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Funding and Costs

• “Funding” is about who provides the money to pay a client’s solicitor while the case is running
• “Costs” is about getting a court order that one party should pay all or some of the lawyers’ charges that are incurred by another party. This is usually done at the end of a case, or the end of an interim hearing


What are costs?
These are costs "of and incidental" to the proceedings WB 44.2.3
 Recovering costs from the losing party (who then pays two lots of costs) ("costs shifting")

 Solicitor’s hourly charges for work done on a case
 Unit costs for letters and telephone (unit = 6 mins)
 Disbursements: court fees; travel expenses; experts’ fees
 Counsel’s fees (briefs; conferences and paperwork)


Once a claim is started, recoverable costs include costs incurred before the claim was issued which are related to the dispute WB 44.2.3

But not the costs of issues dropped during the pre-action protocol stage
Nor the costs of a stand-alone ADR process, particularly if pre-issue

 There is also a partial system of "fixed costs", which where it applies prescribes the amount payable for certain steps in the case
 And a system of "scale costs" for certain IP cases


 Costs orders are discretionary CPR r. 44.2(1)
 Normal rule is loser pays winner (“costs follow the event”) r. 44.2(2)

"The CPR set out a complete code on costs" WB 44x3.17; 44.2.11

Costs orders are made...

A costs order should...

Costs orders are made:
• at the end of interim hearings
• at the end of trials
• at the end of appeal hearings
• as an adjunct to enforcement
• at the end of hearings to assess costs

A costs order should:
• state which party has to pay costs to the other
• state what percentage of costs are to be paid (if applicable)
• deal with how much is payable


Processes to decide how much is payable ("assessment" etc):

• the parties may agree the figure for costs in advance
• court may make a summary assessment at the hearing itself
• the parties may seek to agree a figure after the hearing
• the court may make a detailed assessment after the hearing
• if the figure is to be arrived at after the hearing, the costs order must state the basis of assessment


Basis of assessment. Either:

• standard basis
• indemnity basis


Costs follow the event

Need a clear "winner"
• this is determined as a matter of common sense, and requires a result in real life WB 44x3.6
• in money claims this is the party who receives money as a result of the case

• perhaps unless a small amount is recovered, with the overall result being in line with the defendant's allegations (Painting v University of Oxford [2005] EWCA Civ 161, where D alleged C was exaggerating)
• split trial: wait to conclusion of case as a whole WB 44x3.5
• a judge should be slow to embark on deciding costs if there is no trial eg because the claim settles (apart from costs)


Claim and counterclaim APA Civil para 46.22
Principle that costs follow the event means the starting position is that:

• winner on the claim is awarded costs against the loser on the claim
• winner on the counterclaim is awarded costs against the loser on the counterclaim
If C wins the claim, and D wins the counterclaim, these two costs orders can be set-off against each other under r. 44.12.


Horth v Thompson [2010] EWHC 1674 (QB) WB 44x.3.19
Refers to the difficulties caused by Medway Oil [1929] if the costs order is split with costs of the claim going to one side, and costs of the counterclaim going to the other. Medway Oil says that when costs are assessed the costs judge is not allowed to apportion costs, but instead has to attribute each item ("divide") to either the claim or counterclaim.

To avoid this difficulty, the trial judge should be invited to make a percentage costs order.


Claimant suing two defendants APA Civil para 46.16
Principle that costs follow the event means the starting position is that:

• winner on the claim by C against D1 is awarded costs against the loser on that claim
• winner on the claim by C against D2 is awarded costs against the loser on that counterclaim


Bullock and Sanderson orders WB 44.2.8

Factors are:

If C wins against D1, but loses against D2, the above position may be altered if the court makes a Bullock or a Sanderson order. One of these can only be made if joining both D1 and D2 was reasonable.

Factors are:
• claims against D1 and D2 in the alternative
• claims against D1 and D2 connected
• one defendant blaming the other
• C did not know which of D1 and D2 was at fault


Bullock Order

Sanderson Order

Bullock order
D1 pays C the costs of the claim between C and D1
C pays D2 the costs of the claim between C and D2
D1 reimburses C the costs C has paid to D2

Sanderson order
D1 pays C the costs of the claim between C and D1
D1 pays D2 the costs of D2 in the claim between C and D2


Third Party Claims WB 44.2.9
Arkin v Borchard Lines Ltd (Nos 2 & 3) [2005] 1 WLR 3055
CPR, r. 20.3(1) says a Part 20 claim is treated as if it were a [separate] claim.

