Part 36 Archives

CPR 36.17(4)(c) | How To Calculate Enhanced Interest On Costs — Aggregate Method Applies

Detailed Assessment, Indemnity Costs, New Costs Blog, Part 36

The County Court’s decision in Barry v Essex County Council [2025] EWCC 64 confirms that enhanced interest on costs awarded under CPR 36.17(4)(c) is calculated using the aggregate costs method from the date of offer expiry. This is of course a first instance non-binding decision in the county court and should be treated accordingly.

Background

The claimant, Kelly Barry, brought a claim for damages against Essex County Council for personal injuries sustained in a tripping accident on 18th March 2018. Liability was denied by the defendant. On 7th October 2019, the claimant made a Part 36 offer to settle liability on a 70/30 basis in her favour, which was rejected. The offer expired on 28th October 2019. The matter proceeded to a trial on 5th and 6th July 2023 before District Judge Mills (as he then was). Quantum was partly agreed at £27,031, subject to liability. The trial judge found wholly in the claimant’s favour on liability, making no deduction for contributory negligence, and entered judgment for the agreed sum of £27,031.

As the claimant had beaten her own Part 36 offer, the judge applied the consequences under CPR 36.17(4). He awarded an additional 10% of the damages (£2,703.10) and enhanced interest on those damages at 9% per annum from 28th October 2019 to the first day of trial, amounting to £8,971.33. Regarding costs, the judge ordered that the defendant pay the claimant’s costs up to 28th October 2019 on the standard basis, and costs from that date on the indemnity basis. Crucially, he also ordered, pursuant to CPR 36.17(4)(c), that the defendant pay “additional interest on those costs… from 28th October 2019 at the rate of 9% per annum.”

A Bill of Costs was subsequently served totalling £91,173.92. The parties later agreed the base costs at £75,000, excluding interest and the costs of the assessment. A dispute arose solely concerning the method for calculating the interest on the post-offer indemnity costs, leading the claimant to issue an application on 25th April 2025 to resolve the issue.

Costs Issues Before the Court

The single issue for determination was the correct method for calculating interest on costs awarded under CPR 36.17(4)(c). The claimant argued for the “Aggregate Costs method,” whereby interest at 9% per annum is applied to the total sum of all costs incurred from the expiry of the Part 36 offer (28th October 2019) until the date of the costs order (6th July 2023). The defendant contended for the “Individual Item method,” whereby interest is calculated separately on each individual item of costs incurred after the offer’s expiry, running from the specific date that item of work was done or the disbursement was incurred.

The Parties’ Positions

Claimant’s Submissions: Mr Meehan, for the claimant, advanced two primary arguments. Firstly, he submitted that on a natural reading of District Judge Mills’s order, the only reasonable construction was that it intended the Aggregate Costs method. His second, alternative argument was that if the interpretation remained open, the Aggregate Costs method was consistent with case law, the policy behind CPR Part 36, and practical reality. He argued that the Court of Appeal’s decision in McPhilemy v Times Newspapers Ltd, upon which the defendant relied, was not binding. He relied on the subsequent case of OMV Petrom SA v Glencore International AG, which indicated that the policy behind Part 36 had evolved to include a non-compensatory, punitive element designed to encourage settlement—a “carrot and stick” scheme. He further argued that the Individual Item method was practically unworkable, creating unnecessary complexity for costs judges.

Defendant’s Submissions: Mr Roderick, for the defendant, clarified that the Individual Item method involved recalculating the interest due each time a new cost was incurred post-offer. He contended that this method was consistent with the precedent in McPhilemy, which he submitted was binding, where the Court of Appeal had expressly ordered that interest run from the date work was done. He accepted that Part 36 now had a punitive element but argued that this was delivered through the enhanced rate of interest itself, not the method of calculation. He submitted that the Aggregate Costs method could lead to absurd outcomes, such as interest running on a counsel’s brief fee for some three years before it was actually incurred. He argued for consistency with the principle that interest on damages typically runs from the date the loss was incurred. Finally, he asserted that the Individual Item method was practical and straightforward to operate using spreadsheets and electronic bills.

The Court’s Decision

Deputy District Judge Rathod found in favour of the claimant, holding that the Aggregate Costs method was the correct approach. The decision was reached for several key reasons.

- - First, on a straightforward construction of District Judge Mills’s order, the judge found that the wording indicated a clear intention to apply interest at 9% per annum to the entirety of the post-offer costs from a single specified date. This aligned with the “broad brush” approach to interest on costs endorsed by Lord Neuberger in Simcoe v Jacuzzi UK Group plc, which discouraged overly detailed and prolonged arguments on such points.
  - Second, the judge held that he was not bound to follow the specific outcome in McPhilemy. He analysed that the ratio of McPhilemy concerned the trial judge’s erroneous exercise of discretion in refusing Part 36 consequences, not the precise mechanics of interest calculation. The specific order made in that case was a product of its own facts and was not an issue that had been fully argued. Furthermore, the judge found McPhilemy to be of limited persuasive authority as it pre-dated the Jackson reforms, which introduced a stronger “carrot and stick” policy into Part 36, and its reasoning was based on compensating a claimant for loss of use of money paid on account—a factor not present in this case where a conditional fee agreement was used.
  - Third, the Court of Appeal’s decision in Petrom was found to dilute the authority of McPhilemy. The judge noted that in Petrom, the Chancellor held that enhanced interest awards under Part 36 were not purely compensatory and could include a non-compensatory element. This shift in policy supported an interpretation that could lead to a more punitive result for a defendant who rejected a reasonable offer.
  - Fourth, the judge rejected the defendant’s argument that the Aggregate Costs method produced an “absurd” result by potentially accruing interest on costs before they were incurred. He stated that if this was the outcome of a rule designed to encourage settlement, it was a fair consequence for a defendant who chose not to accept an offer. He also found the defendant’s analogy with interest on damages to be a false one, noting that in personal injury cases, a simple half-rate from the date of accident is often used to avoid complexity.

Finally, the judge agreed with the claimant that the Individual Item method was unworkable in practice. It would add significant complexity to detailed assessments and, crucially, would be impossible to apply in cases involving summary assessment of costs, where individual dates of incurrence are not examined. The Aggregate Costs method, in contrast, was consistent with authority, the policy of Part 36, and practical reality.

The application was therefore allowed, and it was declared that interest should be calculated at 9% per annum on the aggregate of all costs incurred from 28th October 2019 to 6th July 2023.

Part 36 Consequentials | Enhanced Interest, Indemnity Costs And 100% Payment On Account

CPR 36.17(4) | Does It Apply To The Costs Of Detailed Assessment?

CPR 44.2(6)(g) | Pre Judgment Interest On Costs Under | A General Rule?

The Correct Approach To Summary Assessment | Guideline Hourly Rates Up By 35%?

CPR 44.2(8) | Payments On Account In Costs Budgeted Cases

Part 36 Consequences In Detailed Assessment | De Minimis Form Errors Will Not Invalidate Offers

Detailed Assessment, Indemnity Costs, New Costs Blog, Part 36

The Senior Courts Costs Office’s decision in Stockler and Another v The Corporation of the Hall of Arts and Sciences [2025] EWHC 3080 (SCCO) confirms that de minimis errors in Part 36 offer forms will not prevent the full statutory consequences applying in detailed assessment proceedings.

Background

The claimants, William Thomas Stockler and Alexander Charles Stockler, are holders of rights to permanent seats in the Royal Albert Hall. The defendant is the corporation which holds a long lease of the Hall. Following underlying litigation, a costs order was made in the defendant’s favour.

The detailed assessment involved hearings on 23-24 June 2025 and 28-29 August 2025 before Deputy Costs Judge Joseph. At the outset, the judge disclosed he had sung in concerts at the Hall as a member of the City of Birmingham Symphony Orchestra Chorus; both parties confirmed this was not a basis for recusal. On the second day of the June hearing, however, the claimants applied for recusal alleging that positive comments about the Hall demonstrated inappropriate influence. The application was dismissed as totally without merit [§7].

Between hearings, the claimants amended their Points of Dispute. At the August hearing, the court disallowed all amendments pursuant to CPR PD 47 paragraph 13(10), finding it unfair and too late to permit them [§13]. The line-by-line assessment was completed on 29 August. The defendant presented a calculation of £120,513.88; the claimants did not challenge the figure and were held to have accepted it by proceeding on the basis they “assumed” it was correct [§14, §34-36]. The court later corrected this to £120,221.98 using CPR 3.1(7) after identifying an inadvertent error that would otherwise have breached the indemnity principle [§39-41].

A separate judgment dated 5 September 2025 [2025] EWHC 2262 (SCCO), which reported on here, addressed proportionality; no further reduction was warranted [§2].

The present judgment deals with the remaining consequential issues.

Costs Issues Before the Court

The court was required to determine four issues [§18]: interest payable on the assessed costs; whether the costs of the detailed assessment should be paid on the indemnity basis (due to a Part 36 offer or unreasonable conduct); the quantum of those costs; and permission to appeal.

The Parties’ Positions

The defendant sought indemnity costs on two grounds [§45]. First, a Part 36 offer dated 29 October 2024 to accept £115,000 inclusive of interest [§46]. The relevant period expired on 19 November 2024 without acceptance. As the assessed costs exceeded the offer, the defendant argued CPR 36.17, as modified by CPR 47.20(4), applied [§47]. Second, unreasonable conduct including pursuing unmeritorious Points of Dispute, failing to engage with ADR, and the opportunistic recusal application [§52].

The claimants argued the Part 36 offer was invalid due to a clerical error on form N242A, where it was misdescribed as a “claimant’s offer” despite the defendant being the receiving party [§54]. They contended it would be unjust to apply Part 36 consequences because their failure to beat the offer resulted from the court’s Ainsworth rulings and disallowance of amendments [§55]. On conduct, they submitted their behaviour did not take the case “out of the norm” per Excelsior v Salisbury Hammer Aspden [2002] EWCA Civ 879 [§56].

The Court’s Decision

The court held the Part 36 offer was valid [§60]. Applying F&C Alternative Investments (Holdings) Ltd v Barthelemy (No 3) [2012] EWCA Civ 843, the error was de minimis, falling into the class of “obvious slips which mislead no-one” [§57]. The offer was clear, made shortly after Replies were served, and provided sufficient information for evaluation [§62].

The court rejected the argument that Part 36 consequences would be unjust. If Ainsworth rulings and similar matters made it unjust, “it would be unjust in almost every detailed assessment to order them. That cannot have been the intention of the Rules Committee” [§61].

Consequently, the defendant was awarded costs on the standard basis until 19 November 2024 and on the indemnity basis thereafter [§63]. Interest on the assessed costs of £120,221.98 was awarded at 8% per annum from 1 July 2024 to 18 November 2024, and at 14% per annum thereafter [§65]. An additional sum of £12,022.20 was awarded under CPR 36.17(4)(d) [§65].

Conduct-Based Indemnity Costs

Separately from Part 36, the court analysed whether conduct justified indemnity costs [§67]. The defendant’s costs schedule only included costs from 27 August 2024 onwards, after expiry of its Calderbank offer [§53]. Conduct prior to the hearing did not sufficiently take the case out of the norm, but conduct from 23 June 2025 was “unreasonable to a high degree” and did take it out of the norm [§86]. This included:

- - The recusal application, found to be “entirely opportunistic and made not as a result of any genuine concern about the bias or apparent bias of the judge, but in an inappropriate attempt to circumvent or to cause to be revisited certain decisions” [§81]
  - Fixed costs arguments that “could not possibly have had any application to the matter” [§70]
  - Amendments to Points of Dispute seeking “another bite at a cherry which had already been swallowed”, with the claimants “oblivious to the self-evident prejudice” to the defendant [§83]

This was largely subsumed by the Part 36 consequences [§86].

Quantum of Costs

The court summarily assessed the defendant’s costs of the detailed assessment [§87]. From the claimed £105,092.89, reductions were made: £2,500 for document work and £750 for other costs (reflecting proportionality on the standard basis element), and £3,000 for duplication between fee earners [§93-95]. Counsel’s fees were adjusted to £16,500 for June and £12,500 for August [§96-97]. The final award was £98,542.89 [§99].

Permission to Appeal

Permission was refused on all ten grounds [§113]. The recusal allegations fell “way short of anything which could possibly have justified such an application” under Porter v Magill [2001] UKHL 67 [§102]. Decisions on fixed costs, amendments, and proportionality were within the court’s discretion [§106-112].

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Indemnity Basis Costs Following Discontinuance

An Interest Exclusive Part 36 Offer Is Not A Part 36 Offer

Costs Thrown Away, Indemnity Costs And Payments On Account

Can A Vulnerable Party’s Change Of Mind Justify Part 36 Withdrawal Of An Accepted Part 36 Offer?

Clinical Negligence, New Costs Blog, Part 36

The High Court’s decision in Chinda v Cardiff & Vale University Health Board [2025] EWHC 2692 (KB) establishes that client vulnerability and medical conditions affecting concentration do not justify withdrawing an accepted Part 36 offer where no objective change of circumstances has occurred.

Background

The claim concerned a delay in the diagnosis of spinal tuberculosis which resulted in the Claimant sustaining a severe neurological injury [§2]. By reason of his injuries, the 35-year-old Claimant is essentially paraplegic, wheelchair-bound, with no movement in both legs [§3]. He suffers from significant neuropathic pain, paraesthesia and burning sensations, together with bladder, bowel and sexual dysfunction [§4]. There was also a small but material risk of future deterioration affecting his upper limbs [§5].

The Defendant, Cardiff & Vale University Health Board, admitted a breach of duty in failing to arrange an MRI scan when the Claimant attended the Emergency Department on 4 August 2020 [§2]. Judgment was entered for the Claimant on the basis of admissions made in the Defence, with damages to be assessed [§8]. A trial on quantum was listed for 2 October 2025 [§8].

A round table meeting took place on 1 July 2025, concluding at approximately 4:25pm [§9-10]. During this meeting, the Claimant, for the first time, indicated a wish to settle on a provisional damages basis [§10]. No settlement was reached, and it was agreed that the Claimant would propose terms [§11]. The following day, on 2 July 2025 at 3:42pm, the Claimant’s solicitors made a Part 36 offer which included a retained lump sum, a variable periodical payments order, and an order for provisional damages [§12, §29]. This offer was made on the basis of instructions given by the Claimant at the RTM on 1 July 2025 [§12].

On 8 July 2025, less than seven days later, the Claimant’s solicitors notified the Defendant of the Claimant’s wish to withdraw this offer [§13]. However, the Defendant accepted the offer on 22 July 2025 [§13]. The Claimant then issued an application on 29 July 2025 seeking permission to withdraw the Part 36 offer [§14]. By consent, the trial on quantum was vacated, and the court was asked to determine this application [§15].

Costs Issues Before the Court

The central costs issue was whether the court should grant the Claimant permission to withdraw his Part 36 offer pursuant to CPR 36.10 [§16]. The rule requires that where an offeree serves notice of acceptance of an offer before the expiry of the relevant period, that acceptance has effect unless the offeror applies to the court for permission to withdraw the offer within seven days of the notice of acceptance [§16(2)(b)]. The court must be satisfied that there has been a change of circumstances since the making of the original offer and that it is in the interests of justice to give permission [§16(3)]. The application turned on the interpretation and application of CPR 36.10(3).

The Parties’ Positions

The Claimant argued that there had been a change of circumstances sufficient to justify withdrawal [§22-26]. He relied on his medical condition, which caused him significant pain and fatigue, asserting that he found the RTM “really quite overwhelming and exhausting” and that “as a result of my fatigue and pain, I was unable to focus, think clearly and fully consider the instructions I provided to my solicitors on the day” [§22]. The Claimant characterised his condition as rendering him vulnerable and affecting his ability to provide clear instructions during the round table meeting [§26].

The Claimant stated that after the meeting, he had the opportunity to rest, reflect, and seek independent financial advice from an IFA and the author of his Periodical Payment Suitability report, leading him to prefer a lump sum award over the periodical payments structure originally offered [§17, §23]. He said that his revised offer, made on 29 July 2025, was for a lump sum of £7,350,500 – identical to an alternative lump sum offer previously made by the Defendant at the RTM [§25(iii)]. The Claimant also noted that the provisional damages element was now more limited (relating only to upper limb deterioration, not bladder/bowel/sexual function), being more favourable to the Defendant [§25(iv)].

The Claimant further argued that he had notified the Defendant promptly of his wish to withdraw (less than seven days after making the offer, and well before acceptance) [§25(i)], and that all quantum issues were agreed, with the only remaining dispute being the form of the award [§25(v)].

The Defendant opposed the application, contending that no relevant change of circumstances had occurred [§27-28]. They argued that the Claimant’s change of mind, based on a reassessment of known facts, did not meet the threshold required by CPR 36.10(3) [§28]. The Defendant highlighted that the Claimant’s Part 36 offer was made at 3:42pm on 2 July 2025, almost a full day after the round table meeting concluded at 4:25pm on 1 July, allowing ample time for reflection [§29(ii)]. During this time, the Claimant could have rested, discussed the case with his family, or delayed making any offers until after obtaining financial advice [§29(ii)].

The Defendant explained that when considering whether to accept the Claimant’s Part 36 offer, it had concluded that the periodical payment structure proposed was more advantageous than a pure lump sum settlement, offering financial certainty and avoiding over or under-compensation given the Claimant’s impaired life expectancy [§30, §40]. The Defendant submitted that permitting withdrawal on these grounds would undermine the predictability and certainty fundamental to the Part 36 regime [§31].

The Court’s Decision

Senior Master Cook refused the Claimant’s application for permission to withdraw the Part 36 offer [§41]. In applying CPR 36.10(3), the court found that there had been no relevant change of circumstances [§38]. The Claimant’s reassessment of his preferences, influenced by his medical condition and subsequent advice, was characterised as a change of mind rather than a change in circumstances [§38].

