ACCEPTING A PART 36 OFFER MID-TRIAL: The Pyrrhic Victory
- Jan 30
- 11 min read
Updated: Jan 31
CASE SUCCESS: SUFI OSMAN SHEIKH -v- WAKAM (unreported)
ACCEPTING YOUR OPPONENT'S PART 36 OFFER MID-TRIAL MAY BE POSSIBLE, BUT CAN BE UNREASONABLE CONDUCT.
Twice in 2025 we were instructed to accept our opponents' Part 36 Offer mid-trial. Our clients achieved a far more favourable settlement than the courts would have otherwise awarded but it was not without cost.
This article begins with a concise synopsis of the law before examining the principles and procedure involved in accepting your opponent's Part 36 Offer mid-trial. It then concludes with an brief analysis of the aforementioned case. Please note, we use the term 'mid-trial' to denote only that the trial had commenced.
Exclusions:
Content & Advice: As with all content published on our website, this article does not constitute legal advice and you are referred to the terms and conditions of use accordingly.
Criminal Law: Nothing in this article relates to criminal law. But please note, offering a sum of money to a police officer just to go away, would be considered a 'bribe.' The procedures for settling disputes in civil and criminal proceedings are entirely different.
Opinions: Any opinion expressed herein unless otherwise expressly stated is solely the personal view of the author.
SYNOPSIS
For a concise synopsis of the law, please click the below headings to expand the answer.
WHAT IS A PART 36 OFFER OF SETTLEMENT (A PART 36)?
Very briefly, a Part 36 Offer is a written offer of settlement that transcribes and abides with the formalities of Part 36 of the Civil Procedure Rules.
The Overriding Objective of the Civil Procedure Rules (CPR) promotes the use of Alternative Dispute Resolution (ADR). This is with the stated aim of saving expense while ensuring that cases are dealt with justly and at proportionate cost.
Justice and Proportionality necessitate negotiation and the use of offers of settlement including ‘a Part 36 Offer.'
Should your offer of settlement comply with the requirements of CPR Part 36 i.e. the format and the content written in that chapter then, there are the real additional cost consequences associated with accepting or rejecting your Part 36 Offer I.e. your opponent will have to pay you more money which would not have been available had it been 'just', an ordinary offer.
CAN A PART 36 OFFER BE ACCEPTED MID-TRIAL?
Yes. Subject of course to meeting the requirements set out in CPR Part 36:
CPR r.36.11 ACCEPTANCE OF A PART 36 OFFER -
(1): A Part 36 Offer is accepted by serving written notice of the acceptance to the offeror.
(3)(d): The court's permission is required to accept a Part 36 Offer where a trial is in progress.
(4): Where the court gives permission under paragraph (3), unless all the parties have agreed costs, the court must make an order dealing with costs, and my order that the cost consequences set out in CPR r.36.13 apply.
Also important to note:
CPR r.36.3(d). A trial is in progress until it delivers judgement on the material issues.
Do not inform the court of the amount/sum of the Part 36 Offer. It should simple be referred to as 'the [Party]'s Part 36 Offer of [Date].
CAN AN OFFEREE BE STOPPED FROM ACCEPTING A PART 36 OFFER MID-TRIAL?
Yes. Permission of the court is required to accept a Part 36 Offer once the trial has begun. This is not a mere formality.
Houghton v PB Donoghue (Haulage & Plant Hire Ltd) and others [2017] EWHC 1738 (Ch), the court refused a claimant permission under CPR 36.11(3)(d) to accept a defendant's Part 36 offer (made almost six months previously) two days after trial began.
ARE THERE PENALTIES IN ACCEPTING A PART 36 OFFER MID-TRIAL?
Yes potentially. Firstly, the usual CPR Part 36 Cost Consequences will apply i.e. acceptance outside of the relevant period will almost certainly incur additional penalty interest, uplifit and/or a lump sum.
Secondly, additional cost consequences may apply should the court find that the late acceptance of the Part 36 Offer amounted to 'unreasonable conduct.' Should that be the case, then the court will will attach additional cost penalties to its judgement.
The exact penalty will depend in part as to whether the Offeror applied for their costs pursuant either to:
CPR r.44.11: - Court's Powers in Relation to Misconduct, or
CPR r.45.13: - Unreasonable Behaviour in the Fixed Recoverable Costs.
TAKING A CHANCE AT TRIAL - FACTORS THE COURT WILL CONSIDER
In Houghton v PB Donoghue (Haulage & Plant Hire Ltd) and others [2017] EWHC 1738 (Ch),the court considered whether to grant a claimant permission to accept a Part 36 Offer when the trial was in progress.
Brief Material Facts:
This was a construction dispute heard in the Technology & Construction Claims Court (TCC).
The Defendant had made a Part 36 Offer approximately 6 months prior to the start of a multi-day trial.
On the 2nd day of the trial the Claimant having initially rejected the Part 36 Offer of settlement saw the way the wind was blowing and applied in the face of the court for permission to accept the Defendant’s Part 36 Offer.