Therefore the usual position is that costs between D and TP depends on who wins the Third Party claim ("costs follow the event").
However, in suitable cases the discretion as to costs means the court has full power:
• to make costs orders between C, D and any TPs as justice may require
• includes ordering C to pay TP's costs (or vice versa)


Non-party costs order WB 44.2.3
The discretion on costs (which ultimately derives from the SCA 1981, s. 51), is wide enough to allow the court to make an order that a person who is not a party to the proceedings should pay the costs. This is for exceptional cases.

Aiden Shipping Ltd v Interbulk Ltd [1986] AC 965
Typically, non-party costs orders may be made against:
• a director who orchestrates litigation on behalf of a company
• a third-party funder of litigation (Arkin v Borchard Lines Ltd (Nos 2 & 3) [2005] 1 WLR 3055)


Costs are discretionary. The question is: should the usual rule that the loser pays the winner be departed from because there is some sufficient reason? e.g.

• Have the parties conducted themselves reasonably and in compliance with the overriding objective?
• Has the winner been only partially successful?
Having the possibility that the court may make some other order on costs:
• supports the conduct of litigation in a proportionate manner
• discourages excess, or a "kitchen sink" approach to litigation


Exercise of discretion
See CPR, r. 44.2(4), where the relevant factors are listed.
(4) In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including –

(a) the conduct of all the parties;
(b) whether a party has succeeded on part of his case, even if he has not been wholly successful; and
(c) any admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply.


What is "conduct"?
r. 44.2(5): The conduct of the parties includes –

(a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction – Pre-Action Conduct or any relevant pre-action protocol;
(b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
(c) the manner in which a party has pursued or defended its case or a particular allegation or issue; and
(d) whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim.


Partial success ("issues based approach")
Distinguish between:-

• winner (if the claimant) not recovering as much in damages as claimed
• winner succeeding on the overall merits, but losing on a number of distinct issues in the case

The first situation looks like one best dealt with by cutting the percentage of overall costs recovered by the winner. (Walker Construction WB 44.2.6)


The second situation:

• winner succeeding on the overall merits, but losing on a number of distinct issues in the case

The second looks suited to making an "issues-based" costs order: one where the winner recovers the costs on the issues on which he won, but where the winner has to pay the other side's costs on the issues won by the other side. This causes problems at the assessment stage, and is not usual:
English v Emery Reimbold and Strick Ltd [2002] 1 WLR 2409 WB 44.2.7
Partial success on various issues is best reflected by awarding the winner a percentage of its full costs.

7 guidelines on costs following partial success are listed at WB 44.2.7, p 1429.


Admissible offer
CPR, r. 44.2(4)(c) says the court will take into account any admissible offer which is not a Part 36 offer.
The types of offer described in r. 44.2(4)(c) are:

• what is commonly called a "Calderbank offer": a written offer to settle stated to be "without prejudice save as to costs"; and
• an "open offer": an offer that could have been protected by without prejudice privilege, but which the party making the offer has deliberately framed as being "open", and therefore admissible in evidence at the trial.

The court has a discretion on this, but failing to beat a Calderbank offer may result in the winner having to pay all the offeror's costs from the date the winner should have responded to the Calderbank offer. (Walker Construction WB 44.2.6)
However, it has also been held to be an error of principle to regard a non-Part 36 offer as if it were a Part 36 offer. (Amber v Stacey WB 44x.3.20)
It is clear that where there is a more generous non-Part 36 offer the court has a broad discretion on how to take it into account (Coward v Phaestos WB 44x.3.20).
Where there is a formal Part 36 offer there are rules on costs, see below.


