As part of a series of webinars by Kings Chambers Costs and Funding Group I recently recorded a webinar on Part 36 Recent cases and what they can teach us.  One case, in particular, cause some comment and questions from many viewers.   This was the observations of Mr Justice Kerr in Equitix Eeef Biomass 2 Ltd v Fox & Ors [2021] EWHC 2781 (TCC) that a party judging a Part 36 offer had to engage in “inspired guesswork”.  It is necessary to go back a few years to remind people how stringently Part 36 can be applied. (The webinar is available online here.)


“… in personal injury claims as in other litigation, offers to settle are often made at an early stage when the evidence is incomplete (either on liability or quantum or both). In these circumstances, it is the job of the claimant’s advisors to weigh up the merits of the Part 36 offer and give the claimant appropriate advice. I accept that the exercise involves judgement and experience,”


In this case the claimant had obtained judgment for £11 million.  The claimant had made a Part 36  offer  of  £5,471,093.60. The judge considered some of the defendant’s complaints that it had not been able to carry out a full assessment of the offer until later in the litigation when further reports were served.  This argument was not accepted by the judge.


I reject the defendants’ contentions. As to the first, parties frequently face the pressure of a Part 36 offer without all pieces of the jigsaw in place. Much of the purpose of Part 36 would be lost if it were otherwise; the costs which the regime was intended to prevent being incurred, would have to be incurred before the normal consequences of the offer could flow. A well judged Part 36 offer is often based on inspired and educated guesswork, which the other party must also display when deciding whether to accept it.”



Many of the questions that arise out the webinar related to the dilemma that litigators face when an “early” Part 36 offer is made.  Will the courts have any sympathy for a party who waits for more information? The blunt answer to this is often “no”, or at least not very often. Certainly not often enough for any litigator to decide that this is a prudent course of action.



The judgment in Briggs -v- CEF Holdings Ltd [2017] EWCA 2363 (Civ), demonstrates the need to give clear warnings of the risks of Part 36 offers even in cases where the prognosis is uncertain and it is not possible (at the time the offer is made) for the recipient of the offer to properly value the case. The fact that it is difficult to form a view as to the outcome of the litigation does not, normally, provide a basis for displacing the normal rule as to Part 36 costs.



The claimant was injured in 2010. Proceedings were issued. In September 2012 the defendant made a Part 36 offer of £50,000. On the 2nd June 2015 the claimant accepted that offer. The claimant made an application for an order that the defendant pay the claimant’s costs up to October 2014.  The district judge allowed that application. The defendant appealed to the Court of Appeal.


The Court of Appeal overturned the District Judge’s order.  The District Judge held that the medical uncertainty up until October 2014 made it appropriate to make a different order. The Court of Appeal did not agree. Lord Justice Gross stated:

 “In my judgment, it is very important not to undermine the salutary purpose of Part 36 offers. It is important too that in considering often attractively advanced submissions as to uncertainty the court should not be drawn into microscopic examination of the litigation details. It is true that every case in this area is fact-specific but the important point is that there is a general rule which emerges from Part 36, namely, that if the offer is not accepted within time then the claimant bears the costs of the defendant until such time as the offer is accepted. If, of course, the offeree can show injustice, then a different situation will prevail – but it is up to the offeree to show injustice, not simply that it may have been difficult to form a view as to the outcome of the litigation. The whole point of the Part 36 offer is to shift the incidence of the risk as to costs onto the offeree. As observed in the note in Civil Procedure (set out above), it is important not to undermine that salutary purpose. Nothing in these observations is in any way at odds with SG v Hewitt. For my part, with respect, SG v Hewitt was a very clear case on the other side of the factual line. It was a very extreme case concerning brain damage to a small child. That is a very different situation from that prevailing here where, as one of the contingencies of litigation, it was perhaps difficult to work out how it might go. As Stanley Burnton J observed in the Matthews case, that is not infrequently the case and it is to guard against that risk that a Part 36 offer is made…”

38. Nonetheless, I find the progress of the litigation in this case very troubling. It is sufficient, for my part, to conclude that I can see nothing here which is distinguishable from the usual litigation risk. On the facts here, quite plainly the decision did not await Mr Chell’s report. That came in October 2014. The claimant carried on. Notwithstanding the joint report shortly thereafter which, in my judgment, holed the claimant’s case below the waterline, the claimant continued, all the way through to June 2015. The reality here was that it was the joint report which undermined the claimant’s position. It was not a problem of awaiting the guidance in Mr Chell’s October 2014 report. Until then, there were uncertainties in litigation and the usual contingencies of litigation risks. Struggle though I have, I have been unable to detect anything which would render it unjust for the usual order to operate.
39. I have considered too the via media of the stay. At first blush, I confess to being somewhat attracted to it, and I might have been persuaded by it had the suggestion of the stay followed promptly on the defendant’s Part 36 offer in September 2012, but it did not. It followed a good deal of time later. Even without a finding that the photograph demonstrates exaggeration, nonetheless there is some force in Mr Jones’s submission about the ever-increasing size of the claim which accompanied certainly the end of the stay period. I am not therefore persuaded that in this case, albeit it might in many others, a stay justifies displacing the usual rule.
40. In the circumstances, though I would always hesitate long and hard before interfering in a costs appeal, with great respect, the decision of the judge cannot stand. I understand the sympathy which perhaps informed his approach but, with great respect, the decision was wrong in principle in failing to give effect to the purpose underlying Part 36 offers. If I had to express it in terms of the test in SG v Hewitt at [50], I would be driven to conclude that the conclusion was plainly wrong within the meaning of that paragraph. I reach that conclusion with respect for the judge, but ultimately on the facts before this court that is the conclusion to which I am driven. There is, in short, nothing unjust which has been identified by the judge to warrant departing from the usual order.


Another example can be seen in the judgment of Mrs Justice Lambert in Campbell -v- Ministry of Defence [2019] EWHC 2121 (QB). The claimant had to bear the usual costs consequences and pay the defendant’s costs for a 13 month period.  The judgment emphasises the risks posed by Part 36 offers, the role that the lawyer has to play in making a “judgement call”, and the possibility of applying for a stay, which would, at the very least, reduce the escalation of costs.


The claimant brought an action for damages for personal injury.  Liability was admitted. In January 2018 the defendant made a Part 36 offer of £100,000. That offer was accepted by the claimant on the 22nd March 2019, 13 months after the time limit for acceptance had expired.


The claimant applied for an order that he be awarded his costs up to the 19th February 2018, with no order for costs thereafter, on the basis that the application of the usual rule would be unjust.


The judge reviewed the rules and the relevant principles.  The review of the case law is a salutary reminder of the difficulties involved for a claimant seeking to obtain a “different” order.

4 The legal framework is not controversial. The starting point is CPR 36.13 (4) which at (b) provides that where, as in this case, a Part 36 offer which relates to the whole of the claim is accepted after expiry of the relevant period, the liability for costs must be determined by the court unless the parties have agreed costs. CPR 36.13(5) provides that, in the event the parties are unable to agree the costs liability then the court must, unless it considers it unjust to do so, order that the offeree (in this case, the Claimant) be awarded the costs up until the date on which the relevant period expired but that thereafter the offeree should bear the offeror’s costs from the date of expiry of the relevant period to the date of acceptance.
In considering whether the normal rule would produce an unjust outcome, the court is required to take into account all of the circumstances of the case (CPR 36.13(6)) including the matters identified in CPR 36. 17(5). Those are:
(a) the terms of the Part 36 offer;
(b) the stage in the proceedings when any Part 36 offer was made, including, in particular, how long before trial started the offer was made;
(c) the information available to the parties at the time when the Part 36 offer was made;
(d) the conduct of the parties in the provision of information for the purposes of enabling the offer to be made or evaluated; and
(e) whether the offer was a genuine attempt to settle the proceedings.
6 The court must therefore approach the question of the appropriate costs order by considering (by reference to the factors above) whether it would be unjust to apply the presumption in 36.13(5) and, only if the court does so conclude, then go on to determine the appropriate alternative order by reference to CPR 44.3. The court must guard against making an exception from the norm on the grounds that the regime itself is harsh or unjust but must find something about the particular circumstances of the case which takes it out of the norm (see Downing v Peterborough & Stamford Hospitals NHS Foundation Trust [2014] EWHC 4216 at [61]) and keep in mind the salutary purpose of the Part 36 regime which is to promote compromise and avoid unnecessary expenditure of costs and court time (see Smith v Trafford Housing Trust [2012] EWHC 3320 (Ch) at [13]). Finally, the burden is on the offeree to show injustice: uncertainties in the litigation and the usual contingencies of litigation do not render it unjust for the normal costs order to operate (see Briggs v CEF Holdings Ltd [2018] Costs 123). Subject to this guidance, the court exercises a broad discretion as to the appropriate costs order.