The court acknowledged the Claimant’s vulnerability but found this did not constitute a change of circumstances for several reasons [§32-35]:

First, the amended overriding objective and Practice Direction 1A, which address vulnerability, relate to ensuring parties can participate fully in proceedings and give their best evidence [§33]. The emphasis is on participation in proceedings and the giving of evidence, not on decision-making about settlement offers [§33-35].

Second, at no point before the hearing had it been suggested that the Claimant might be vulnerable “in the sense that his ability to instruct his representatives might be adversely affected” [§34]. The Claimant’s specialist personal injury solicitors “should be presumed to be aware of his difficulties, particularly as they were referred to in the expert medical evidence obtained by them” [§35]. If there had been any real concern, the solicitors should have raised the issue or ensured their client had sufficient space to give instructions [§35].

Third, the Claimant did not assert that he lacked capacity to make his decision, and the Part 36 offer was made by solicitors acting on his behalf [§37].

The court emphasised that Part 36 is a self-contained procedural code designed to promote certainty and predictability in settlement negotiations [§36]. Parties and their advisors “need to know where they stand when offers to settle are made or considered” [§36]. The court referred to authorities such as Cumper v Pothecary and Retailers v Visa, which establish that a change of circumstances must be “some significant alteration in the circumstances surrounding the case” – such as new evidence putting a wholly different complexion on the case or a change in the legal outlook from a new judicial decision – and not merely a reevaluation of existing facts [§18-20, §39].

The court rejected the Claimant’s submission that there was no real difference between the original and revised offers [§40]. The Defendant had concluded that a periodical payment settlement was more advantageous, providing financial certainty and avoiding over or under-compensation in a case where life expectancy was impaired [§40].

The court concluded that “to hold otherwise would be to introduce an unacceptable degree of uncertainty into what should be a certain process” [§38]. Consequently, the Claimant was held to his original Part 36 offer [§41].

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The High Court’s decision in Ellis v Ellis & Ors Re: Care (Decd) [2025] EWHC 2609 (Ch) confirms that Part 36 offers in probate disputes remain valid even where the offeror does not yet own the assets being offered, and clarifies when it is reasonable to delay mediation pending disclosure.

Background

The dispute concerned the estate of Yeamon Keith Care, who died in March 2020. The Claimant, Luke Ellis, sought to propound the will dated 23 August 2016, under which he was the sole beneficiary of the residuary estate, primarily comprising a share in Tregear Farm. The Third Defendant, Vivian Care, the brother of the deceased, challenged the will on the grounds of lack of testamentary capacity, want of knowledge and approval, and due execution. Vivian also advanced a counterclaim for proprietary estoppel, asserting that the deceased had led him to believe he would inherit the farm. The First and Second Defendants were the executors of the estate and adopted a neutral stance throughout the proceedings [§2, §5, §92].

Pre-action correspondence commenced in June 2020, with Vivian indicating a challenge to the will [§7]. A Larke v Nugus request was made in July 2020 [§8]. Despite repeated promises, Vivian failed to provide a letter of claim outlining his case [§89]. Luke instructed solicitors in May 2021 and, after further delays, issued proceedings in July 2022 without a prior letter of claim [§15, §50]. Vivian served a defence and counterclaim [§53]. A case and costs management conference took place in May 2023 [§26, §57], and mediation was attempted in November 2023 but was unsuccessful [§32, §128]. The substantive trial occurred over several days in April and May 2024, with a further hearing in July 2024 [title page]. The substantive judgment, handed down in January 2025, upheld the validity of the will and dismissed all of Vivian’s claims [§1].

Costs Issues Before the Court

The court was required to determine the incidence of costs following the substantive judgment. The key costs issues were:

- - whether the general rule that costs follow the event should be departed from due to alleged unreasonable pre-action conduct by the Claimant;
  - whether the Claimant’s refusal to mediate until September 2023 warranted a costs sanction;
  - the applicability of the probate exceptions concerning the testator’s conduct causing the litigation and reasonable grounds for investigation;
  - the validity and consequences of the Claimant’s Part 36 offer dated 15 January 2024;
  - whether the Third Defendant should pay the litigation costs of the First and Second Defendants as executors; and
  - the appropriate payment on account of costs [§5-6].

The Parties’ Positions

The Third Defendant accepted that the Claimant was the successful party but contended that the First and Second Defendants were not successful [§5, §47]. He argued for no order for costs until September 2023 based on three grounds: unreasonable pre-action conduct by the Claimant, including a failure to serve a letter of claim before issuing proceedings [§7-20]; an unreasonable refusal to mediate until September 2023 [§21-33]; and the application of the probate exceptions [§34-40]. He submitted that the testator’s conduct, through promises and familial expectations, caused the litigation, and that there were reasonable grounds for investigation, particularly regarding due execution and testamentary capacity [§35-40]. He challenged the validity of the Part 36 offer, arguing it was uncertain and not a genuine attempt to settle [§41-46], and contended there was no principled basis for him to pay the executors’ costs [§47-48].

The Claimant argued that costs should follow the event in accordance with the general rule [§49]. He submitted that his issuance of proceedings without a letter of claim was justified due to the Third Defendant’s prolonged delays and failure to articulate his case despite having access to relevant documents [§50-56]. He maintained that his refusal to mediate prior to September 2023 was reasonable because he lacked necessary disclosure from the Third Defendant, including medical records and evidence supporting the proprietary estoppel claim [§57-61]. He opposed the application of the probate exceptions, contending that the testator’s conduct did not cause the litigation and that any investigation period had ended well before proceedings were issued [§62-69]. He asserted that the Part 36 offer was valid and should trigger the full consequences under CPR 36.17 [§70-72], and that the Third Defendant should pay the executors’ costs to avoid the successful party bearing them [§73-74].

The First and Second Defendants supported the Claimant’s position on costs [§75]. They argued that the Third Defendant’s challenge to the will necessitated their involvement and that it would be unjust for the estate or the Claimant to bear their litigation costs [§76]. They emphasised that their costs budget had been agreed, indicating an expectation that the unsuccessful party would pay [§77]. They submitted that the probate exceptions did not apply and that the Third Defendant’s conduct had prolonged the litigation unnecessarily [§78-79].

The Court’s Decision

Pre-Action Conduct

The court held that the general rule under CPR 44.2 should apply, with the Third Defendant paying the costs of the Claimant and the executors, subject to specific considerations [§80-83]. On pre-action conduct, the court found that the Claimant’s failure to serve a letter of claim was not a brazen breach of the protocol [§84]. The Third Defendant had ample time and material to formulate his claim from as early as August 2021, and the Claimant’s issuance of proceedings in July 2022 was a reasonable response to prolonged inactivity [§86, §89]. The court concluded that a letter of claim would not have altered the course of litigation or facilitated earlier settlement [§99].

The court made detailed findings about the Third Defendant’s delay in formulating his case. Despite having access to most key documents by late 2020, including the will file and signed authorities to obtain further records, no letter of claim was forthcoming despite repeated promises [§87-89]. The documents held out for—such as full Adult Social Care records and complete bank files—were not necessary to formulate the claim [§90-93]. The court found that the Third Defendant was able to plead his counterclaim without difficulty once proceedings were issued, demonstrating that sufficient information was available much earlier [§98].

Mediation

Regarding the refusal to mediate, the court determined that the Claimant’s delay in agreeing to mediate until September 2023 was justified [§100]. The Third Defendant had withheld key disclosure, including medical records and evidence on proprietary estoppel, until after the case management conference [§100, §106]. The court found it reasonable for the Claimant to await disclosure before engaging in mediation, and noted that the period of delay was relatively short and incurred minimal additional costs [§101, §107-108]. No costs sanction was imposed [§109].

The court rejected arguments based on Northamber Plc v Genee World Limited, noting that silence in response to mediation invitations is only “as a general rule” unreasonable, and each case turns on its own facts [§102-103]. The reasons given by the Claimant—lack of complete information about the estate and evidence supporting the proprietary estoppel claim—were reasonable in the circumstances [§104, §106].

Probate Exceptions

The court rejected the application of the probate exceptions [§110]. On the first exception (testator’s conduct), it held that the testator’s conduct did not cause the litigation [§110-114]. Familial expectations and promises, even if they existed, did not amount to conduct surrounding the will with confusion or uncertainty, following established authority such as Re Cutcliffe’s Estate [§110-111]. The court declined to depart from Re Cutcliffe, noting that recent authoritative decisions have endorsed it and the trend is to narrow rather than broaden the exception [§111].

The court found that the worst that could be said against the testator was that he did not live up to expectations he had allowed to develop within the family, based on intentions formed during his first wife Betty’s lifetime [§112, §39]. The testator had gone out of his way to engage professionals in making his will, which was in short form and perfectly clear [§113]. There was no confusion or uncertainty surrounding the will itself [§113].