Charles Franklin brought a claim for breach of contract against Global Suppliers plc seeking damages amounting to £150,000. At trial today the judge found for Charles on an allegation that the goods supplied were not of satisfactory quality, but dismissed allegations made by Charles that the goods did not comply with alleged express terms of the contract. Damages have been assessed at £42,700. It is estimated that both sides have incurred costs of about £45,000 in bringing and defending this claim.
(a) What should counsel for Charles argue on costs?
(b) What should counsel for Global Suppliers plc argue on costs?

Use CPR, r. 44.2 and the notes at 44.2.3 and 44.2.6 to 44.2.15 in the White Book in formulating these arguments.



Interim Costs Orders

On all interim applications, after making the order on the application, the court will consider who should pay the costs of the application.


 Discretionary
 Usually winner recovers from loser
 There are variations
 Case management orders are usually “draws”
 If there is a "winner", judge will consider making a summary assessment
 Parties are required to file and serve “costs statements” 24 hours before hearings lasting no more than a day (PD 44, para 9.5(4)(b))



Consider the following:
(a) ‘The claimant’s costs in the case’.
(b) ‘The defendant’s costs in the case’.
(c) ‘The claimant’s costs in any event’.
(d) ‘Costs thrown away’.
(e) ‘Claimant’s costs’.
(f) ‘Costs in the case’.
(g) ‘Costs reserved’.

(i) What category of orders are they?
(ii) By reference to the White Book, explain what they mean. (The relevant provision is PD 44, para 4.2).

You need to:
• be able to define what all the entries in the table mean
• be able to select the most suitable cost formulation to meet the situation in any civil case that might arise


What happens if C makes a successful application to amend the PoC?
What does “costs of and occasioned by” the amendment mean? (PD 44, para 4.2 says “costs of and caused by”, and the opening words of PD 19A, “costs of and arising from”, mean the same thing).

• Amending the PoC
• Amending the Defence
• Costs incurred in investigating the defectively pleaded case
• Costs of the application to amend


What is the right costs order on a CMC?
What does “costs in the case” mean?

What happens if (say) C is the clear winner of an interim application?
What does “costs in any event” mean?

What happens on costs if D is successful in setting aside a default judgment?
What does “costs thrown away” mean?


What is the right costs order if C seeks an interim payment of £250,000, and succeeds in getting an interim payment of £40,000?

What does “claimant’s costs in the case” mean?


Order silent on costs CPR, r. 44.10(1)
The general rule is that if an order is silent on costs neither side can recover costs.

There are 3 exceptions: CPR, r. 44.10(2) and (3):
“(2) Where the court makes -
(a) an order granting permission to appeal;
(b) an order granting permission to apply for judicial review; or
(c) any other order or direction sought by a party on an application without notice,
and its order does not mention costs, it will be deemed to include an order for applicant’s costs in the case.

(3) Any party affected by a deemed order for costs under paragraph (2) may apply at any time to vary the order.”

This explains why the form for the interim injunction before issue (PF 39CH) (LGS 07B) does not include an order for costs.


Summary assessment
APA Civil para 46.52
Judge dealing with the case decides the amount payable there and then.

Each party is required to file and serve a statement of costs

(a) 24 hours before any interim hearing or appeal which is likely to take no more than one day
(b) 2 days before any fast track trial


Summary assessments are used:

Costs which are summarily assessed are payable within 14 days (CPR, r. 44.7).

(1) For "unreasonable behaviour" assessments in small claims track cases
(2) For most fast track final costs orders
(3) For interim hearings lasting no more than 1 day
(4) For appeals lasting no more than 1 day

If the statement of costs is not filed, the court may order a detailed assessment, but is likely to penalise the winner by ordering them to pay the costs of the detailed assessment:
Wheeler v Chief Constable of Gloucestershire [2013] EWCA Civ 1791


Detailed assessment
APA Civil para 46.58

Formal and somewhat complex procedure with a bill of costs; written objections to items on the bill; and a formal hearing where the parties argue about how much should be paid and materials on the solicitor’s file are looked at and adjudicated upon by a costs judge.


Bases of assessment CPR, r. 44.3
“What is the difference between the indemnity and standard basis of quantification?”

Standard Basis

Indemnity Basis

Standard basis
Usual for costs between parties

(1) Reasonable amount for costs reasonably incurred.
(2) Must be proportionate.
(3) Doubts are resolved in favour of payer.

