Part 36 of the Civil Procedure Rules is one of the most powerful tools in civil litigation, designed to encourage settlement and impose clear costs consequences on parties who fail to accept reasonable offers. Many ask, ‘when can the court depart from part 36?’.

In most cases, the rules are applied strictly. However, there are circumstances where the court may depart from Part 36 and refuse to apply the usual cost consequences. Understanding when this can happen is essential for both claimants and defendants when making or responding to offers to settle.

 

What Is Part 36 and Why Does It Matter?

Part 36 governs formal offers to settle in civil litigation in England and Wales. These offers carry automatic cost consequences depending on whether they are accepted and how they compare to the final judgment.

For example:

• If a claimant fails to beat a defendant’s Part 36 offer, the defendant may be entitled to their costs from the expiry of the relevant period
• If a claimant obtains a judgment more advantageous than their own Part 36 offer, enhanced benefits may apply

These consequences can include costs on the indemnity basis, interest on those costs, and an additional amount calculated by applying a prescribed percentage (up to £75,000).

 

The General Rule: Costs Consequences Apply Automatically

The strength of Part 36 lies in its certainty. Once the relevant period (usually 21 days) has expired, the cost consequences are intended to follow automatically.

For example:

• Where a claimant beats their own offer, the court will usually order the defendant to pay enhanced costs
• Where a claimant fails to beat a defendant’s offer, the claimant may be ordered to pay the defendant’s costs

This structure is designed to incentivise realistic offers and discourage unnecessary litigation.

 

The Exception: When It Would Be Unjust

The key test is whether applying the usual Part 36 consequences would be unjust.

Under the Civil Procedure Rules, the court has discretion to depart from the standard outcomes if it considers it unjust to apply them in a particular case. This is a high threshold; it is not enough that the result seems harsh or unfavourable.

Instead, the court will consider all the circumstances of the case.

 

Factors the Court Will Consider

When deciding whether to depart from Part 36, the court may take into account several factors, including:

1. The Terms of the Offer

The clarity and structure of the Part 36 offer are important. If an offer is ambiguous, difficult to interpret, or fails to comply properly with the rules, the court may be less willing to enforce its consequences.

The court will also consider whether the offer represented a genuine attempt to settle the claim.

2. The Stage at Which the Offer Was Made

Timing can be critical. An offer made very late in proceedings, for example, shortly before trial, may carry less weight, particularly if the other party had limited time to properly assess it.

Similarly, offers made before key evidence is available may be treated differently.

3. The Information Available to the Parties

The court will consider what information was available when the offer was made and whether the receiving party had a fair opportunity to evaluate it.

If important evidence only emerged after the expiry of the relevant period, this may influence whether it is unjust to apply the usual consequences.

4. The Conduct of the Parties

Conduct throughout the litigation is a significant factor.

If one party has behaved unreasonably, for example, by failing to engage with settlement discussions or by adopting an overly aggressive approach, the court may take this into account when making a costs order.

5. Whether the Offer Was a Genuine Attempt to Settle

Part 36 is designed to encourage realistic offers. If an offer is purely tactical or set at a level that does not genuinely reflect the merits of the case, the court may be less inclined to apply its consequences.

 

Common Scenarios Where the Court May Depart

While each case turns on its facts, there are some recurring scenarios where the court may depart from Part 36.

Late Acceptance of a Part 36 Offer

Where a Part 36 offer is accepted after the expiry of the relevant period, the usual rule is that the accepting party must pay the other side’s costs for the delay.

However, the court may depart from this if there is a good reason for the delay, such as new evidence or a change in circumstances.

Failure to Beat an Offer by a Narrow Margin

In some cases, a claimant may fail to beat a defendant’s Part 36 offer by a very small amount.

While this does not automatically prevent the usual consequences from applying, the court may consider whether strict application would be unjust in light of the margin involved.

Offers Made Without Sufficient Information

If a party was not in a position to properly evaluate an offer, for example, due to missing evidence or incomplete disclosure, the court may take this into account.

This is particularly relevant in complex or multi-track cases where key issues may only become clear at a later stage.

Technical Non-Compliance

If a Part 36 offer does not comply with the formal requirements set out in the Civil Procedure Rules, it may not attract the usual automatic consequences.

However, the court may still consider the offer under its general discretion when making a costs order.

 

Indemnity Costs and Enhanced Consequences

Where Part 36 consequences do apply, they can be significant.

If a claimant beats their own Part 36 offer, the court may order:

• Costs on the indemnity basis from the expiry of the relevant period
• Interest on those costs at a rate above base rate
• Interest on damages
• An additional amount calculated as a percentage of the sum of money awarded (capped at £75,000)

These enhanced consequences are designed to reward parties who make reasonable offers and penalise those who fail to accept them.

 

Practical Considerations for Litigants

Given the potential impact of Part 36, parties should approach offers to settle with care.

Key considerations include:

• Ensuring offers are clearly drafted and compliant
• Making offers at an appropriate stage in proceedings
• Regularly reviewing offers as new evidence emerges
• Carefully evaluating any offer received

Failure to engage properly with Part 36 can have serious cost consequences, particularly in higher-value litigation.

 

How Greener Costs Can Assist

Part 36 is one of the most complex and high-impact areas of civil litigation costs. Understanding when the court may depart from the usual rules, and how to protect your position, requires careful analysis and strategic planning.

Greener Costs provides specialist advice on all aspects of costs law, including Part 36 offers, costs consequences, and disputes relating to indemnity costs and interest.

Whether you are seeking to challenge a costs order, assess the risks associated with an offer, or navigate complex multi-track litigation, expert guidance can help ensure the best possible outcome.

If you require advice on Part 36 or civil litigation costs, contact Greener Costs today.
📞 Call: 01204 263047
📧 Email: info@greenercosts.co.uk

 

Frequently Asked Questions

1. What is the “relevant period” in a Part 36 offer?

The relevant period is usually 21 days from the date the offer is made, during which the offer can be accepted without triggering adverse cost consequences.

2. Can the court ignore Part 36 consequences completely?

Yes, but only if it would be unjust to apply them. This is a high threshold, and the court will consider all the circumstances before departing from the usual rules.

3. What happens if a claimant fails to beat a defendant’s Part 36 offer?

The claimant may be ordered to pay the defendant’s costs from the expiry of the relevant period, which can significantly increase the overall financial impact.

4. Are Part 36 offers only relevant in multi-track cases?

No, Part 36 applies across different tracks, including fast track and multi-track cases, and can have important cost consequences in both.