Firstly, the presiding Morgan J in considering the Claimant’s application referred to two TCC authorities which considered earlier versions of Part 36. The ratio behind both cases was against granting permission when the offeree had waited to see which way the wind was blowing at trial:
Scampla and others -v- Rushmoor Borough Council and another [2008] EWHC 2616 TCC and
Nulty -v- Milton Keynes Borough Council [2012] EWHC 730 (QB).
Secondly, while allowing acceptance of the Defendant’s Part 36 Offer could potentially further the overriding objective and save the court time and resources, this had to be tempered by the fact acceptance was very, very late.
Capital Bank Plc -v- Stickland [2004] EWCA Civ 1677
Thirdly, the Defendant having made a fair offer in advance which was spat back now wished to have its court victory and thus, limit the amount of money if any at it would have to pay. This meant that should the court grant permission the settlement would no longer be voluntary, but court imposed. It would also, be to the benefit of defaulting party.
For all those reasons, in Morgan J’s view there would no justice served in case where an offeree had decided to take their chances at trial before quickly recanting when the battle did not going well. In those cases, justice demanded that the offeror enjoy the fruits of its victory and permission was refused accordingly.
MISCONDUCT OR UNREASONABLE BEHAVIOUR?
In contrast to the above and in both our cases, we are pleased to report that we were successful in persuading the court to allow the Claimant's late acceptance of the Defendant’s Part 36 Offer. However and pursuant to CPR r.36.13(4); where a Part 36 Offer has been accepted the liability for costs must be determined by the court unless the parties have agreed the costs. The question then for the offeror whom is now deciding how to dispose of their vanquished foe is, whether to apply for costs arising from 'misconduct' or 'unreasonable behaviour?'
Misconduct: CPR Part 44 contains the General Rules About Costs. CPR r.44.11 relates to the court’s powers in relation to misconduct.
CPR r.44.11 Court’s Powers in Relation to Misconduct.
(1) The court may make an order under this rule were -
(a) A party or that party’s legal representative, in connection with a summary or detailed assessment, fails to comply with a rule, practice direction or court order; or
(b) It appears to the court that the conduct of a party or that party’s legal representative, before or during the proceedings or int he assessment proceedings, was unreasonable or improper.
(2) Where paragraph (1) applies, the court may -
(a) disallow all or part of the costs which are being assessed; or
(b) Order the party at fault or that party’s legal representative to pay costs which that party or legal representative has caused any other party to incur.
Unreasonable Behaviour: CPR Part 45 governs the court procedure in relation to Fixed Recoverable Costs (FRC). These will almost certainly apply for any case where the quantum in dispute is >£100’000.
CPR r.45.13 - Unreasonable Behaviour
(2) Where, in a claim to which Section VI, Section VII or Section VIII of this Part applies, an order for costs is made against a party whom the court considers has behaved unreasonably, the other party may apply for an order that those costs be increased by an amount equivalent to 50% of the fixed recoverable costs which would otherwise be payable.For RTA cases the facts today were that impecuniosity had fallen as a preliminary issue.
(3) In this rule -
(a) Unreasonable behaviour is conduct for which there is no reasonable explanation; and
(b) “Fixed recoverable costs which would otherwise by payable” does not include -
(I) VAT
(II) Any additional amounts under rules 36.17 or 36.24; or
(III) Any disbursements.
Ultimately, should the matter in dispute relate to fixed costs and a party believes their opponent’s behaviour to have been unreasonable, an application pursuant to CPR r.45.13 should be favoured for the guaranteed and expedient uplift of 50%.
The question that then remains is ‘what amounts to unreasonable conduct?’ Certainly it is not the intention of Parliament or the courts to go so far as force the parties into settling their disputes by punishing every litigant whom mistakenly rejects a Part 36 Offer. The answer then is entirely fact dependent in the context. We should suggest the following approach:
CPR r.44.11.2: This states that “conduct which is 'unreasonable' or 'improper' includes steps which are calculated to prevent or inhibit the court from furthering the overriding objective.’ In our view, this would include any 'aggressive' or 'arrogant' behaviour contrived at 'punishing' or [unsuccessfully] 'ambushing' your opponent in court rather than settle amicably.
In Ridehalgh -v- Horsefield [1994] EWCA Civ 40: The Court of Appeal in considering the definition found:
Unreasonable Conduct is “vexatious, designed to harass the other side rather than advance the resolution of the case.” The acid test is whether the conduct “permits of a reasonable explanation.”
"Improper" encompasses conduct that “can be regarded as improper according to a consensus of profession or judicial opinion."
While both items above do relate to different parts of the CPR, the parallels should be persuasive.
Finally, a party requesting additional costs for Unreasonable Behaviour must have evidence:
That the conduct complained of specifically increased the legal costs.
Under the Fixed Costs Summary assessment, the Precedent U states that an N260 Statment of costs should be prepared in such circumstances.
CASE SUCCESS: SUFI OSMAN SHEIKH -v- WAKAM unreported)
The above was a Fast Track listed trial heard in the County Court of Clerkenwell & Shoreditch 05/12/2025.
I appeared for the Claimant and Counsel Peter Savory of Farrar’s Building for the Defendant.