Indemnity basis
• Usual for paying own solicitor
• To deal with misconduct
• To reward a claimant making a successful Part 36 offer

(1) Reasonable amount for costs reasonably incurred.
(2) Doubts are resolved against the payer.


Standard/indemnity basis

What is proportionate?

What is “proportionate”?
CPR, r. 44.3(5):
Costs incurred are proportionate if they bear a reasonable relationship to –
(a) the sums in issue in the proceedings;
(b) the value of any non-monetary relief in issue in the proceedings;
(c) the complexity of the litigation;
(d) any additional work generated by the conduct of the paying party; and
(e) any wider factors involved in the proceedings, such as reputation or public importance.

Willis v MRJ Rundell [2013] EWHC 2923 (TCC)
C’s costs budget = £900,000
D’s costs budget = £700,000
Claim value = £1.1 million

Held: Fact the combined costs budgets exceeded the value of the claim meant the costs budgets were disproportionate and unreasonable.

Note: Lawrence v Fen Tigers (No. 3) [2015] UKSC is a pre-Jackson Reforms case.


Wasted Costs Orders

CPR, r. 44.11: Court's powers in relation to misconduct

(1) The court may make an order under this rule where –
(a) a party or that party’s legal representative, in connection with a summary or detailed assessment, fails to comply with a rule, practice direction or court order; or
(b) it appears to the court that the conduct of a party or that party’s legal representative, before or during the proceedings or in the assessment proceedings, was unreasonable or improper.
(2) Where paragraph (1) applies, the court may –
(a) disallow all or part of the costs which are being assessed; or
(b) order the party at fault or that party’s legal representative to pay costs which that party or legal representative has caused any other party to incur.
(3) Where –
(a) the court makes an order under paragraph (2) against a legally represented party; and
(b) the party is not present when the order is made,
the party’s legal representative must notify that party in writing of the order no later than 7 days after the legal representative receives notice of the order.


Rule 44.11 is all that is on the syllabus on this.
For the wider jurisdiction on wasted costs orders, see further:

APA Civil paras 46.74-46.79;
SCA 1981, s. 51(6), (7)
PD 44, paras 11.1 to 11.3
CPR, r. 46.8
PD 46, paras 5.1 to 5.9


17. Part 36 APA Civil ch 36

The current rules came into force on 6 April 2015. They are the third attempt to get this right under the CPR:
Original Part 36 in force April 1999
2nd version Part 36 in force 6 April 2007, and amended on 1 April 2013.

The basic principles on Part 36 offers are:

• They are used to make a formal offer having costs consequences if not accepted
• Can be made by any party
• Can be made at any time: pre-action; while the claim is pending; on an appeal
• Kept secret from the trial judge if refused


Self-contained code CPR r. 36.1(1)
Technical Note
Gibbon v Manchester City Council [2010] 1 WLR 2081, per Moore-Bick LJ at [5]

Part 36 is drafted as a self-contained code. It contains a carefully constructed and highly prescriptive set of rules dealing with formal offers to settle which have specific consequences. It prescribes in some detail the manner in which a Part 36 offer is to be made, and in some respects, particularly CPR, rr. 36.9(2) and 36.14(3), departs quite markedly from the normal concepts governing the law of contract. While the basic concepts of offer and acceptance underpin Part 36, it does not follow that all the rules of law governing the formation of contracts are imported into Part 36.
Moore-Bick LJ at [6] said:
'Certainty is as much to be commended in procedural as in substantive law, especially, perhaps, in a procedural code which must be understood and followed by ordinary citizens who wish to conduct their own litigation. In my view, Part 36 was drafted with these considerations in mind and is to be read and understood according to its terms without importing other rules derived from the general law, save where that was clearly intended.'


Calderbank Offers WB 36.2.1
An offer made "without prejudice save as to costs".

