work.She plainly withheld the information about the playgroup from her solicitors, since if she had told them I have no doubt that they would have given disclosure of the relevant documents and would not have allowed the first witness statement to be served without any mention of the playgroup. Nor would the Claimant’s employment expert have reported in the terms he did if he had been told about the playgroup. The Claimant clearly made a deliberate decision to withhold the information from her advisers, the Defendant’s advisers and the court, and the reasons given for this in her third witness statement are unconvincing. The judge was in my view entitled to describe her conduct as dishonest and misleading.
    2. Nevertheless, I cannot agree with the judge’s decision on costs or the reasoning which led him to that decision. His judgment, with respect, does not grapple with the argument that the Defendant’s Part 36 offer was unconditional, rather than a Calderbank offer, and that it was made with knowledge of the Claimant’s material non-disclosure.
    3. The Defendant’s insurers, through their very experienced solicitors, made the unconditional Part 36 offer in full knowledge of the Claimant’s material non-disclosure, and knowing that acceptance within 21 days would (by virtue of CPR 36.13(1)) give the Claimant her costs to date as of right. Mr McCluggage valiantly submitted that the insurers were entitled to choose this option in the interests of greater certainty, and that once the 21 day period had expired the Claimant’s dishonesty rendered her liable to an adverse costs order in the exercise of the judge’s discretion.
    4. It is striking, however, that in the Summers case, where the dishonesty of the Claimant was on a scale far greater than in the present case, the Supreme Court emphasised the importance of the Defendant’s ability, in a claim for damages, to make an offer on special terms as to costs. At paragraph 54 Lord Clarke JSC said:
“There was much discussion in the course of the argument as to whether the defendant can protect its position in costs by making a Part 36 offer or some other offer which will provide appropriate protection. It was submitted that a Part 36 offer is of no real assistance because, if it is accepted, the defendant must pay the claimant’s costs under CPR 36.10. We accept the force of that argument. However, we see no reason why a defendant should not make a form of Calderbank offer (see Calderbank v Calderbank [1976] Fam 93) in which it offers to settle the genuine claim but at the same time offers to settle the issues of costs on the basis that the claimant will pay the defendant’s costs incurred in respect of the fraudulent or dishonest aspects of the case on an indemnity basis. In Fox v Foundation Piling Ltd [2011] EWCA Civ 790 the Court of Appeal correctly accepted at para 45 that the parties were entitled to make a Calderbankoffer outside the framework of Part 36. The precise formulation of such an offer would of course depend upon the facts of a particular case, but the offer would be made without prejudice save as to costs and, unless accepted, would thus be available to the defendant when the issue of costs came to be considered by the trial judge at the end of a trial.”.
    1. The judge referred to this paragraph of Lord Clarke’s judgment in Summers, but, with respect, failed to follow the guidance given in it.
CPR 36.14(4): the threshold of “injustice”
    1. Mr McCluggage reminded us that in SG v Hewitt [2015] 5 Costs LR 937 at paragraph 29 Black LJ said:
“I do not think it wise to attempt to prescribe or restrict in the abstract the circumstances in which the court may reach the conclusion that it is unjust to make the normal order. Rule 36.14(4) requires that, in considering whether it is unjust to make the normal order, the court must take into account all the circumstances of the case. The four factors specifically identified as relevant cast quite a wide net on their own but they are not the only matters that fall for consideration and anything else which is relevant must be considered as well. Costs decisions are particularly sensitive to the facts of the individual case.”
    1. I agree that costs decisions are fact-sensitive and that it may be unwise to attempt to list the categories of case in which it would be unjust to make the normal order. But it is painting with too broad a brush to say that the decision is entirely a matter of discretion, either generally or even in any case where a party has behaved dishonestly.
    2. In Webb v Liverpool Women’s NHS Foundation Trust [2016] 1 WLR 3899 at paragraph 38, Sir Stanley Burnton (with whom Simon and Gloster LJJ agreed) said that Part 36 is a “self-contained code”, and continued:-
“[A] successful claimant is to be deprived of all or part of her costs only if the court considers that would be unjust for her to be awarded all or that part of her costs. That decision falls to be made having regard to “all the circumstances of the case”………… The principles were aptly summarised by Briggs J (as he then was) in Smith v Trafford Housing Trust [2012] EWHC 3320 (Ch):

“13. … For present purposes, the principles which I derive from the authorities are as follows:

a) The question is not whether it was reasonable for the claimant to refuse the offer. Rather, the question is whether, having regard to all the circumstances and looking at the matter as it affects both parties, an order that the claimant should pay the costs would be unjust: see Matthews v Metal Improvements Co. Inc [2007] EWCA Civ 215, per Stanley Burnton J (sitting as an additional judge of the Court of Appeal) at paragraph 32.

b) Each case will turn on its own circumstances, but the court should be trying to assess “who in reality is the unsuccessful party and who has been responsible for the fact that costs have been incurred which should not have been”: see Factortame v Secretary of State [2002] EWCA Civ 22, per Walker LJ at paragraph 27.