On the second exception (reasonable investigation), the court found that any reasonable investigation period had ended by August 2021 for most issues, and by March 2022 for the due execution issue [§122]. The Third Defendant had sufficient information to assess the merits early on, and pursuing the claims beyond those points constituted hostile litigation.

The court made detailed findings on each challenged ground:

- - Testamentary capacity: The plentiful medical evidence did not suggest incapacity [§117]. The Third Defendant failed to admit this fact after service of a Notice to Admit Facts, and the court noted this could be taken into account under CPR 32.18(5) [§117]. The description of the deceased by the Third Defendant’s expert was alien to the true picture, and the Third Defendant would or should have been aware of the deceased’s acuity [§117].
  - Knowledge and approval: This was a professionally drawn will that accorded with detailed attendance notes of instructions [§118]. The Third Defendant had access to the will file long before proceedings were issued [§118]. Even without prior knowledge of a meeting where the deceased reviewed the draft will with his chosen executors, this ground was always going to be extremely difficult [§118].
  - Due execution: While there was an apparent conflict between the attestation witnesses’ evidence, the Third Defendant had spoken to both witnesses before issuing proceedings [§119]. The court found that any reasonable investigation should have factored in: (a) the strong presumption of due execution; (b) the professional standing of the witnesses; (c) careful instructions given on execution; and (d) an attendance note placing both witnesses at the surgery on the date of execution [§119]. An objective assessment of these factors, all available pre-issue, should have led to the conclusion that this would be difficult to succeed on and was “certainly going to be in the nature of hostile litigation” [§120].

The court emphasised that while reasonable investigations may justify a “no order as to costs” for a period, “once the parties are aware of the settled positions of the attestation witnesses, time must begin to run to decide whether the investigation phase is over” [§120].

Part 36 Offer

The court upheld the validity of the Claimant’s Part 36 offer, finding it sufficiently clear and a genuine attempt to settle [§123-129]. The offer represented a significant value (approximately 14.6% of the estate), and the Third Defendant’s objections were deemed pedantic or capable of resolution [§124-125, §128]. Issues such as whether the will would be formally admitted to probate or which party owned the third tractor were “technical details that could have been sorted out had the Part 36 Offer been accepted” [§125].

The court rejected arguments that the offer was invalid because the Claimant did not own the land being offered (it was vested in the executors) or that the bank’s charge created difficulties [§126]. It found these submissions “almost contrived” since the executors would obviously abide by any settlement and the estate’s net value would have allowed the bank to be paid [§126].

Consequently, the consequences under CPR 36.17(4) applied, including indemnity costs from the expiry of the relevant period and an additional amount [§129]. However, considering the offer was made only three months before trial, the court reduced the interest on costs to 5% above base rate to avoid injustice, while applying the other consequences in full [§134]. The court noted that “all circumstances of the case” included the Third Defendant’s conduct in relation to the personality disorder issue raised late in the proceedings [§134].

Executors’ Costs

The court ordered the Third Defendant to pay the executors’ litigation costs on the standard basis [§140]. It held that the executors’ costs were incurred solely due to the Third Defendant’s challenge, and it would be unjust for the Claimant or the estate to bear them [§137]. The court noted the executors’ neutrality and the agreement of their costs budget as supporting this outcome [§138-139].

The court rejected the Third Defendant’s argument that there was no principled basis for this order, observing that CPR 44.2(1) clearly encompasses executors as parties [§136]. The court emphasised that if the Third Defendant did not pay the executors’ costs, the Claimant would effectively bear them despite being the successful party, which would be “wholly unjust” [§137]. The court noted by analogy to administration pending suit cases that the losing party should pay such costs [§139].

Payment on Account

On payment on account, the court awarded the Claimant £94,000, representing 90% of budgeted costs and 75% of incurred costs, reflecting the approved budget and the indemnity basis applicable from February 2024 [§145-147]. The executors were awarded 85% of their budgeted costs (on combined incurred and budgeted costs of £20,278), considering the estate’s illiquidity and the need for efficient administration [§148].

The court applied the principles from Cleveland Bridge v Sarens, noting that where costs form part of an approved costs budget, payment on account should be no less than 90% of that budgeted amount [§144]. For incurred costs not subject to the approved budget, a more cautious approach of 75% was adopted [§145].

Failure To Mediate And Validity Of Part 36 Offers In Probate Claims

Costs Penalty Applied For Silence In The Face Of An Invitation To Mediate | Court Of Appeal Decision

Refusal To Mediate Does Not Always Justify Indemnity Costs

CPR 44.2(8) | Payments On Account In Costs Budgeted Cases

CPR 36.17 And The Just Rewards Of A Good Part 36 Offer

CPR 44.2 And The Courts’ Discretion As To Costs

Part 36 Consequentials | Enhanced Interest, Indemnity Costs And 100% Payment On Account

Commercial Litigation, Indemnity Costs, New Costs Blog, Part 36, Payment on Account, YT

The High Court’s decision in Learning Curve (NE) Group Limited v Lewis & Anor [2025] EWHC 2491 (Comm) demonstrates the difficulty parties face when attempting to avoid Part 36 consequences after failing to beat a claimant’s offer, with the court rejecting challenges to offer validity, interest rates, cost basis, and payment on account quantum.

Background

The claim arose from a Share Purchase Agreement (SPA) dated 29 October 2021, under which the claimant, Learning Curve (NE) Group Limited, acquired shares from the defendants, Richard Huw Lewis and Melanie Probert. The claimant brought proceedings for breaches of warranty and under an indemnity clause in the SPA. In a judgment dated 4 August 2025 ([2025] EWHC 1889 (Comm)), the court found the defendants liable, and the claimant elected to enter judgment in the sum of £5,211,625 for breach of warranty. This sum was reduced by a prior payment of £783,325 made by the defendants under the indemnity, resulting in a net judgment debt of £4,428,300, which was payable by 19 September 2025.

Prior to the trial, the claimant had made a Part 36 offer on 7 February 2024, offering to settle for £5,211,625, which was not accepted by the defendants. Following the main judgment, the court addressed consequential matters, including the effect of the Part 36 offer, interest on the judgment sum, costs, permission to appeal, and a stay pending appeal. The parties provided written submissions, and the court determined these issues on the papers without a further hearing [§8, §11].

The Defendants’ Multi-Pronged Challenge

Following judgment in the claimant’s favour for the exact sum offered under Part 36, the defendants mounted challenges on multiple fronts, seeking to avoid or reduce the consequences under CPR 36.17(4). The court addressed each argument in turn.

Challenge 1 | The Offer Was Unclear

The defendants’ first argument was that the Part 36 offer lacked clarity because it offered £5,211,625 but was silent about the £783,325 already paid by the defendants under the indemnity in October 2022. They contended it was unclear whether the offer required payment of the full £5,211,625 in addition to the amount already paid, meaning the judgment (which credited the earlier payment) had not matched the offer [§19, §23].

The court rejected this argument. HHJ Russen KC held that the £783,325 was properly treated as a payment on account of the larger warranty claim. The offer’s silence on this sum was appropriate because the defendants’ counterclaim sought its return, meaning it could not be “appropriated” by either party until the counterclaim was resolved. The offer included settlement of the counterclaim, so acceptance would have resulted in the claimant retaining the £783,325 as part of the £5,211,625 total. The defendants had not requested clarification under CPR 36.9, and the court found no genuine ambiguity [§20-25].

Drawing on the reasoning in Macleish v Littlestone [2016] EWCA Civ 127 and Synergy Lifestyle Ltd v Gamal [2018] EWCA Civ 210, the court applied a presumption that the payment on account would be treated as made on account of the sum offered, absent contrary clarification. Any other interpretation would produce an “absurd result” [§25].

Challenge 2 | The Claimant’s “Shifting Case” Made Application Unjust

The defendants argued that it would be unjust to apply CPR 36.17(4) consequences because the claimant’s case on quantum had shifted significantly—from £6.8m in the claim form to £10.18m in particulars of claim to different valuations in expert evidence. They contended this uncertainty meant they could not properly evaluate the offer when made [§29-30].

The court found this argument backfired. Rather than supporting injustice, these points “reinforced the effectiveness of the Offer.” The claimant had not made good its pleaded case for £10m+, and the defendants would have “spared themselves both the continuing uncertainty over the level of their financial exposure, including ongoing interest, and the very significant legal costs incurred by both sides since the Offer was made” if they had accepted it [§30].

HHJ Russen KC cited the “formidable obstacle” test from Smith v Trafford Housing Trust [2012] EWHC 3320 (Ch), endorsed by the Court of Appeal in Webb v Liverpool Women’s NHS Foundation Trust [2016] EWCA Civ 365. By making the offer a year before trial at just over half the pleaded sum, the claimant had given defendants a genuine settlement opportunity. The defendants “come nowhere close to overcoming the ‘formidable obstacle'” required to escape Part 36 consequences [§31-33].

Challenge 3 | Enhanced Interest Rate Too High

On interest, the defendants proposed that if enhanced Part 36 interest applied, it should be limited to 4% above base rate rather than the 8% sought by the claimant [§41].