• "without prejudice", so cannot be shown to the judge on liability or remedies without the joint consent of the parties
• "save as to costs", so can be relied upon when arguing who pays costs
• does not need to comply with the formalities in Part 36
• does not involve some of the obligations under Part 36, such as paying C's costs if accepted
• effect on costs: see page 6 above


Martin Johnson v Gillian Ford
Martin Johnson and Gillian Ford are business partners. Martin has brought proceedings in the Chancery Division claiming an equitable interest in certain freehold property which was registered in the sole name of Gillian. The property has been valued at £500,000 after deduction of the sum secured by a mortgage. Liability and the size of any equitable interest, if found, are in dispute.
You are instructed on behalf of Gillian. Having considered the evidence you take the view that the claim has some merit, but is far from certain of success. In conference, Gillian asks what she can do to protect her position on costs.

(a) What is the best option on protecting Gillian on costs?
(b) What are the necessary formalities?
(c) Assume that an offer to settle at £150,000 was made by Martin 12 months before trial. This was refused by Gillian. At trial the judge finds in favour of Martin and assesses his equitable interest at 50%. What is going to be the overall effect?



An offer to settle intended to take effect in accordance with Part 36 must comply with the formalities set out in CPR, r. 36.5(1). Such an offer must:

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



The terms of the offer need to be set out.
An offer of a sum of money is treated as inclusive of all interest up to the end of the relevant period (r. 36.5(4)(a)).
Although a Part 36 offer may be made in a letter, it is better to use form N242A. See APA Civil pp 398-399
The offer is "treated" as being Without Prejudice Except as to Costs (r. 36.16(1)). Means there is no need to say so expressly.


Failing to Include any of the Formalities WB
These are the 5 requirements set out in CPR r. 36.5. If any of them is missing, there is likely to be a fundamental defect, and the document is not a Part 36 offer.

Minor defects causing no real uncertainty or prejudice to the offeree will not invalidate the Part 36 offer:
Huntley v Simmonds [2009] EWHC 406 (QB)


Terms as to costs
To ensure that Part 36 offers have effective costs consequences, CPR, r. 36.5(1)(c), provides that they must specify a period of not less than 21 days within which the defendant will be liable for the claimant’s costs in accordance with r. 36.13 if the offer is accepted.

Time Part 36 offer is made
CPR, r. 36.7(2): A Part 36 offer is made when it is served on the offeree.
This imports the service rules from CPR, Part 6.

Time limited Part 36 offer
Since 6 April 2015 it has been possible to make a time limited Part 36 offer that is "automatically withdrawn in accordance with its terms" (CPR, r. 36.9(4)(b)).


Part 36 offer made less than 21 days before trial
In this situation:

Claimant’s Part 36 offer
Same formalities as a Defendant’s Part 36 offer
Intended to obtain costs and interest advantages if not accepted

• formality (c) does not apply (CPR, r. 36.5(2))
• the "relevant period" expires at the end of the trial: CPR, r. 36.3(g)(ii)
• if the Part 36 offer is accepted, the liability for costs must be determined by the court unless the parties agree costs: CPR, r. 36.13(4)(a)
• if the trial is actually in progress, the Part 36 offer can only be accepted with the court's permission: CPR, r. 36.11(3)(d)


Notice of acceptance served before withdrawal or change
The claim is settled on terms of the offer. Effect of CPR, r. 36.9(1).

Procedure for withdrawing or changing Part 36 offer
By serving written notice of withdrawal or change of terms on the offeree: CPR r. 36.9(2).
Such a notice takes effect when it is served: r. 36.9(3).


Before the end of the relevant period
CPR, r. 36.10: Before the expiry of the relevant period a Part 36 offer, if the offeror serves a notice of withdrawal or a notice of change to terms less advantageous to the offeree:

(a) the notice of withdrawal or change takes effect at the end of the relevant period if the offeree does not serve notice of acceptance during the relevant period (r. 36.10(2)(a));
(b) if the offeree serves a notice of acceptance within the relevant periods, the acceptance takes effect unless the offeror issues an application using the Part 23 procedure within 7 days of the notice of acceptance (or the first day of trial if earlier) seeking court permission to withdraw or change the offer (r. 36.10(2)(b)).
• Means a Part 36 offer can be increased at any time as of right. Doing so means there are 2 Part 36 offers, the original one and the improved offer (r. 36.9(5)(a))
• The restriction only applies in the [21]-day relevant period


CPR r. 36.10(3): On an application for permission to withdraw or change a Part 36 offer within the relevant period, the court may grant permission if:

• there has been a change of circumstances; and
• it is in the interests of justice


After the expiry of the relevant period

CPR, r. 36.9(4): After expiry of the relevant period and provided the offeree has not previously served notice of acceptance, the offeror may withdraw the offer or change its terms to be less advantageous to the offeree without the permission of the court.