Material Facts:
Road Traffic Accident took place 20/08/2023. This was a credit hire case with the Claimant claiming to be ‘impecunious.’
The Claimant driver was employed as a taxi driver and claimed for the hire of a replacement vehicle together for the repair of this own. The Defendant insurer admitted breach of duty i.e. their driver was responsible for the vehicles colliding. However;
The Defendant had made a Part 36 Offer in 2024 that had not been accepted. While respecting the confidentiality of the settlement, we can say it was >50% claimed.
The Defence challenged the Claimant’s case on impecuniosity on the basis of defective pleadings.
The court had considered the Defence and Order the Claimant to ‘Reply’ with the required information.
At trial, the Defendant argued that the Claimant’s Reply did not comply with the Court Order and so the Claimant should be debarred from Relying upon the fact of impecuniosity.
Accepting the Offer
The parties agreed the court should determine the issue of impecuniosity as a preliminary issue and regretfully for the Claimant, the Reply (again, not drafted by us) was held to be inconsistent with the ratio of Steven Probyn -v- Sahr Nordic [2023] EWHC 3314 (KB).
With the Claimant now debarred from relying upon the fact of impecuniosity at the outset of his trial, he could now only realistically recover perhaps 10% of the sum claimed.
Due to the matters aforesaid I was instructed to seek acceptance of the Defendant’s Part 36 Offer and applied for acceptance in the face of the court.
Acceptance & Unreasonable Conduct
The court granted permission for the Claimant to accept the Defendant’s Party 36 Offer:
Firstly and what should take priority; the Defendant did not object or seek to withdraw their Part 36 Offer or seek to persuade the court that it should not be accepted. Instead, they were content to leave this to the court's discretion.
As the matter was subject to Fixed Recoverable Costs, the Defendant sought an uplift pursuant to CPR r.45.13 for the unreasonable conduct i.e. the delay in accepting the offer.
The Unreasonable Conduct found was as follows:
The Particulars of Claim should have contained all the necessary information pertaining to impecuniosity at the outset. Thereafter;
The Reply ordered by the court should have contained all the information ordered. Thereafter;
As a final gasp, this evidence could have been submitted in the Claimant’s Witness Statement but had been omitted.
While not specifically ordered a self-employed Claimant seeking to prove that he is impecunious should have provided disclosed his profit and loss accounts for the material year which would have provided some of the information
The Defendant’s case as to the quality of the Claimant’s pleadings had been at the front of the dispute for >1 year now. In the court’s judgement, this could and should have been resolved prior to trial. Instead the Claimant had chosen to run risk as a preliminary and now having lost on that with now almost nothing to gain, recanted.
In line with the previous authorities discussed, the court found this behaviour to have been unreasonable and pursuant to CPR r.45.13(3), increased the amount of fixed recoverable costs the Defendant was entitled to by 50%.
At first glance it may at first seem at baffling that with impecuniosity having fallen, the Claimant could recover over and above the Basic Hire Rate evidence and any Potential Loss of Profit. However, this is courtesy of the self-contained provisions of Part 36 which operate pursuant to the law of contract.
COMMENT
It is highly unlikely that the court will ever allow an Offeree to accept a Part 36 Offer mid-trial against the wishes of the Offeror unless there is potential evidence of unreasonable conduct on both side. The scales of justice must be balanced.
Equally and referring to Sufi Sheikh, we consider that it was material the Defendant’s Part 36 Offer had been accepted approximately 1 hour into the start of a trial listed for a full day. Had impecuniously not fallen away at the outset as, the court would not have allowed the acceptance for lack of any real benefit in saving court resources.
As for what amounts to 'unreasonable conduct' we find this is best identified by contrasting the fact of the case with the ideal open conduct portrayed in the overriding objective. Anything contrary to the considered approach the Overriding Objective paints will likely be found to be unreasonable (unless of course it actually works then in which case, ‘Vae Victis’).
HOW WE CAN HELP
Gavin Renwick a Solicitor-Advocate has been dealing with credit hire claims since 2012 serving time in Hill Dickinson LLP’s fraud department (NOW merged into Keoghs).
He receives instructions from law firms, insurers and credit hire organisations where he has successfully struck-out credit hire claims >£75’000, separately recovered full credit hire charges of >£50’000 and draws on an extensive background of fraud ring investigations, commercial objectivity and adequate advocacy. Since 2023 Mr Renwick has almost daily appeared in the courts of London, Manchester, Leicester and other major centers
Should you require advice legal representation or further information on any of the issues touched upon in this article then please do not hesitate to reach out.
Case Index:
Sufi Osman Sheikh -v- WAKAM [2025] County Court of Clerkenwell & Shoreditch (unreported)
Houghton v PB Donoghue (Haulage & Plant Hire Ltd) and others [2017] EWHC 1738 (Ch),
Scampla and others -v- Rushmoor Borough Council and another [2008] EWHC 2616 TCC and
Nulty -v- Milton Keynes Borough Council [2012] EWHC 730 (QB).
Capital Bank Plc -v- Stickland [2004] EWCA Civ 1677
Steven Probyn -v- Sahr Nordic [2023] EWHC 3314 (KB)