The court awarded 8% above base rate for the period from 28 February 2024 (expiry of the relevant period) to 4 August 2025 (judgment date). This decision was supported by evidence from the claimant’s witness that the claimant had borrowed at rates equivalent to 4.5-7.14% above base since 2021, meaning 8% provided appropriate compensation while remaining within the 10% maximum under CPR 36.17(4)(a). The court noted that enhanced interest under Part 36 may include a “non-compensatory element” as an incentive to settle [§44-46].

For the earlier period (29 October 2021 to 28 February 2024), the court awarded 2% above base under section 35A of the Senior Courts Act 1981, rejecting the defendants’ proposal of 1% [§42, §44].

Challenge 4 | Costs Should Be Reduced by 50%

The defendants argued that the claimant’s costs recovery should be capped at 50% because the claimant had “deliberately exaggerated its claim” by pursuing £10m when the true value was approximately £5m. They also contended that any payment on account should exclude pre-budget incurred costs, limiting it to £846,206.50 [§52-53].

The court rejected this comprehensively. The existence of the Part 36 offer undermined the exaggeration argument—defendants had a clear opportunity to settle at the sum now established as correct. The claimant succeeded “on all material issues presented by the parties” and was entitled to full recovery [§54-55]. The court specifically noted that costs reserved from an earlier disclosure application should be included, as these would never have been incurred if the offer had been accepted [§57].

Challenge 5 | Payment On Account Too High

The court ordered payment on account at 100% of the approved budgeted costs (£1,257,382), departing from the common practice of 90% [§58].

HHJ Russen KC explained that the usual 90% approach reflects the protection CPR 3.18 gives to approved budgets on standard basis assessment—providing confidence that this percentage is unlikely to constitute overpayment. However, CPR 3.18 does not apply to indemnity basis costs. Citing Burgess v Lejonvarn [2020] EWCA Civ 114, the court held that where a significant portion of costs will be assessed on the indemnity basis, approved budgets become “prima facie irrelevant” to those costs [§59-60].

With total invoiced costs of £2,210,133 and a significant element on the indemnity basis, the payment on account of £1,257,382 represented only 57% of total costs incurred. The court was satisfied this was unlikely to constitute overpayment even allowing for reasonableness challenges [§61].

Final Elements | The Additional Amount and Interest on Costs

The court ordered:

- - The additional amount of £75,000 under CPR 36.17(4)(d), payable within 6 weeks [§34]
  - Interest on costs at 2% above base until 28 February 2024 and 8% above base until 4 August 2025, with the Judgments Act rate thereafter [§63]

Permission to Appeal and Stay—Also Refused

For completeness, the defendants also sought permission to appeal on four grounds and a stay pending appeal. Permission was refused on all grounds, with the court finding no real prospect of success [§67-80]. The stay application was rejected as the defendants had not demonstrated “solid grounds of irremediable harm” and appeared able to access resources to meet their liabilities [§85-88].

Key Takeaway

This judgment illustrates that comprehensively challenging Part 36 consequences rarely succeeds. The “formidable obstacle” test means courts will apply the full range of CPR 36.17(4) benefits unless clear injustice can be demonstrated—and arguments that defendants could have avoided expense by settling will typically reinforce rather than undermine those consequences.

CPR 36.17 And The Just Rewards Of A Good Part 36 Offer

igh Court decision on full CPR 36.17(4) consequences including enhanced interest at 6% above base, indemnity costs, and additional amount. Directly relevant authority on when courts apply Part 36 benefits.

CPR 36.17 | Part 36 Offer To Accept £1 Was A Genuine Attempt To Settle

Court of Appeal guidance on the “formidable obstacle” test and when Part 36 consequences apply. Discusses the strict compliance required and high hurdle for escaping consequences.

CPR 36.17(5) | Costs Following Trial On Liability And The Effect Of An Extant Part 36 Offer

High Court decision on CPR 36.17(5) mandatory factors and when costs must be reserved. Explores the “formidable obstacle” threshold in split trial context.

CPR 44.2(8) | Payments On Account In Costs Budgeted Cases

Guidance on payment on account principles, including the standard 90% of budgeted costs approach and the relevance of CPR 3.18 on assessment.

When Part 36 Offers Demand Total Capitulation | Matière v ABM

Recent High Court decision on what constitutes a genuine Part 36 offer and when offers may be challenged as demands for capitulation rather than settlement.

When Is A Part 36 Offer Not A Part 36 Offer?

Court of Appeal guidance on Part 36 offer validity and construction, relevant to the offer clarity arguments in Learning Curve.

Monthly Costs Law Update – September 2025

Costs Budgeting & CMC, Indemnity Costs, New Costs Blog, New News Article, Part 36

September delivered critical decisions on costs budgeting, indemnity costs thresholds, and procedural jurisdiction. The NOx Emissions litigation saw budgets slashed by 62%, whilst courts clarified when “annoying” behaviour remains insufficient for indemnity basis awards. Pre-action applications now definitively constitute “proceedings” for costs purposes. Practitioners must note the firm line drawn against Part 36 offers demanding total capitulation and the narrow scope for costs-only joinder applications.

Detailed Assessment & CPR 44.11

No Procedural Tension Between CPR 44.11 And s57 of the Criminal Justice and Courts Act 2015 Costs Judge Nagalingam refused permission to appeal, holding that CPR 44.11 and s57 Criminal Justice and Courts Act 2015 serve distinct purposes with no procedural tension. Detailed assessment cannot become a forum for quasi-fundamental dishonesty findings that should have been pursued at trial, and settlement without apportionment prevents retrospective allocation of damages to specific heads of loss.

Trust and Estate Costs

Executor’s Litigation Costs Indemnity Denied And Personal Costs Ordered In Hostile Trust Dispute

HHJ Paul Matthews dismissed an appeal against costs orders depriving an executor of estate indemnity for litigation costs. Executors defending hostile removal proceedings in their own interests rather than for the estate’s benefit lose entitlement to indemnity under Trustee Act 2000 s31, even where administration costs indemnity is preserved.

Section 51 Jurisdiction

Court Of Appeal Confirms That Pre-Action Applications Constitute ‘Proceedings’ for Costs Purposes
Lord Justice Cobb held that pre-action injunction applications constitute “proceedings” under s51 Senior Courts Act 1981, closing a loophole where parties might escape costs consequences through procedural technicalities. Courts possess costs jurisdiction for any application where they are seised and asked to make orders, regardless of whether a claim form was issued.

Costs Budgeting

High Court Slashes Claimants’ Costs Budgets by 62% In NOx Emissions Litigation
Cockerill J and Senior Costs Judge Rowley approved just £21m of £55.7m sought by claimants for Tranche 3 of the NOx Group Litigation. The court criticised continued “over-lawyering”, drastically reduced budgets for CMC attendance from 32 fee earners to 9 in-person attendees, and confined non-lead firms’ recoverable involvement to narrow circumstances, with routine “keeping abreast” work deemed non-recoverable inter partes.

CPR 3.15(8) | £870 Hourly Rate And £90,000 Brief Fee For Leading Counsel Deemed Disproportionate In £1.2m Claim
The High Court reduced trial preparation and trial budgets through broad-brush phase reductions where solicitors’ rates substantially exceeded London Band 2 guidelines and counsel brief fees totalled £90,000. Courts can address excessive rates without breaching CPR 3.15(8)’s prohibition on fixing hourly rates by applying downward adjustments to disproportionate phase totals following GS Woodland Court GP1 Ltd v GRCM Ltd.

Indemnity Costs

Being ‘Annoying and Difficult’ Not Sufficiently ‘Out Of The Norm’ For Indemnity Costs In Failed Liquidator Challenge
The Chancery Division refused indemnity costs against an unsuccessful creditor applicant, finding his conduct, though creating a weak application, did not meet the “out of the norm” threshold. Personal circumstances including head injury and deep investment in the liquidation distinguished the case from authorities like Beattie v Smailes where extravagant applications warranted higher basis awards.

Part 36 Offers

When Part 36 Offers Demand Total Capitulation | Matière v ABM
Alexander Nissen KC held that a Part 36 offer of nil for a multi-million pound counterclaim was not a genuine attempt to settle that aspect of proceedings, making it unjust to apply indemnity costs consequences under CPR 36.17(4) to counterclaim costs. The offer’s genuine nature regarding the claim secured full Part 36 benefits for those costs only, demonstrating offers must involve realistic concessions across all dispute aspects.

Costs Capping

Costs Capping Order | Court Sets Different Caps Despite Defendant’s Push For Parity In Facial Recognition Challenge
Farbey J set reciprocal but non-identical costs caps at £70,000 (claimants) and £100,000 (defendant) in a judicial review of Live Facial Recognition technology policy. Courts will look beyond specific fundraising to assess campaign organisations’ true financial resources, expecting strategic deployment of unrestricted funds whilst recognising that “reciprocal” caps under Criminal Justice and Courts Act 2015 ss88-89 need not be identical.