The claimant argued that the normal principles as to costs were displaced because of the particular facts of the case.

“Mr Ridgway, who appears for the Claimant, submits that the burden of displacing the normal order is discharged in this case because the Claimant was not, during the period for acceptance, able to quantify fully the claim. The claim included a claim for loss of earnings, the value of which depended upon the success or failure of the Claimant’s application for a commission. The outcome of that application was not known until October 2018. The Claimant then had to undergo various occupational health assessments to establish whether he was fit to take up any post in the RAF and, although he had learned that he was to be posted as a Unit Welfare Officer in December 2018, there remained some uncertainty over whether he would be fit to take up the job given his phobia of flying. In January 2019 the Claimant’s solicitors learned that the medical board was not concerned by the phobia of flying and so updated employment evidence dealing with promotion prospects was then obtained. It was only when all of these steps had been taken that advice on the merits of the Part 36 offer could be given. Mr Ridgway accepted that the Claimant had not sought a stay of the action but submitted that there had been an adjustment to the court directions to delay the obtaining and exchange of expert evidence from employment consultants until after the results of the Commission Board were known. Mr Ridgway also submits that the Defendant would have been in a much better position than the Claimant to know whether the commission process was likely to be successful.”


The judge rejected the claimant’s arguments.  The offer was a serious one, it was the role of the claimant’s lawyers to evaluate the offer at the time it was made. It was not unjust for the claimant to bear the usual costs consequences.

9 In my judgment the usual costs order should be made in this case: the Claimant should pay the Defendant’s costs from the last date of expiry of the Part 36 offer. I reach this conclusion for the following reasons.
a. I accept that at the time when the offer expired, the evidence concerning the Claimant’s prospects of promotion was incomplete. However, in personal injury claims as in other litigation, offers to settle are often made at an early stage when the evidence is incomplete (either on liability or quantum or both). In these circumstances, it is the job of the claimant’s advisors to weigh up the merits of the Part 36 offer and give the claimant appropriate advice. I accept that the exercise involves judgement and experience, but, here, the Claimant had the benefit of specialist personal injury lawyers with a sub-specialisation in military claims. As such they were in as good a position as any advisor to evaluate the Claimant’s career prospects and to give him advice on the offer.
b. If, having considered matters, the Claimant’s advisors had concluded that his career prospects were so uncertain as to make any evaluation wholly speculative, then the appropriate course would have been to have made an application to the court for the action to be stayed pending the outcome of the application to the Commission Board. Had an application for a stay been made, then the court would have been able to consider prospectively the issues which have, many months later, been raised before me in this hearing and make an order which was fair to both sides. Importantly, had a stay been granted then the Defendant would not have incurred costs after the time for acceptance of the offer had expired.
c. The Claimant did not seek a stay of the action. Mr Ridgway was unable to tell me why not. Although I accept that there was some modification of the timetable to put back the expert evidence until after the outcome of the Commission Board was known, the Defendant continued to incur considerable costs throughout the 13-month period during which the Claimant could have accepted the settlement offer, including the costs associated with exchange of witness statements and expert evidence.
d. Even after the outcome of the Commission Board was known in October 2018, the Claimant did not apparently re-visit the merits of the Part 36 offer but waited a further 5 or 6 months before accepting the offer. I accept that the underlying logic was the need to obtain further evidence concerning the Claimant’s career prospects for the purpose of valuing the claim for future losses, but in the absence of a stay, the sequential obtaining of evidence placed the Claimant at risk of an unfavourable costs order in due course: a risk which might have been avoided if an application for a stay had been made.
e. Finally, I reject Mr Ridgway’s submission that the Defendant was in a better position to predict the outcome of the Claimant’s prospects of succeeding before the Commission Board. Both the Commission Board and the Occupational Health Board are independent of the Defendant and I accept that information is not funnelled back from either of those bodies to the Defendant or its solicitors. I do not therefore accept that this is one of those rare cases in which the Defendant was privy to information which would assist it uniquely in valuing the claim.
10 For these reasons, I do not find that it would be unjust to make an Order which reflects the normal consequences of a late acceptance of a Part 36 offer. The offer to settle in the sum of £100,000 was not a tactical offer but represented a serious attempt to resolve the claim. It deserved careful attention by the Claimant and his team. Having sought unsuccessfully to obtain a further extension of time for its acceptance the Claimant continued the litigation at his own costs risk, a risk which could have been avoided had he made an application for a stay.