Effect of a withdrawn Part 36 offer

A withdrawn Part 36 offer does not have the effect on costs and interest (as laid down in CPR, r. 36.17) of a subsisting Part 36 offer (r. 36.17(7)(a)). A note to r. 36.17 points out that r. 44.2 requires the court to consider an offer to settle which does not have the costs consequences set out in Part 36 in deciding what order to make about costs.

• A party cannot complain if the court gives little effect to a withdrawn offer
• But the court has to at least consider it
• And may make a significantly different decision on costs relying on the offer, even though it has been withdrawn


Offeree making a counter-offer

The other side making a counter-offer does not operate as a rejection of an earlier Part 36 offer. See words in brackets in CPR, r. 36.11(2).
It means the offeree can still accept the Part 36 offer after making a counter-offer.
• Complete departure from usual contractual principles


Offeror making a new offer

• Offeror makes an offer in April 2015 to settle under Part 36 for (say) £100,000
• Offeror makes a new Part 36 offer in November 2015 for (say) £120,000

The effect is, unless the first offer is withdrawn, that the offeror now has 2 offers on the table:
• £100,000 with costs consequences from April 2015
• £120,000 with costs consequences from November 2015


Rejecting a Part 36 offer
This does not operate as a rejection of the earlier Part 36 offer!!!!!
Gibbon v Manchester City Council [2010] 1 WLR 2081 at [16]-[17]

Held: that the rejection of a Part 36 offer by the offeree has no effect on the continuing validity of the Part 36 offer. Likewise, there is no concept of an implied withdrawal of a Part 36 offer, such as where the offeror rejects a counter-offer from the offeree in terms similar to the terms of the offeror's offer.
This is because the only way in which a Part 36 ceases to be live (in the absence of an acceptance or the final disposal of the claim) is by the offeror formally withdrawing its offer under CPR, r. 36.9. This means that the rejected offer can be accepted as of right by the offeree (even after the relevant period has expired), which was the actual decision in the first appeal in Gibbon v Manchester City Council.


Offeree doing nothing

Offeree doing nothing
A Part 36 offer will only “lapse” by expiry of time if this is expressly stated in the Part 36 offer. It remains a live offer, capable of being accepted at any time, even though it has been ignored by the offeree.


1 The claim is stayed (CPR, r. 36.14(1)) on the terms of the offer.

2 Subject to the exceptions below, where a Part 36 offer is accepted within the relevant period, the claimant is entitled to his standard basis costs of the proceedings up to the date on which notice of acceptance was served on the offeror (CPR, r. 36.13(1)). This applies whether the offer was made by:
• the claimant or
• the defendant.


Exceptions CPR 36.13(1)

3 The exceptions are where:-
(b) a Part 36 offer is made less than 21 days before trial
(c) a Part 36 offer is accepted after the relevant period
(a) a Part 36 offer relates to only part of the claim

4 In these exceptional cases, the parties should either agree the costs order, or the court will make an order for costs (CPR, r. 36.13(4)-(6)).


If a Part 36 offer is not withdrawn, it may be accepted as of right even after the relevant period, up to the start of the trial (CPR, r. 36.11(2); 36.11(3)(d)).
Permission to accept is required if the trial has started (r. 36.11(3)(d)), and also if:

• One of the parties is a child or protected party
• In most cases where the offer is made by some, but not all, the defendants
• The defendant made the offer when awaiting a CRU certificate
• An apportionment is required in a FAA 1976 case
(CPR, rr. 21.10; 36.11(3); 36.15(4); 36.22(3)(b); 41.3A)


Costs in late acceptance cases
In normal late acceptance cases the parties may agree the liability for costs, but if they do not, the court will make an order for costs (r. 36.13(4)(b)). Where the court makes an order for costs under r. 36.13(4)(b), unless it is unjust to do so taking into account the factors in r. 36.17(5), the order will provide that:

(a) the claimant is entitled to his costs of the proceedings up to the date when the relevant period expired; and
(b) the offeree will be liable for the offeror’s costs for the period from the expiry of the relevant period to the date of acceptance (r. 36.13(5)).