Fixed Costs Regime

CPR 45.8 Fixed Costs Apply To Interim Applications From Date Of Provisional Track Allocation
Sheldon J quashed a costs order of £10,653 where the case had been provisionally allocated to the Intermediate Track, limiting recoverable costs to £333 plus £303 court fee under CPR 45.8. Fixed costs regime applies from provisional allocation, not formal allocation, and conducting litigation as an unauthorised person constitutes a reserved activity barred under Legal Services Act 2007 absent specific exemption.

Costs-Only Proceedings

Court Refuses Costs-Only Joinder But Orders Consolidation in Will Dispute
HHJ Paul Matthews refused to join a will-writing company as a costs-only party under CPR 46.2 where it contested negligence allegations requiring full trial on breach, causation and quantum. Summary procedure under s51 Senior Courts Act 1981 is inappropriate where non-parties actively dispute liability; consolidation under CPR 3.1(2)(h) offers broader case management solutions where separate proceedings exist.

When Part 36 Offers Demand Total Capitulation | Matière v ABM

Commercial Litigation, Indemnity Costs, New Costs Blog, Part 36, Payment on Account

The Technology and Construction Court’s decision in Matière SAS v ABM Precast Solutions Ltd [2025] EWHC 2030 (TCC) establishes that Part 36 offers demanding “total capitulation” on multi-million pound counterclaims may not attract full indemnity costs consequences.

Background

The dispute arose from a Consortium Agreement between the French claimant, Matière SAS, and the defendant, ABM Precast Solutions Ltd. In December 2021, Matière issued proceedings to recover £373,295.06 in unpaid invoices. ABM’s Defence and Counterclaim, served in February 2022, partially admitted the debt, acknowledging £157,241.91 was due subject to set-off. The remainder of the claim was not admitted. ABM counterclaimed for damages for breach of express obligations of good faith under the Consortium Agreement and a subsequent Collaboration Agreement. The counterclaim was initially valued at approximately £4.8 million but was later amended to £18.92 million, alternatively £16.62 million.

By the time of the trial, ABM had admitted all but £35,000 of Matière’s claim. The court’s liability judgment, handed down on 11 June 2025, found in favour of Matière on the claim, awarding the full sum of £373,295.06 plus interest. The counterclaim was dismissed in its entirety.

A significant feature of the procedural history was a Part 36 offer made by Matière on 4 April 2022. This offer proposed settling the entire proceedings, including the claim and counterclaim, for a single payment of £350,000 to be made to Matière. The offer was expressed to have the consequences set out in CPR Part 36. ABM did not respond to this offer. A further Part 36 offer was made by ABM on 17 September 2024, shortly before trial, in which it offered to accept £5 million to settle the proceedings.

Costs Issues Before the Court

The court was required to determine the consequential matters arising from its liability judgment, with the primary focus being the appropriate costs orders. The central issue was whether Matière was entitled to the full beneficial consequences under CPR 36.17(4) as a result of its April 2022 Part 36 offer. This included claims for indemnity costs from the expiry of the offer’s relevant period, enhanced interest on both the damages awarded and costs, and an additional 10% uplift on the damages sum. A further issue was whether, in the alternative, the court should make an issue-based or proportionate costs order to reflect ABM’s success on certain sub-issues at trial and Matière’s conduct. Finally, the court was asked to determine the appropriate rate of interest on sums awarded and to rule on Matière’s application for a substantial payment on account of costs.

The Parties’ Positions

Matière argued that its April 2022 offer was a valid Part 36 offer and that it had achieved a result more advantageous than the terms of that offer. It contended that the full consequences of CPR 36.17(4) must follow unless ABM could demonstrate it would be unjust, a burden it characterised as a “formidable obstacle”. Matière submitted that the offer was a genuine attempt to settle the entire proceedings and that ABM had sufficient information to evaluate it at the time it was made. It sought indemnity costs from the expiry of the relevant period, the maximum 10% enhanced interest, the 10% uplift on damages, and a payment on account of 95% of its budgeted costs.

ABM accepted that the Part 36 offer was valid in relation to the claim and that Matière was therefore entitled to the 10% uplift on damages and enhanced interest on the claim. However, it contended that the offer was not a genuine attempt to settle the proceedings in respect of the counterclaim. ABM argued that an offer of ‘nil’ for a counterclaim valued at millions was a demand for total capitulation. It further submitted that, applying the principles of CPR 44.2, the court should make a proportionate costs order and reduce Matière’s costs of the counterclaim by 70% to reflect its success on certain issues (scope of duty and findings of breach) and to mark the court’s disapproval of Matière’s dishonest conduct. ABM also argued that the maximum 10% enhanced interest rate was inappropriate and proposed a rate of 4% above base rate.

The Court’s Decision

The court conducted a detailed analysis of whether it would be unjust to apply the full Part 36 consequences. It found that the April 2022 offer was a genuine attempt to settle the *claim*, representing a concession of approximately 12% of its value. However, it was not a genuine attempt to settle the *counterclaim*. The offer of ‘nil’ for a multi-million pound counterclaim amounted to a demand for total capitulation. The court noted that whilst Matière was ultimately successful in defending the counterclaim, it could not have been so confident of its prospects at the time of the offer that a nil valuation was justified, particularly given the court’s subsequent findings that Matière had acted dishonestly and in breach of its duties.

Consequently, the court held it would be unjust to apply the indemnity costs consequence of CPR 36.17(4) to the costs of the counterclaim. Matière was awarded its costs of the claim on a standard basis up to the expiry of the relevant period (25 April 2022) and on an indemnity basis thereafter. Its costs of the counterclaim were awarded on a standard basis throughout.

The court rejected ABM’s argument for a 70% reduction in costs under CPR 44.2. It found that the issues on which ABM succeeded (scope of duty and breach) were merely stepping stones to establishing its loss of chance claim, on which it failed entirely. There was significant overlap in the evidence between breach and causation, and ABM did not succeed on all its alleged breaches. The court also declined to reduce costs to mark its disapproval of Matière’s conduct, finding the dishonesty was not at the most egregious level and did not materially fuel the dispute or lengthen the trial beyond what was necessary.

On interest, the court awarded Matière the 10% uplift on the principal sum (£37,329.51) as provided for by CPR 36.17(4)(d). For the period before the relevant date, pre-judgment interest on the claim was awarded at 4% above base rate. Enhanced interest under CPR 36.17(4)(a) was awarded on the principal sum from the relevant date, but the court exercised its discretion to set this at 7% above base rate, not the maximum 10%. Enhanced interest on costs under CPR 36.17(4)(c) was also awarded at 7% above base rate, but only for the costs of the claim from the relevant date. Interest on the costs of the counterclaim was awarded at 2% above base rate.

On the application for a payment on account of costs, the court ordered ABM to pay 90% of Matière’s approved budgeted costs, amounting to £935,000. Interest on this payment was set at 2% above base rate. The costs of the consequential hearing were deemed to be part of the general costs of the proceedings and were subsumed within the overall costs order.

Key Takeaway

This decision reinforces that Part 36’s protective regime cannot be manipulated through offers that demand total capitulation on substantial claims. Practitioners should ensure settlement offers involve genuine concessions across all aspects of disputes to secure full Part 36 benefits.

CPR 36.17(4) | Just Consequences | Court Of Appeal Decision

CPR 36.17 And The Just Rewards Of A Good Part 36 Offer

Analysis of when it would be unjust to apply CPR 36.17 consequences and genuine attempt to settle requirements

Part 36 Offer Was Not A Genuine Offer To Settle

High Court decision on when high-value offers (99%) fail the genuine attempt to settle test under CPR 36.17(5)(e)

CPR 36.17(4) | Claimant’s Part 36 Offer Which Amounted To 99.7% Of The Claim Was A Genuine Attempt To Settle

Contrasting case where 99.7% offer was held genuine due to claimant’s strong prospects

Issues Based And Proportional Costs Orders: When Should They Be Made?

Commercial litigation guidance on CPR 44.2 proportionate costs orders and conduct considerations

CPR 36.17 | Part 36 Offer To Accept £1 Was A Genuine Attempt To Settle

Court of Appeal authority on genuine offers and CPR 36.17 consequences

Successful Claimant Awarded Only 50% Of Costs Due To “Imprecise, Vague And Wide-Ranging Case”

Costs Against Successful Party, Indemnity Costs, New Costs Blog, Part 36, Proportionality

Background

The matter concerned an action brought by Illiquidx Limited against Altana Wealth Limited, Lee Robinson, Steffen Kastner and Brevent Advisory Limited for breach of confidence, infringement of trade secrets, breach of contract and copyright infringement. Following a liability trial, Mr Justice Rajah handed down judgment on 13 February 2025, finding that Altana and Brevent had breached a non-disclosure agreement and misused Illiquidx’s confidential information and trade secrets in establishing and operating the Altana Credit Opportunities Fund. The copyright infringement claim failed, as did the claim seeking to establish Mr Kastner’s liability for the acts of Altana or Brevent.

