UK: Margin By Which Party Beat Own Part 36 Offer Not Relevant In Determining Costs Consequences

Last Updated: 30 July 2019
Article by Anna Pertoldi, Maura McIntosh and Jan O'Neill

The High Court has found that, where a claimant beat its own Part 36 offer by only a very small margin relative to the size of the claim, that was not a relevant factor in determining whether it would be unjust to award the claimant the Part 36 costs consequences in full: JLE v Warrington & Halton Hospitals NHS Trust [2019] EWHC 1582 (QB).

The judge referred to the widely criticised decision in Carver v BAA plc [2008] EWCA Civ 412, which meant that a party who beat an opponent's offer by only a small margin could be penalised in costs as if it had failed to beat the offer. That decision was effectively reversed by the Civil Procedure Rules Committee following a recommendation by Lord Justice Jackson, so that the rules now expressly provide that an offer will be beaten if the court's award is better in money terms by any amount, however small. In the present case, the court was keen not to re-introduce Carver – or in effect the flip-side of Carver – by depriving the offeror of the Part 36 costs consequences (or some of them) simply because it beat its own offer by only a small margin.

The decision re-emphasises the high hurdle required before the court will find that a party who makes a well-judged Part 36 offer will be deprived of the costs consequences that would otherwise follow: the test is whether it would be unjust to award the usual costs consequences (or any of them), and that is a stringent test.


The claimant was successful in her clinical negligence action against the defendant and was awarded her costs. In the subsequent detailed assessment proceedings, she put forward a Part 36 offer of £425,000, in respect of a total claim for costs of some £615,000. She was awarded costs of almost £432,000. That meant she beat her Part 36 offer by just under £7,000.

Part 36 applies to detailed assessment proceedings, by virtue of CPR 47.20(4), with the receiving party treated as the claimant and the paying party the defendant for these purposes. Under CPR 36.17(4), where a claimant obtains a judgment that is more advantageous than its own Part 36 offer, the court must (unless it considers it unjust to do so) order that the claimant is entitled to:

  • under 36.17(4)(a)-(c), indemnity costs and enhanced interest on damages and costs (at up to 10% above base rate) from expiry of the relevant offer period;
  • under 36.17(4)(d), an additional amount of up to £75,000, calculated as 10% of the first £500,000 awarded and 5% of the next £500,000 (the "additional amount").

In the present case Master McCloud awarded the claimant indemnity costs and enhanced interest but not the additional amount. She rejected the claimant's argument that the test of whether it would be unjust to apply the Part 36 costs consequences had to be considered once and for all, as opposed to separately for each individual element. She concluded that, in this case, it would be unjust to award the additional amount, which she described as "a clearly disproportionate sum". She pointed to the following three factors as the most significant in exercising her discretion:

  1. the very small margin by which the offer was beaten relative to the much greater size of the bill;
  2. the fact that where a bill is reduced significantly, it will generally be very difficult for a paying party to know where to pitch an offer; and
  3. the large size of the 10% "bonus" award relative to the margin by which the offer was beaten.

The claimant appealed.


The High Court (Stewart J) allowed the appeal and awarded the additional amount.

The judge agreed with the Master that the test of whether it would be unjust to order the Part 36 costs consequences could be applied separately to each of the sub-paragraphs of CPR 36.17(4).

However, the judge held that the Master had erred in principle in relying on the factors referred to above in concluding that it would be unjust to award the additional amount. Those factors were irrelevant to the court's discretion.

Factor 1 – small margin

The judge noted that, in relation to any money claim, the question of whether a judgment is more advantageous than an offer is defined by CPR 36.17(2) as whether it is "better in money terms by any amount, however small". That wording was introduced by the Civil Procedure Rule Committee, on the recommendation of Lord Justice Jackson, to reverse the effect of the Court of Appeal's decision in Carver. In that case the claimant in fact beat the defendant's Part 36 offer by £51 but the court held that the outcome was not more advantageous than accepting the offer, essentially because the margin was not "worth the fight". The decision was widely criticised as introducing an unhelpful degree of uncertainty into the operation of the rule.

Against that background, the judge in the present case said it is not open to the court to take into account the amount by which a Part 36 offer has been beaten in exercising its discretion as to whether to disapply the costs consequences on grounds of injustice. That would risk re-introducing Carver and its adverse consequences.

Factor 2 – significant reduction in the bill

The judge held that the Master erred in principle in deciding that some difficulty in assessing an offer because the bill was reduced by some 30% could be a reason to find it unjust to make the additional award. If that were permitted it would cause "a real risk of burgeoning satellite litigation".

The judge accepted that there could be circumstances where the fact of a significant reduction in a bill could justify a finding that it would be unjust to award some or all of the Part 36 costs consequences, eg where the inflated level of costs claimed led a defendant to incur expense in investigating the claim before the Part 36 offer was made, but there was no such finding in the present case.

Factor 3 – size of additional award relative to margin

The judge noted that the percentage of the additional amount was decided as a matter of policy as part of the Jackson reforms, as under the previous regime it was considered that a claimant was insufficiently rewarded and a defendant insufficiently penalised when the claimant had made an adequate Part 36 offer. The additional amount was not meant to be compensatory; there is a penal element, as made clear in the Jackson Report. The size of the additional award is therefore not a permissible reason for finding that it would be unjust to award it.

Exercise of discretion

Having found that all three reasons for the Master's conclusion were inadmissible, the judge held that there was nothing unusual about the circumstances of this case so that the high threshold of proving injustice could be properly regarded as met.

The defendant sought to argue that the court could and should award a lesser percentage than the 10% prescribed percentage, ie that it was not an all or nothing award. The judge said it was too late to raise the point but considered, obiter, that in fact there is no such power. In the judge's view, if awarded at all (ie unless it is unjust to award it), the additional amount must be awarded in full.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions