Yes, a Part 36 offer can generally be withdrawn, but whether the offeror needs the court’s permission to do so depends entirely on timing. After the relevant period (usually 21 days) has expired, and provided the offeree hasn’t already accepted, the offeror can withdraw the offer simply by serving written notice, and no permission is required. Before the relevant period expires, withdrawal is still possible, but if the offeree serves notice of acceptance before that period runs out, the offeror will usually need the court’s permission to withdraw.

Withdrawing an Offer After the Relevant Period Has Expired

 Once the relevant period has run its course, typically 21 days from the date the offer was made, and the offeree has not served notice of acceptance, CPR 36.9 allows the offeror to withdraw the offer or change its terms to be less advantageous without needing the court’s permission. This is the more straightforward scenario: the offer has simply not been taken up within the time allowed, and the offeror is free to walk away from it or revise it.

Withdrawal at this stage is generally done by serving written notice on the offeree. Once served, the offer ceases to be capable of acceptance, and it will no longer carry the Part 36 cost consequences, including enhanced interest, indemnity basis costs, and any interest set above the base rate, that otherwise would have applied had it been accepted or beaten at trial.

Withdrawing an Offer Before the Relevant Period Expires

The position is more restrictive where the offeror wants to withdraw or downgrade the offer before the relevant period has expired. CPR 36.10 governs this situation, and the outcome generally turns on whether the offeree manages to accept before the withdrawal takes effect.

Where the offeror serves notice of withdrawal before expiry of the relevant period, and the offeree has not served notice of acceptance by the time the relevant period ends, the withdrawal notice simply takes effect at that point, again without needing the court’s permission.

However, where the offeree serves notice of acceptance of the original offer before the relevant period expires, that acceptance generally takes effect, and the case is treated as settled, unless the offeror applies to the court for permission to withdraw the offer within 7 days of the offeree’s notice of acceptance. This creates a genuine race against the clock: if a withdrawal notice and a notice of acceptance are served within a short time of each other, the effectiveness of the acceptance can turn on whether the offeror successfully obtains the court’s permission to withdraw afterwards.

When Will the Court Give Permission to Withdraw?

The court’s permission to withdraw a Part 36 offer during the relevant period is not given automatically. The established test, developed through case law including Flynn v Scougall and more recent decisions applying it, is generally whether there has been a sufficient change of circumstances since the offer was made to make it just to permit the withdrawal.

What counts as a sufficient change of circumstances is assessed on the specific facts of each case. Examples that have supported permission in reported decisions include new evidence emerging that puts a materially different complexion on the case, or a relevant judicial decision that has shifted the general judicial approach to the type of claim in question. A simple change of mind, or the offeror’s own reassessment of litigation risk without any genuine change in the underlying circumstances, is unlikely to be sufficient on its own.

This means that an offeror who wants to withdraw an offer before the relevant period ends should be prepared to explain, with evidence, what has actually changed since the offer was made, rather than relying on a general submission that the offer no longer reflects their preferred litigation strategy.

Improving an Offer Is Different from Withdrawing It

 It’s worth noting that the permission requirement applies specifically to withdrawal or to changing an offer’s terms to be less advantageous to the offeree. Where an offeror instead wants to improve an offer, increasing the sum offered to a claimant, for example, this is generally treated not as a withdrawal of the original offer but as a new offer on more favourable terms. No permission is required for this at any stage, and the improved offer will typically carry its own fresh relevant period, usually a further 21 days unless a longer period is specified.

What Happens Once an Offer Has Been Validly Withdrawn?

Once a Part 36 offer has been effectively withdrawn, whether with or without the court’s permission as the circumstances require, it can no longer be accepted, and it stops attracting the automatic costs consequences under Part 36 from the date the withdrawal takes effect. The parties remain free to negotiate further or to make new offers, but the withdrawn offer itself falls away as a Part 36 offer.

A withdrawn Part 36 offer may still, in some circumstances, be referred to as part of the wider history of settlement negotiations, though it will generally no longer carry the specific automatic consequences that Part 36 attaches to an offer that is beaten at trial. Parties who are unsure whether a previous offer remains relevant to a costs argument after withdrawal should take specific advice on the point, since the position can depend on the detail of what was said and when.

Frequently Asked Questions

Does an offeror need the court’s permission to withdraw a Part 36 offer?

It depends on timing. After the relevant period has expired, generally no permission is needed provided the offeree hasn’t already accepted. Before the relevant period expires, permission is generally only needed if the offeree serves notice of acceptance before the offeror’s withdrawal takes effect.

How long does an offeror have to apply for permission to withdraw after the offeree accepts?

Generally, 7 days from the date the offeree serves notice of acceptance, where that acceptance was served before expiry of the relevant period.

What test does the court apply when deciding whether to allow withdrawal?

The court will generally look at whether there has been a sufficient change of circumstances since the offer was made, such that it would be just to permit the withdrawal. A simple change of mind is unlikely to be enough.

Can a party improve a Part 36 offer without needing permission?

Yes. Improving an offer to make it more advantageous to the offeree is generally treated as a new offer rather than a withdrawal, so no permission is required, and a fresh relevant period will typically apply.

Speak to Greener Costs About Part 36 Strategy

Whether an offer can be withdrawn, and what happens to its costs consequences if it is, can have a significant effect on the overall costs position in a case, and the mechanics under CPR 36.9 and 36.10 are easy to get wrong under time pressure. Greener Costs advises solicitors and costs draftsmen across England and Wales on Part 36 strategy, including the costs consequences of offers made, accepted, beaten, or withdrawn during litigation and at detailed assessment.

Contact Greener Costs on 01204 263047 or info@greenercosts.co.uk to discuss a Part 36 matter.