The procedural history revealed significant difficulties with Illiquidx’s pleadings throughout the litigation. In December 2020, Illiquidx attempted to reformulate its case on confidential information, seeking to adopt terminology from CF Partners v Barclays Bank by pleading a “Big Idea” with component elements called “the Detail”. Deputy Master McQuail rejected this formulation as incoherent and unintelligible, a decision upheld by Mr Justice Miles on appeal. Following further attempts at clarification in early 2022, Illiquidx reframed its confidential information as “the Business Opportunity” with component parts identified in writing as “the Detail”.

At the Pre-Trial Review, the court refused Illiquidx’s application to expand its case on confidential information from the written Detail to include oral conversations and narrative elsewhere in the pleading. Despite these rulings, Illiquidx’s trial skeleton continued an expansive approach, making extensive reference to matters both within and outside the Detail. During closing submissions, Illiquidx’s counsel substantially dropped reliance on the Detail and argued instead that the Business Opportunity was simply the high-level idea of a sanctions-compliant fund, evidenced by only a few documents in the Detail.

The costs hearing took place on 6 June 2025, with judgment reserved. Illiquidx’s costs were stated to be approximately £6.6 million, whilst the defendants’ costs totalled approximately £5.5 million. Mr Robinson had accepted liability for Altana’s liabilities pursuant to paragraph 128 of the liability judgment.

Costs Issues Before the Court

The court was required to determine several discrete costs issues arising from the liability judgment. First, whether costs should be reserved pending determination of quantum or dealt with immediately. The defendants argued that Illiquidx had greatly overstated the value of its claim at £10 million when the true value of damages would likely be £100,000 or less at any quantum trial, and that this potential exaggeration could only be properly assessed after quantum had been determined.

Second, the court needed to determine the appropriate percentage deduction from Illiquidx’s costs to reflect its failure on the copyright and joint liability claims. Illiquidx conceded that some deduction was appropriate, proposing 10%, whilst the defendants argued for 14.7% attributable to these failed claims.

Third, and most significantly, the court was asked to consider whether further deductions should be made to reflect Illiquidx’s conduct of the litigation, particularly its failure to plead its case with clarity and precision. The defendants sought a total deduction of 61.5% of Illiquidx’s assessed costs, incorporating both the failed claims and conduct issues.

Finally, the court needed to determine the appropriate rate of interest on costs (Illiquidx seeking 2% above base rate, the defendants proposing 1% above base rate) and the appropriate interim payment on account of costs, with Illiquidx seeking 60% of 90% of its costs and the defendants proposing 50% of any costs ordered, reduced to account for unpaid interim costs orders in their favour.

The Parties’ Positions

Illiquidx submitted that as the overall winner on liability, the starting point under CPR 44.2(2)(a) was that its costs should be paid by Altana and Brevent. It accepted that a 10% deduction was appropriate to reflect the failed copyright and joint liability claims, which it acknowledged were discrete claims for additional relief rather than alternative routes to the same outcome. Illiquidx argued that costs should be determined immediately rather than reserved, relying on the general principle established in Langer v McKeown that costs should follow the outcome of discrete issues to encourage professional conduct of litigation.

On the conduct issue, Illiquidx resisted any further deduction beyond the 10% for failed claims. Counsel argued that its case, whilst perhaps obscurely pleaded, had ultimately succeeded and was available on the pleadings. It submitted that matters of excessive disclosure costs should be left to detailed assessment rather than dealt with by way of percentage reduction at this stage.

The defendants’ primary position was that costs should be reserved pending the quantum trial, arguing that only then could the court properly assess whether Illiquidx had exaggerated its claim as permitted under CPR 44.2(4)(a) and 44.2(5)(c) and (d). They highlighted that no Part 36 offers had been made but indicated that “without prejudice save as to costs” offers existed which included quantum, though they were unwilling to waive privilege to put these before the court.

On the substantive costs issues, the defendants argued for a 14.7% deduction for the failed copyright and joint liability claims, based on Mr Seadon’s detailed analysis. More significantly, they sought a total deduction of 61.5% to reflect the unnecessary costs incurred due to Illiquidx’s conduct. Mr Seadon’s witness statement attempted to calculate the extent to which costs had been inflated by the “expansive, imprecise and vague” way the claim had been pleaded, including excessive disclosure costs of over £1.1 million resulting in 13,526 documents being disclosed, of which only 452 were referred to at trial.

The defendants emphasised the basic injustice of facing vague and expansive pleadings which failed to properly identify the case they had to meet, arguing this had discouraged settlement and placed them on an unequal footing. They submitted that the lack of clarity and precision justified a substantial departure from the general rule on costs.

The Court’s Decision

Mr Justice Rajah first addressed whether costs should be reserved, holding that they should be determined immediately. He applied the principles from Langer v McKeown, emphasising that requiring losing parties to pay costs as they lose encourages professional conduct of litigation and selectivity in points taken. The court noted that apart from policy considerations, it was desirable to deal with costs whilst the trial and judgment remained fresh in the judge’s mind.

On the reservation point, the court held that if the defendants wished exaggeration of the claim to be considered at the liability stage, they could have made a global Part 36 offer giving the claim its fair value, or some other costs-protective offer. The existence of “without prejudice save as to costs” correspondence was insufficient, particularly where the defendants were unwilling to waive privilege. The court applied the principle from Langer that parties cannot “have it both ways by withholding admission of the evidence of the offer but still asking the court to take account of it”.

Turning to the substantive costs determination, the court found that costs had been significantly increased by Illiquidx’s failure to identify its case clearly. The judgment detailed how costs had been increased “at every turn” – in pleadings, disclosure, evidence, trial preparation, cross-examination and inter-solicitor correspondence. The court particularly criticised the disclosure exercise, which resulted in millions of documents being harvested at a cost exceeding £1.1 million, describing Illiquidx’s approach as “casting about to find a case”.

However, the court declined to displace the general rule entirely. Three factors influenced this decision: first, Illiquidx had won on a case that was pleaded, however obscurely; second, the defendants’ defence remained unaffected but unsuccessful; and third, the defendants had advanced a false case that Mr Robinson was already aware of most of the information and had independently conceived the fund idea.

The court ordered the defendants to pay 50% of Illiquidx’s assessed costs on the standard basis, representing both a reduction for the failed claims and the court’s disapproval of how the claim had been prosecuted. Interest was awarded at 2% above base rate from the date of payment to Illiquidx’s solicitors until judgment. The interim payment was set at 50% of the reduced figure (i.e., 25% of total costs), taking a cautious approach given the high hourly rates exceeding guideline rates and outstanding interim costs orders of approximately £77,000 in the defendants’ favour.

The court expressly rejected the suggestion that excessive disclosure costs should be left to detailed assessment, holding that where disclosure had been ordered or agreed by reference to pleaded issues, the Costs Judge would not revisit whether a different disclosure exercise should have been undertaken. The 50% reduction therefore reflected both the court’s disapproval of Illiquidx’s conduct and the likely additional costs caused by that approach.

Part 36 Additional Amount Is “All Or Nothing” | Maximum £75,000 Awarded After Rejected Offers

Case Law, Costs Budgeting & CMC, Indemnity Costs, New Costs Blog, Part 36

The High Court’s decision in Barry & Anor v Barry [2025] EWHC 819 (KB) confirms that the CPR 36.17(4)(d) additional amount operates as an “all or nothing” entitlement that must be awarded unless the defendant discharges the burden of establishing injustice.

Background

Underlying Dispute: The case arises from a dispute between elderly parents and their son over a series of loans totalling over £650,000. The factual dispute regarding whether the funds were loans or gifts is not the focus here; the judgment concentrates on how costs should be allocated once the court determined that a binding loan agreement existed.

Costs Context: Key costs issues addressed include:

The request to vary the pre-approved costs budget in light of late developments.
An allegation of “oppressive behaviour” by the defendant during litigation.
The impact of the rejected Part 36 settlement offers on the costs award.
The method and quantum of the payment on account of costs.

Budget Variation Applications

Late Amendments and Promptness: The defendant’s late amendment to his defence — introducing a new argument regarding the lack of intention to create legal relations — led to significant additional work in trial preparation. The claimants sought a revision of their costs budget to account for these unanticipated developments. The judge emphasised that requests for budget variation must be made promptly [17, 20]. Applications made long after the completion of disclosure were rejected due to a lack of promptness [17].

Judicial Reasoning: The court accepted that the defendant’s last-minute changes were “significant developments” justifying an upward revision for trial-related work [23, 25–26]. However, it reduced the amounts claimed where it found that an excessive proportion of senior lawyer time had been billed [24, 26].

Evaluation of the Oppressive Behaviour Claim

Claim Overview: The claimants contended that the defendant’s litigation conduct was oppressive — designed to drive up legal costs. The court, however, found that although the defence was presented aggressively, the necessary threshold of intentional causation had not been met [18–19].

