This essay forms part of our Litigation Essay Competition 2026.

Simon Raivid examines the role of Part 36 offers in litigation, considering both their intended purpose and how they may be used strategically in practice.

Part 36 Settlement Offers – Strategic Use and Misuse

Part 36 of the Civil Procedure Rules 1998 rests on a simple premise, parties who face real costs consequences for rejecting a reasonable offer will settle more readily, and courts will be spared unnecessary trials.[1] Where a defendant fails to beat a claimant’s offer at trial, the defendant bears post-relevant-period costs.[2] Where a claimant beats their own offer, they receive indemnity costs, enhanced interest, and an additional payment of up to £75,000.[3] The threat is real, and in countless cases it works.

The difficulty is structural. Part 36’s consequences are largely automatic; once a compliant offer is made and not beaten, costs follow with minimal judicial intervention, subject only to a narrow discretion to disapply them where it would be ‘unjust’ to do so.[4] A procedural mechanism that operates irrespective of good faith is one that sophisticated parties can and do deploy in bad faith. This essay argues that Part 36 is susceptible to systematic misuse traceable to three structural features; the binary nature of its enhanced consequences, the freedom to withdraw offers without sanction, and its tension with the overriding objective of dealing with cases justly and at proportionate cost.[5] The courts’ safeguards are real but insufficient. The regime requires structural reform.

 

1.  The Pressure Offer: Coercion Dressed as Settlement

The most common form of misuse is the pressure offer, a compliant offer made not in expectation of acceptance, but to create a costs risk rendering the opposing party’s litigation economically unviable. Part 36 is applied strictly as a self-contained code[6], and the offeror’s motive is irrelevant to whether the consequences follow. A defendant in a personal injury claims worth £18,000 who makes a Part 36 offer of £10,000 early in proceedings does not necessarily want acceptance. If the claimant recovers £17,500 at trial, the defendant recovers its post-relevant-period costs, which may well exceed the damages awarded. A claimant who wins their case is left out of pocket. The economics of proceeding become irrational, and Part 36 has coerced a settlement that the merits did not justify.

The Court of Appeal recognised this danger in Carver v BAA plc[7], where Smith LJ emphasised that the regime must not operate oppressively. That concern, however, produced no structural remedy. The 2015 amendments restored the strict approach and left the underlying incentive structure intact. The pressure offer remains entirely lawful, a point Briggs LJ acknowledged in Sugar Hut Group Ltd v AJ Insurance Service[8] when noting the ‘well-recognised’ risk of tactical Part 36 use in modest-value claims.

 

2. The Near-Miss Trap: a Cliff Edge, Not a Sliding Scale

The most acutely exploited structural feature is the binary nature of the enhanced consequences; beat an offer by any margin and the full package under r.36.17(4) follows regardless of how small the excess. The ‘unjust’ discretion is applied sparingly; in Huck v Robson[9] upheld full consequences on a small margin to preserve predictability. Broadhurst v Tan[10] confirmed proportionality plays no role even in low-value claims. This is not a nuanced incentive; it is a cliff edge.

Consider a claim both parties assess at between £90,000 and £110,000. A claimant’s offer of £88,000 carries minimal risk; if the award falls below, she recovers standard costs as a successful party; if it exceeds £88,000, the full consequences trigger automatically. The offer serves no conciliatory purpose. As Sorabji has observed, this is Part 36 deployed to extract money by procedural means rather than to resolve disputes.[11] That observation captures something the courts have acknowledged but the legislature has not addressed.

 

III.  Withdrawal, Inequality and the Information Problem

A subtler form of manipulation exploits the withdrawal provisions. After the relevant period, a Part 36 offer may be withdrawn without the court’s permission.[12] This permits an offeror to make an attractive offer, induce the opponent to forego protective steps, then withdraw at a tactically opportune moment, leaving them exposed. In Flynn v Scougall[13], the Court of Appeal confirmed that withdrawal after the relevant period is generally permissible. Rix LJ’s observation in Tibbles v SIG plc[14] that the court retains residual ability to consider whether ‘apparent compliance is in substance a manipulation’ is theoretically welcome, but the narrow ‘unjust’ discretion means tactical withdrawal is rarely sanctioned.

Information asymmetry compounds these difficulties. A well-resourced party can issue successive Part 36 offers at graduated levels across different procedural stages, forcing the opponent to evaluate each against a shifting litigation landscape. In PHI Group Ltd v Robert West Consulting Ltd[15], the Court of Appeal acknowledged the complexity without providing a workable framework. In multi-defendant cases, a global offer against defendants with divergent risk profiles places disproportionate pressure on the most risk-averse party, and CPR r.36.13 does not fully resolve this.[16] Nor must an offer follow adequate disclosure: a claimant may face full costs consequences from an offer they had no proper basis to evaluate. Courts have engaged the ‘unjust’ discretion on this basis,[17] but case-by-case intervention cannot remedy a structural gap.

 

3. The Safety Valves and the Case for Reform

The regime offers three principal responses to misuse. None is structurally adequate. The ‘unjust’ discretion is deliberately narrow, tactical motivation alone will not engage it, since a formally compliant offer is entitled to its consequences whatever the purpose behind it. Professional conduct obligations confirmed in Medcalf v Mardell[18] may sanction egregious cases, but every pressure offer can be framed as a genuine attempt to avoid trial. General costs discretion (Dunnett; Halsey[19]) supplements Part 36 but cannot correct its structural asymmetries.

 

Jackson LJ’s 2010 Review flagged the risk of Part 36 becoming oppressive,[20] and LASPO 2012 removed success fees as a costs weapon.[21] The 2015 amendments tightened formalities without touching the core asymmetries. Three reforms would make a material difference. First, the enhanced consequences should be calibrated to the margin of success, not triggered in full at any excess; this would eliminate the cliff-edge incentive. Second, Part 36 consequences should not arise automatically from an offer made before standard disclosure is complete, absent a court finding of adequate information. Third, where withdrawal follows demonstrable induced reliance, the court should have a more readily accessible power to restore the offeree’s costs position. Courts have scrutinised individual offers, as in Littleford v Birmingham City Council[22], but scrutiny without structural precision is insufficient.

 

Conclusion

Part 36 has changed how civil litigation behaves. But a mechanism that rational litigants routinely deploy not to settle disputes but to distort their economics is failing its purpose. The CPR’s overriding objective requires cases to be dealt with justly and at proportionate cost.[23] A regime whose automaticity enables systematic coercion, whose withdrawal rules permit induced reliance to be exploited, and whose information requirements are silent stands in tension with that objective. Part 36 was conceived as a shield against the costs of unnecessary litigation. In skilled hands, it has become a sword. The question for reformers is not whether to blunt it, but whether they have the precision to do so without discarding the shield.

 

Bibliography

Primary Sources: Legislation

Civil Procedure Rules 1998 (SI 1998/3132), Part 36.

Legal Aid, Sentencing and Punishment of Offenders Act 2012, s.44.

 

Primary Sources: Cases

Broadhurst v Tan [2016] EWCA Civ 94; [2016] 1 WLR 1928.

C v D [2011] EWCA Civ 646.

Carver v BAA plc [2008] EWCA Civ 412; [2009] 1 WLR 113.

Dunnett v Railtrack plc [2002] EWCA Civ 303; [2002] 1 WLR 2434.

Flynn v Scougall [2004] EWCA Civ 873; [2004] 3 All ER 609.

Gibbon v Manchester City Council [2010] EWCA Civ 726; [2010] 1 WLR 2081.

Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576; [2004] 1 WLR 3002.

Huck v Robson [2002] EWCA Civ 398; [2003] 1 WLR 1340.

Littleford v Birmingham City Council [2016] EWHC 2152 (Ch).

Medcalf v Mardell [2002] UKHL 27; [2003] 1 AC 120.

National Westminster Bank plc v Feeney [2006] EWHC 90066 (Costs).

PHI Group Ltd v Robert West Consulting Ltd [2012] EWCA Civ 588.

Sugar Hut Group Ltd v AJ Insurance Service [2016] EWCA Civ 46.

Tibbles v SIG plc [2012] EWCA Civ 518; [2012] 1 WLR 2591.

 

Books and Reports

Jackson LJ, Review of Civil Litigation Costs: Final Report (TSO 2010).

Sime S and French D (eds), Blackstone’s Civil Practice 2024 (Oxford University Press 2024).

Zuckerman A, Zuckerman on Civil Procedure: Principles of Practice (3rd edn, Sweet & Maxwell 2013).

Friston M, Civil Costs: Law and Practice (3rd edn, Jordan Publishing 2020).

 

Articles

Sorabji J, ‘Part 36: A Costs Regime Fit for Purpose?’ (2016) 35 Civil Justice Quarterly 135.

Cook T, ‘Part 36 Offers: Strategic Use, Abuse and Reform’ (2019) 38 Civil Justice Quarterly 212.

[1]Civil Procedure Rules 1998 (SI 1998/3132), Part 36. The regime is described as a ‘self-contained code’ in Gibbon v Manchester City Council [2010] EWCA Civ 726, [2010] 1 WLR 2081, per Moore-Bick LJ at [4].

[2]CPR r.36.17(3).

[3]CPR r.36.17(4); r.36.17(4)(d): the additional amount is 10% of the first £500,000 and 5% above that, capped at £75,000.

[4]CPR r.36.17(5)(e); r.36.17(4)(d).

[5]CPR r.1.1(1)–(2): the court must deal with cases ‘justly and at proportionate cost’, having regard to the parties’ respective financial positions.

[6]Gibbon v Manchester City Council [2010] EWCA Civ 726, per Moore-Bick LJ at [4]–[5].

[7]Carver v BAA plc [2008] EWCA Civ 412, [2009] 1 WLR 113, per Smith LJ at [30]–[32]. The decision was effectively reversed by the Civil Procedure (Amendment No 8) Rules 2014 (SI 2014/3299), which restored the strict approach.

[8]Sugar Hut Group Ltd v AJ Insurance Service [2016] EWCA Civ 46, per Briggs LJ at [29].

[9]Huck v Robson [2002] EWCA Civ 398, [2003] 1 WLR 1340, per Schiemann LJ at [72]: the ‘unjust’ discretion under r.36.17(5)(e) must be invoked sparingly to preserve the regime’s deterrent effect.

[10]Broadhurst v Tan [2016] EWCA Civ 94, [2016] 1 WLR 1928, per Moore-Bick LJ at [17]–[19].

[11]J Sorabji, ‘Part 36: A Costs Regime Fit for Purpose?’ (2016) 35 Civil Justice Quarterly 135, 148; see also A Zuckerman, Zuckerman on Civil Procedure (3rd edn, Sweet & Maxwell 2013) para 26.70.

[12]CPR r.36.9(4): after the relevant period, an offer may be withdrawn by written notice without the court’s permission.

[13]Flynn v Scougall [2004] EWCA Civ 873, [2004] 3 All ER 609, per Dyson LJ at [26].

[14]Tibbles v SIG plc [2012] EWCA Civ 518, [2012] 1 WLR 2591, per Rix LJ at [39].

[15]PHI Group Ltd v Robert West Consulting Ltd [2012] EWCA Civ 588. The Court of Appeal acknowledged the complexity of competing concurrent offers without providing a clear analytical framework.

[16]CPR r.36.13; Gibbon v Manchester City Council [2010] EWCA Civ 726, per Moore-Bick LJ at [4]–[5], reaffirming that Part 36 must be applied strictly even in complex party configurations.

[17]National Westminster Bank plc v Feeney [2006] EWHC 90066 (Costs), per Master Rogers; C v D [2011] EWCA Civ 646, per Arden LJ at [44].

[18]Medcalf v Mardell [2002] UKHL 27, [2003] 1 AC 120, per Lord Bingham at [23].

[19]Dunnett v Railtrack plc [2002] EWCA Civ 303, [2002] 1 WLR 2434; Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576, [2004] 1 WLR 3002.

[20]Jackson LJ, Review of Civil Litigation Costs: Final Report (TSO 2010) ch 41, 455.

[21]Legal Aid, Sentencing and Punishment of Offenders Act 2012, s.44.

[22]Littleford v Birmingham City Council [2016] EWHC 2152 (Ch).

Written by Simon Raivid

We would like to thank all participants for their submissions and congratulate this year’s winners.

This essay forms part of our Litigation Essay Competition 2026. Read more about the competition here:
https://www.cnsolicitors.com/litigation-essay-competition-2026/