Part 36 offers: a powerful settlement tool and a costly one if misused

This article was co-authored by Anais Doyle, Trainee Solicitor.

Part 36 offers remain one of the most effective mechanisms for driving settlement in civil litigation. When deployed strategically, they can exert significant commercial pressure and deliver meaningful costs protection. That leverage, however, depends on strict compliance with the procedural framework and a clear understanding of the consequences that flow from acceptance or rejection.

Operating as a self-contained procedural code, the regime is designed to encourage settlement through automatic and often significant costs consequences where a compliant offer is beaten at trial.

Recent Decisions: Judicial Reminders in Practice

Two recent High Court decisions provide a timely reminder of the structured and unforgiving nature of the regime. Both judgments demonstrate the courts’ continued willingness to apply Part 36 rigorously and predictably, with limited scope for discretion. Together, they reinforce why it should be treated as a strategic settlement mechanism, not an administrative step, with significant consequences flowing from acceptance or non-acceptance.

Costs consequences and the high bar for injustice

Matière SAS v ABM Precast Solutions Ltd [2025]

The Technology and Construction Court recently reaffirmed the strict approach to the costs consequences of Part 36 offers.

In Matière, the claimant made an early Part 36 offer seeking to settle the claim and counterclaim in full. The offer was not accepted, and the claimant ultimately achieved a more advantageous result at trial, engaging CPR 36.17.

The defendant argued that it would be unjust to impose the usual Part 36 consequences. In particular, it relied on alleged conduct issues in the proceedings and the scale of the counterclaim pursued at trial. The defendant also contended that the claimant’s offer was not a genuine attempt to settle because of the wording used.

The court rejected those arguments. Once CPR 36.17 is engaged, the default position applies unless injustice is clearly established. The hurdle facing a party seeking to disapply those consequences was described as a “formidable obstacle”, and allegations of complexity, conduct or partial success will rarely suffice. The court also rejected the suggestion that the wording of the offer undermined its validity, emphasising that the test is objective: whether the offer was capable of disposing of the proceedings. Strong language does not undermine an otherwise compliant Part 36 offer.

The decision reinforces the predictability of the regime. The discretion to depart from the prescribed consequences remains deliberately narrow, allowing parties to assess the risks they face if an offer is not accepted with some certainty at the point an offer is made or received. It also serves as a reminder that declining a well-judged Part 36 offer carries real and potentially significant costs risk.

Certainty and finality once an offer is accepted

Chinda v Cardiff & Vale University Health Board [2025]

If Matière illustrates the risks of rejection, Chinda demonstrates the difficulty of withdrawing an offer once it has been accepted.

The claimant sought permission to withdraw a Part 36 offer after it had been accepted within the relevant period, arguing there had been a material change of circumstances, including a reassessment of quantum following further expert evidence.

The court refused permission. It held that, once accepted, withdrawal requires the court’s permission under CPR 36.10(3) and will only be granted where there has been a material change of circumstances that fundamentally alters the complexion of the case. A reassessment of quantum, or a shift from periodical payments to a lump sum, amounted to a change of mind rather than a qualifying change of circumstances.

Whilst an offer can be withdrawn or varied without permission before acceptance, once accepted, the threshold for its withdrawal is intentionally high and requires the court’s permission. Finality is a central feature of the Part 36 regime which this decision reinforces.

Practical Implications for Litigants and Insurers

Taken together, these decisions confirm several important practical points:

• Part 36 remains unforgiving: the courts continue to apply the regime strictly and consistently, with limited willingness to depart from the prescribed consequences.
• Costs risk is central: not accepting a claimant’s Part 36 offer, whether expressly rejected or simply allowed to lapse, may expose a defendant to indemnity costs, enhanced interest and an additional financial penalty.
• Language will not determine validity: strong or critical wording, including criticism of an opponent’s case, will not of itself prevent an offer from being a genuine attempt to settle, provided it is objectively capable of disposing of the proceedings.
• Finality matters: once a Part 36 offer is accepted, the threshold for withdrawal is high and requires genuinely exceptional circumstances that fundamentally alter the complexion of the case.

For insurers and those advising insured defendants, Matière highlights the risk of allowing a well-judged offer to go unanswered, whilst Chinda underscores the need for careful evaluation before acceptance, given the very limited scope for retreat.

Comment

Matière and Chinda together serve as timely reminders of why Part 36 remains such a powerful settlement mechanism. The regime delivers certainty and predictability. Parties must therefore think carefully about the consequences of making, accepting or rejecting Part 36 offers, which the courts will almost invariably uphold.

As these decisions demonstrate, the courts will not readily come to the aid of parties who misjudge their position or assume that discretion will soften the edges of a deliberately rigid code.