Court’s Findings: The judge stated that he “never once sensed that he was trying to run up costs needlessly or deliberately to oppress or coerce his parents” [19]. The decision clarifies that aggressive litigation does not equate to oppressive behaviour unless there is clear evidence of a deliberate intent to cause disproportionate expense. The critical words in PD 3D paragraph 13 are “in seeking to cause”, which the court interpreted as requiring targeted intentionality rather than mere “but for” causation [18].

Part 36 Costs Consequences

Settlement Offer Rejections: Prior to trial, the parents made formal Part 36 offers which the defendant rejected. The offers were made on 17 September 2021 — pre-issue, two years before trial, and shortly after the defendant had rejected mediation [34(2), (4)]. Since the final judgment was more favourable than the claimants’ offers, the court applied the Part 36 regime [32].

The Court’s Analytical Framework: The judge set out a nine-point framework for approaching CPR 36.17 entitlements [33]:

1. The CPR 36.17(4) cost entitlements apply if the claimant obtains a judgment at least as advantageous as the proposals in the Part 36 offer.
2. The court must order the four CPR 36.17(4) entitlements unless it is unjust to do so.
3. The burden shifts to the defendant to establish that it is unjust to order any of the four entitlements.
4. Entitlement (d) — the “additional amount” — is an “all or nothing” entitlement (JLE v Warrington & Halton Hospitals NHS Trust [2019] EWHC 1582 (QB)).
5. Therefore, the court must order the tiered “prescribed amount” unless the defendant establishes that it is unjust.
6. In determining whether it is unjust, the court should have regard to the fact that the additional amount is not compensatory (OOO Abbott v Design Display Ltd [2014] EWHC 3234 (IPEC)); is a key ingredient of the Part 36 code to provide additional incentive to accept reasonable offers (Thai Airways v KI Holdings [2015] EWHC 1476 (Comm)); and is intended to penalise the unreasonable refusal to accept an adequate offer (Cashman v Mid Essex Hospital Services NHS Trust [2015] EWHC 1312 (QB)).
7. In assessing the sum to which the prescribed percentage applies, the court should consider the gross award it would have made but for the Part 36 provisions, including basic interest, but not any additional interest ordered under Part 36 (Mohammed v The Home Office [2018] EWHC 3051 (QB)).
8. In considering whether ordering the additional amount is unjust, the court must have regard to “all the circumstances” (CPR 36.17(5)).
9. The court should also have regard to the five matters set out at CPR 36.17(5)(a)–(e).

Award Components: The judgment awarded:

- - Indemnity basis costs: From 15 October 2021 (the expiry of the relevant period) [41(2)].
  - Enhanced interest on damages and costs: Set at 8% above the base rate [40–41]. The judge rejected the maximum 10% rate as disproportionate, noting that the parties were private individuals rather than institutions [38].
  - An additional sum: The maximum of £75,000 was awarded under CPR 36.17(4)(d) [36, 41(4)].

Judicial Commentary: The judge stated: “The rule mandates the additional amount unless displaced by the weight of circumstances that establish the award is unjust. It is not unjust. This is a paradigm case where the additional amount should be awarded” [35]. The court emphasised that the purpose of the additional amount is to incentivise offerees to accept adequate offers and, if necessary, to penalise unreasonable refusals [35].

Payment on Account of Costs

Interim Payments: The judge ordered a substantial payment on account, reflecting:

- - 55% of incurred costs [48],
  - 90% of the budgeted costs (as per July 2022 budget) [53], and
  - 80% of the newly allowed variation costs [53–54].

Rationale: For incurred costs, the court noted that assessing the correct proportion is “always a matter of risk management” [47]. The higher percentage for incurred costs (55% rather than the typical 50%) reflected the indemnity basis of assessment, under which “any” doubt about reasonableness is resolved in favour of the receiving party [47–48].

For varied budget costs, the court applied a lower percentage (80% rather than 90%) because these costs “did not receive the same degree of scrutiny that would occur at a CCMC” [54].

Conclusion

The judgment in Barry & Anor v Barry [2025] EWHC 819 (KB) provides a detailed account of how costs are determined when unexpected developments occur during litigation. The court’s approach is methodical: applying existing rules strictly while requiring prompt action for budget revisions, setting a high bar for oppressive conduct, and confirming that Part 36 consequences operate on an “all or nothing” basis subject to the injustice discretion.

Part 36 Consequentials | Enhanced Interest, Indemnity Costs And 100% Payment On Account

CPR 36.17 And The Just Rewards Of A Good Part 36 Offer

CPR 3.15A | Costs Budget Revisions | Significant Developments And The Need To Act Promptly

Significant Developments And The New Precedent T

CPR 44.2(8) | Payments On Account In Costs Budgeted Cases

Costs Thrown Away, Indemnity Costs And Payments On Account

Allocation to Multi-Track Automatically Disapplies Fixed Costs Regime, Enabling Standard Basis Cost Assessment for Part 36 Offer Acceptance

Case Law, Detailed Assessment, Fixed & Predictable Costs, New Costs Blog, Part 36, Personal Injury

Background

On 11 April 2025, Mrs Justice Stacey delivered a judgment in the High Court of Justice, King’s Bench Division regarding an appeal in the case of Miss Laura Attersley v. UK Insurance Limited (2025 EWHC 884 (KB)). The appellant, Miss Laura Attersley, initially brought a claim for damages in the tort of negligence following a road traffic accident, and the respondent was UK Insurance Limited, the insurer of the other driver involved.

The claim began under the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents (RTA Protocol), but subsequently exited it at the defendant’s request. The claimant issued Part 7 proceedings claiming up to £150,000 damages and, later, accepted a Part 36 offer from the defendant for £45,000 after the claim had been allocated to the multi-track. The principal matter on appeal was the determination of whether the claimant was entitled to fixed costs or costs assessed on the standard basis up until the point of the expiry of the relevant period of the Part 36 offer accepted late.

The procedural history began on 9 March 2018 when the claimant was involved in a road traffic accident in Southend on Sea, Essex. Ten days later, on 19 March 2018, the claimant’s solicitors submitted a Claim Notification Form (RTA1) under the RTA Protocol. The defendant requested the claim exit the RTA Protocol on 9 April 2018 due to disputed liability. Subsequently, on 29 April 2019, liability was admitted by the defendant. On 12 February 2021, the claimant issued Part 7 proceedings with the particulars of claim dated 13 January 2021, escalating the damages claimed to up to £150,000 based on ongoing physical and psychological issues, supported by medical reports.

The claim was allocated to the multi-track on 5 January 2022, and the trial was scheduled, with extensive expert evidence anticipated. Nearly a year later, on 8 July 2022, the claimant accepted the defendant’s Part 36 offer of £45,000. A subsequent dispute arose regarding the costs consequences of this late acceptance, ultimately leading to the appeal heard on 14 October 2024.

Costs Issues Before the Court

The core issue before the High Court was the costs implications arising from the claimant’s late acceptance of the Part 36 offer. Specifically, the court needed to determine whether the claimant was entitled to her reasonable costs assessed on the standard basis up to the expiry of the Part 36 offer, or whether she was restricted to fixed costs up to that date, pursuant to CPR 36.20 as it was then in force.

Central to the issue was the interplay between CPR 45.29B, which pertains to fixed costs under Section IIIA of Part 45 for cases that have exited the RTA Protocol and not been allocated to the multi-track, and Part 36.20, which encompasses costs consequences of accepting a Part 36 offer for such cases. The contention primarily revolved around whether the rule amendments following Qader v Esure [2017] removed the application of the fixed costs regime upon allocation to the multi-track, thus entitling the claimant to costs assessed on the standard basis.

The Parties’ Positions

The claimant argued that, under CPR 45.29B, the fixed costs regime ceased to apply once the case was allocated to the multi-track, implying she was entitled to costs assessed on the standard basis as per CPR 36.13. Relying on Qader v Esure, she contended that the rule amendment intended to disapply fixed costs retrospectively upon multi-track allocation.

On the other hand, the defendant maintained that the claimant was only entitled to fixed costs until the Part 36 offer acceptance deadline per CPR 36.20. They argued that this interpretation was necessary to prevent an absurd outcome where claimants could benefit disproportionately from late offer acceptances and to uphold the overarching legislative intention to encourage early settlement and cost proportionality.

The Court’s Decision

Mrs Justice Stacey reviewed the statutory provisions and case law to ascertain the proper interpretation of the conflicting CPR rules. The judgment emphasised that the intention behind the CPR amendments following Qader was explicit in disapplying the fixed costs regime upon allocation to the multi-track. The court noted that this applied retrospectively, provided there had been a judicial determination for allocation to the multi-track.

Therefore, the court held that CPR 36.20 did not apply where a case had been allocated to the multi-track. Consequently, the claimant was entitled to her reasonable costs on the standard basis up to the expiry of the relevant period of the Part 36 offer, thereby overturning the lower court’s ruling that limited her to fixed costs.

The appeal was allowed, and the claimant’s costs up to the Part 36 offer expiry were to be assessed based on the standard basis under Part 44 principles. This outcome aligned with the statutory intention of CPR amendments and provided clarity on the costs implications in multi-track allocations.