Normally, most aspects of Part 36 are dealt with administratively without needing any court order. Includes:

• making Part 36 offers;
• acceptance of the same;
• staying the claim on an acceptance; and
• costs consequences following acceptance


Exceptions: need for court order

1. Cases where permission is required to accept an offer to settle. As previously mentioned, these include children, protected parties, cases where the trial has started, and where there are multiple defendants.
2. Failure to agree costs after late acceptance.
3. Where the offeror wants to withdraw or reduce the offer during the relevant period.
4. Where the offeree wants to clarify a Part 36 offer under r. 36.8.


Part 36 offers must not be disclosed to trial or appeal judge until all questions of liability and quantum have been resolved (CPR, r. 36.16(2)).

Garratt v Saxby [2004] 1 WLR 2152
If disclosed, the judge can continue hearing the case only if there is no injustice.


The following consequences apply when the party receiving the offer fails to obtain a judgment more advantageous than the Part 36 Offer. i.e., CPR, r. 36.17(1) if:

• C fails to obtain a judgment more advantageous than a Defendant's Part 36 offer; or
• judgment against D is at least as advantageous to C as the proposals in a Claimant's Part 36 offer.

In money claims, "more advantageous" means better in money terms by any amount, however small (r. 36.17(2)).


Technical Note
This over-rules Carver v BAA plc [2009] 1 WLR 113

In this case it was said that what is now r. 36.17(1) permitted a more wide-ranging review of the circumstances of the case, including taking a view on whether the eventual judgment was “worth the fight”. The court could consider matters such as the costs incurred after the offer, and the emotional stress of taking the case to trial.


(a) Defendant’s Part 36 Offer
If judgment is not more advantageous than a Defendant’s Part 36 offer (r. 36.17(3)):

• claimant recovers standard basis costs to last day for acceptance (the relevant period)
• defendant recovers (standard basis) costs thereafter


(b) Claimant’s Part 36 offer
A claimant makes a Part 36 offer, and the judgment is at least as advantageous to C as the terms in C's Part 36 offer

• claimant will usually recover standard basis costs of claim to the end of the relevant period (costs follow the event)
• claimant may be awarded, from last date for acceptance:
• indemnity basis costs
• interest on damages at a rate up to 10% above base rate
• interest on any indemnity basis costs awarded at a rate up to 10% above base rate
• an increase in damages/sum awarded of 10%, to a maximum of £75,000
See CPR, r. 36.17(4)


In the absence of a Claimant's Part 36 offer, as C has won, C would normally be awarded the whole of its costs on the standard basis, from the start of the dispute to final disposal. Costs follow the event. What r. 36.17(4) does is to enhance this basic position to reward C for having made a successful Claimant's Part 36 offer. Most of these rewards take effect from expiry of the relevant period.

In damages cases the 10% increase is technically:
(a) 10% of the money awarded on the first £500,000
(b) 5% of the money awarded between £500,000 and £1 million
In non-money claims, the 10% increase is based on the sum awarded in costs.


(c) Unless it is unjust WB 36.17.3
The normal consequences of failing to obtain a judgment more advantageous than a Defendant's Part 36 offer or a Claimant's Part 36 offer (see above), are displaced if "the court considers it unjust" (r. 36.17(3) and 36.17(4)).

In deciding whether to depart from the usual rules on the basis it would be unjust, the court must (r. 36.17(5)):
• take into account all the circumstances of the case, including
• the terms of any Part 36 offer
• the stage of the proceedings when the Part 36 offer was made
• the information available to the parties at the time the Part 36 offer was made
• the conduct of the parties with regard to giving or refusing to give information to enable the offer to be evaluated
• whether the offer was a genuine attempt to settle the proceedings