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

Where claimants beat their own Part 36 offers, the additional amount under CPR 36.17(4)(d) is an “all or nothing” entitlement. The court must award it unless the defendant establishes that doing so would be unjust.

BARRY & ANOR V BARRY [2025] EWHC 819 (KB)

In Barry v Barry the court determined costs following a trial in which the claimants had beaten their own Part 36 offers. The central costs issue was whether the defendant could resist the full consequences of CPR 36.17(4), including the additional amount of up to £75,000. The court held that the additional amount is an “all or nothing” entitlement: it must be awarded unless the defendant establishes that doing so would be unjust. Here, the offers were genuine, made pre-issue after rejected mediation, and the defendant failed to discharge that burden. The court awarded the maximum £75,000 additional amount, indemnity costs, and enhanced interest at 8% above base rate. Separately, the court refused budget variations for disclosure and witness statements due to lack of promptness under CPR 3.15A, but allowed variations for trial preparation following the defendant’s late amendment. The judgment confirms the high threshold for “oppressive behaviour” under PD 3D paragraph 13, requiring proof of intentional causation rather than merely aggressive litigation.

I have no hesitation in concluding that the claimants' offers bear all these positive attributes. Mr and Mrs Barry did not want to litigate this matter against their son. They tried to mediate. They made reasonable offers to settle. Denis Barry was not interested. His case failed in virtually every particular at trial. His submission on this matter comes nowhere close to persuading me that it would be unjust not to order the mandated additional amount entitlement. Mr Sawtell submits that in fact it would be 'just' to make the order. That is not the test. He does not have to establish that. The default of the scheme is clear. 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.

Citations

Silvia Henry v News Group Newspapers Ltd [2013] EWCA Civ 19 Costs budgets serve as limits on recoverable costs, ensuring that incurred costs are reasonable and proportionate unless there is good reason for departure. Elvanite Full Circle Ltd v AMEC Earth & Environmental (UK) Ltd [2013] EWHC 1643 (TCC) Applications to revise budgets after judgment require good reason and must be supported by clear evidence justifying the delay. Jones v Padavatton [1969] 1 WLR 328 Intra-family litigation that could have been resolved amicably may incur unnecessary costs, and courts lament disputes driven to costly and public trials. JLE v Warrington and Halton Hospitals NHS Trust Foundation [2019] EWHC 1582 (QB) The additional amount under CPR 36.17(4)(d) is an all-or-nothing entitlement and will be awarded unless it is unjust. OOO Abbott v Design & Display Ltd [2014] EWHC 3234 (IPEC) The additional amount under Part 36 is not compensatory but designed to incentivise early settlement. Thai Airways International Public Co Ltd v KI Holdings Co Ltd [2015] EWHC 1476 (Comm) The additional amount in CPR 36.17(4) penalises the unreasonable refusal to accept a reasonable offer and promotes settlement. Cashman v Mid Essex Hospital Services NHS Trust [2015] EWHC 1312 (QB) The additional amount under Part 36 is intended to penalise a party who unreasonably refuses a realistic offer, supporting proportional cost recovery. Mohammed v The Home Office [2018] EWHC 3051 (QB) The “sum awarded” in CPR 36.17(4)(d) includes base interest but excludes enhanced Part 36 interest when calculating the additional amount. BXB v Watch Tower and Bible Tract Society of Pennsylvania [2020] EWHC 656 (Admin) Enhanced interest under Part 36 should be assessed in light of both its compensatory and policy functions, without presuming a default rate. Petrotrade Inc v Texaco Ltd [2002] 1 WLR 947 (Note) Enhanced interest awards partially reflect compensation for the inconvenience and disruption caused to the claimant by prolonged litigation. OMV Petrom SA v Glencore International AG [2017] EWCA Civ 195 The purpose of enhanced interest under Part 36 is to encourage settlement and to make the best use of court resources. Mate v Mate [2023] Costs LR 1425 In private family-related litigation, the court may assess enhanced interest below the 10% cap based on fairness and proportionality. Thomas Pink Ltd v Victoria’s Secret UK Ltd [2014] EWHC 3258 (Ch) Incurred costs are less predictable and attract a lower rate of payment on account, commonly around 50% where costs are awarded on the standard basis. Cleveland Bridge UK Ltd v Sarens (UK) Ltd [2018] EWHC 827 (TCC) Budgeted costs are a reliable guide for payments on account as they are presumed reasonable and proportionate; varied budgets attract a discount due to reduced scrutiny. Sharp & Others v Blank & Others [2020] EWHC 1870 (Ch) Budget variations do not enjoy the same judicial scrutiny as original budgets and should be treated with caution when awarding payments on account. MacInnes v Gross [2017] EWHC 127 (QB) Approved budgets are a strong basis for determining payments on account, given their prior judicial approval of reasonableness and proportionality. Harrison v University Hospitals Coventry & Warwickshire NHS Trust [2017] EWCA Civ 792 Reinforced the principle that budgeted costs are presumed reasonable and proportionate unless a good reason is shown for departing from them.

Track allocation housing disrepair CPR 46.13 settlement sum costs restriction SCCO

MRO fee markup cap 25% detailed assessment personal injury Senior Courts Costs Office

Security for costs refused CPR 25.27 very high probability success excessive estimate King's Bench

IPEC scale costs transfer Patents Court PD 30 para 9.2 costs caps Court of Appeal

Costs budget variation CPR 3.15A promptness significant development unfair prejudice Chancery Division

Costs budgeting inter partes proportionality high hourly rates AI disclosure Patents Court CPR 3E

Beneficiary personal liability section 71(3) Solicitors Act 1974 indemnity costs VAT self-supply SCCO

Summary assessment indemnity costs unless order payment on account disclosure default Chancery Division

Provisional assessment set aside CPR 3.1(7) points of dispute filing duty PD 47 para 14.3 SCCO

Fixed recoverable costs police claims CPR 26.9(10)(e) intentional tort exemption

Key Points

Applications to vary a costs budget under CPR 3.15A must demonstrate both a “significant development” in the litigation and prompt submission of the application; delays without good reason render the application liable to refusal. [11–12, 17, 20]
A “significant development” justifying a revision to a costs budget includes steps or events that were not, and could not reasonably have been, anticipated at the time the budget was approved or agreed. [15–16, 23, 25–26]
The “oppressive behaviour” provision in Practice Direction 3D paragraph 13 requires an element of intentional conduct aimed at causing another party to spend costs disproportionately, and cannot be founded merely on robust litigation tactics or adversarial conduct. [12, 18–19]
Where a claimant beats its own Part 36 offer, the court must order the consequences in CPR 36.17(4)—including an “additional amount”—unless satisfied that it would be unjust to do so; the burden lies on the defendant to establish unjustness. [33–35]
For awards of interest under CPR 36.17(4)(a) and (c), the applicable rate is at the discretion of the court, up to 10% above base rate, and should reflect both the private compensatory function and the public interest in encouraging early settlement. [36–40]

"I judge that the critical words are 'in seeking to cause'. Seeking connotes on a natural and ordinary reading intentional causation. I recognise that causation may be in two distinct senses: a 'but for' (sine qua non) causation or a more deliberately targeted intentionality. I judge that the latter is the correct reading. This is because one must interpret the phrase in the context of its neighbouring term 'behaving oppressively'… This was a bitterly contested family dispute, as my trial judgment makes clear. The defendant was unquestionably intent on testing his parents' case to the extent permissible. The approach at trial was to leave no stone unturned and take, if not every point, then almost all of them… Although my judgment fell very heavily against Denis Barry and made serious criticisms of his evidence, I never once sensed that he was trying to run up costs needlessly or deliberately to oppress or coerce his parents."

Key Findings In The Case

The defendant’s late application to amend his defence to include a lack of intention to create legal relations constituted a significant development which justified variations to the claimants’ trial preparation and trial length costs budgets; however, much of the additional solicitor time claimed was not reasonably incurred at partner level, and the court allowed a reduced sum accordingly [23–27].
The court found that the claimants’ application to vary their costs budget in respect of disclosure and witness statements lacked promptness as required under CPR 3.15A(2) and was therefore refused; the claimant failed to provide sufficient justification for the delay between the relevant developments and the application to vary [17–20].
The allegations of “oppressive behaviour” by the defendant, relied upon as alternative justification for increased costs under PD 3D paragraph 13, failed because there was no evidence of intentional conduct aimed at causing the claimants to incur disproportionate costs; the defendant’s conduct, while robust and at times confrontational, did not display the requisite causative intent [18–19].
The claimants beat their own Part 36 offers, which were made reasonably and genuinely to settle the dispute, involved significant discounts, and were made well in advance of trial—thus triggering the mandatory consequences under CPR 36.17(4), including an “additional amount” of £75,000, as the defendant failed to show it was unjust to make such an award [30–36].
In determining the appropriate interest rate under CPR 36.17(4), the court ordered an enhanced rate of 8% above base rate on both damages and costs, taking into account the need to compensate the claimants and to uphold the public policy incentive for early settlement in the face of the defendant’s refusal to accept reasonable offers [36–40].

"For the varied budget, I make a further reduction from 90 per cent in recognition of the fact that these budgeted amounts did not receive the same degree of scrutiny that would occur at a CCMC. Thus the costs subject to the variation do not have the same level of 'approval', to borrow a term from Coulson J, and thus the 'degree of confidence' is correspondingly reduced."

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.

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