c) The court is not constrained by the list of potentially relevant factors in Part 36.14(4) to have regard only to the circumstances of the making of the offer or the provision or otherwise of relevant information in relation to it. There is no limit to the types of circumstances which may, in a particular case, make it unjust that the ordinary consequences set out in Part 36.14 should follow: see Lilleyman v Lilleyman (judgment on costs) [2012] EWHC 1056 (Ch) at paragraph 16.

d) Nonetheless, the court does not have an unfettered discretion to depart from the ordinary cost consequences set out in Part 36.14. The burden on a claimant who has failed to beat the defendant’s Part 36 offer to show injustice is a formidable obstacle to the obtaining of a different costs order. If that were not so, then the salutary purpose of Part 36, in promoting compromise and the avoidance of unnecessary expenditure of costs and court time, would be undermined.”

    1. Thus the “formidable obstacle” test set out by Briggs J in Trafford received the endorsement of this court, which applied it to the case of a successful claimant.
    2. In Tiuta PLC (in liquidation) v Rawlinson & Hunter (a firm) [2016] EWHC 3480 (QB) (a judgment given after Judge Harris’ decision now under appeal) a Part 36 offer had been made at a very early stage of the dispute with a 21 day period for acceptance expiring on 11 January 2016. The Claimants served notice of acceptance but only on 3 October 2016, nearly nine months after the 21 period expired. Andrew Baker J noted at paragraph 14 that:-
“It is common ground that the persuasive burden must lie on the party contending that the court should not rest with the default rule [that the claimant accepting an offer late should have costs up to the expiry of the period for acceptance but should pay the defendant’s costs thereafter] on the basis that it would be unjust to do so. In that regard, and as general background to the consideration of injustice the authorities have repeatedly emphasised the importance of remembering that the part 36 regime is there to provide a clarity and balance for the encouragement of the resolution of claims that would otherwise be litigated through to a trial.”
    1. At paragraphs 29-30 Andrew Baker J said:
“The essence of the Part 36 strong prima facie justice is that the Part 36 offer, to have been a qualifying Part 36 offer, must have involved a considered acceptance of the value, as much to the offeror as to the offeree, of the claimant recovering its pre-offer costs, together with whatever is being offered to resolve the substantive claims. The essence of the enquiry as to injustice where that offer is accepted only after the relevant period, as it seems to me, must therefore be whether there is something in the particular circumstances of the case that undermines that assessment on the part of the offeror, particularly if that is the consequence of, although it is elusive to see in what circumstances this will be so, the fact that the offer has been accepted after, rather than within, the relevant period.
I accept in principle that it cannot be sufficient to say that there is no injustice that the consequence in question would have applied as of right if the offer had been accepted within the relevant period. As a matter of logic, that would prove too much and it would never be possible to depart from the claimant’s pre-offer costs default rule that I am considering. It would therefore, as a matter of analysis, contradict CPR 36.13(6). However, it does mean, it seems to me, that in the case of a claimant’s acceptance of a defendant’s Part 36 offer, where the acceptance is given after the expiry of the relevant period, if nothing emerges from the facts to show that the defendant’s assessment of the risks and benefits involved in making the offer he made is in some significant way upset or contradicted or misinformed, it is highly unlikely to be unjust to apply the default rule. The defendant must be taken to have been content to compromise on the basis of paying the claimants’ costs on the standard basis to the end of the relevant period by reference to his assessment of matters as they stood when the offer was made. If nothing is shown to the court clearly to upset or undermine that assessment, there will almost always be nothing unjust about holding the defendant to it. One should never say never, of course; one cannot be entirely prescriptive. For example, in particular, one can envisage, and I will come back to that in this case, that there could be a change of circumstances after the expiry of the relevant period not known to the defendant which can be demonstrated – bearing in mind that we are not descend into lengthy satellite trial litigation over the question of the Part 36 consequences – would or might well have led to the withdrawal of the Part 36 offer prior to its actual acceptance.” [emphasis added]
    1. This decision was cited with approval by Warby J in Optical Express Ltd v Associated Newspapers Ltd [2017] EWHC 2707 (QB).
    2. I agree entirely with what Andrew Baker J said in Tiuta. In particular, he was right to emphasise the difference between:
a) a case where the facts known to the defendant’s advisers at the time of the Part 36 offer do not change significantly during the period before the delayed acceptance; and
b) a case where the defendant’s advisers’ assessment at the time of making the Part 36 offer of the true value of the case, based on the facts then known to them, is upset or undermined by subsequent events or subsequently discovered facts.
In the first type of case it is highly unlikely to be unjust to apply the default costs rule.
  1. Even though the Claimant’s material non-disclosure can properly be described as dishonest, and was certainly misleading, I regard the judge’s exercise of his discretion as flawed. I would allow the appeal and order the Defendant to pay the Claimant’s costs up to 8 October 2015, the Claimant remaining liable to pay the Defendant’s costs from 8 October to 1 December 2015.