We have adopted a specialist team approach to our practices for many years. We feel that this is the way our clients want us to work, and that specialisation leads to the provision of a better service.
We have adopted a specialist team approach to our practices for many years. We feel that this is the way our clients want us to work, and that specialisation leads to the provision of a better service.
Insights
14/04/2026
By Rob Sowersby
Predicting the outcome of a Part 36 offer on liability became a little easier on 16 January 2026, with the arrival of guidance from the Court of Appeal in Smithstone v Tranmoor Primary School [2026] EWCA Civ 13.
The claim arose from an injury sustained at the claimant’s school, and settled for £2,650 when the defendant’s witness didn’t turn up on the day of trial. The main issue taxing the Court of Appeal was what to make of the two offers the claimant had made before that settlement was reached:
The first offer had been rejected, and the deadline for acceptance of the second lapsed without any response from the defendant. After the settlement figure had been approved the claimant had argued that he had beaten his own 90:10 offer, and that as a result CPR 36.17 bit, and he should not be limited to recovering fixed costs. The argument failed and that was the end of matters until, more than 3 years later, the claimant was given leave to appeal.
The appeal in Smithstone was subsequently heard by HHJ Baddeley, to whom the defendant cited the single authority of Mundy v TUI UK Ltd [2023] EWHC 385 (Ch).
The wrangling in Mundy was a little unusual in that the claimant made two simultaneous offers, followed by a counter-offer from the defendant:
[the claimant made] one [offer] to accept £20,000 in full and final settlement of the whole claim, the other to settle liability only on a 90:10 per cent basis in favour of the claimant. The defendant later made a counter-offer, expiring on 19 December 2019, to pay £4,000 in full and final settlement. At trial the judge found the defendant in breach of contract but awarded general damages of £3,700 plus special damages of £105.30. The judge ordered the defendant to pay costs up to 19 December 2019, but the claimant to pay the defendant’s costs thereafter.
The claimant then argued that he had beaten his own 90:10 offer on liability, and that the adverse costs consequences of CPR 36.17 should kick in, entitling him, amongst other things, to a 10% uplift on damages, which would take his award above the defendant’s £4,000 offer (and therefore avoid the claimant having to pay the latter part of the defendant’s costs).
In Mundy Collins-Rice J rejected the claimant’s argument, and the idea that a 90/10 offer – [could] be fitted into the terms of CPR 36.17(1)(b) consistently with the wording, integrity and practicality of the CPR 36.17 mechanism. Trying to do so strains the language of the provision, undermines its careful balance, and introduces a degree of complexity and uncertainty which I am not persuaded is within its contemplation.
Unsurprisingly, following this authority, HHJ Baddeley dismissed the claimant’s appeal in Smithstone, but the case duly went before the Court of Appeal.
The Court of Appeal considered and endorsed two authorities that had not been put before the lower courts: Huck v Robson [2002] EWCA Civ 398 and Broadhurst v Tan [2016] EWCA Civ 94.
In Huck the Court found that the claimant in a road traffic collision case was entitled to indemnity costs where he had beaten his own 95:5 offer on liability, notwithstanding the fact that this was not a liability split that the trial judge was ever likely to have made. Tuckey LJ stated:
- … I do not think that the court is required to measure the offer against the likely outcome in a case such as this. In this type of litigation a claimant with a strong case will often be prepared to accept a discount from the full value of the claim to reflect the uncertainties of litigation. Such offers are not usually based on the likely apportionment of liability but merely reflect the reality that most claimants prefer certainty to the ordeal of a trial and uncertainty about its outcome. If such a discount is offered and rejected there is nothing unjust in allowing the claimant to receive the incentives to which he or she is entitled under the Rules. On the contrary, I would say that this is a just result.
- I would however add that if it was self-evident that the offer made was merely a tactical step designed to secure the benefit of the incentives provided by the Rule (e.g. an offer to settle for 99.9% of the full value of the claim) I would agree with Jonathan Parker L.J. that the judge would have a discretion to refuse indemnity costs. But that cannot be said of the offer made in this case, which I think did provide the Defendant with a real opportunity for settlement even though it did not represent any possible apportionment of liability. I would therefore allow this appeal.
A similar outcome was reached in Broadhurst.
Considering all the relevant cases, and the case in hand, the Court of Appeal overruled Mundy, stating in terms that Collins-Rice J had been wrong to suggest ‘that a 90:10 liability offer is ineffective as a matter of principle to engage CPR 36.17’.
Bean LJ went on to say (Smithstone, para.34):
Whether litigation is complex and of high value, or straightforward and of relatively modest value, the courts should, and the Civil Procedure Rules do, encourage settlement of specific issues where the case as a whole cannot be settled. In a case where liability is to be tried before quantum the benefits of a liability-only offer in saving costs and court time are obvious. But even in a fast track case where all contested issues will be resolved by a district judge or deputy district judge in the course of a single hearing, liability-only or quantum-only offers are still to be encouraged.
In fact the claimant’s appeal got him nowhere: the Court of Appeal was with him in principle, but liability had never been determined in the initial claim, and there were no proper grounds for asserting that he had arrived at an outcome more advantageous than his proposed 90:10 offer.
The possibility of a finding of contributory negligence looms large in many personal injury claims, not only those arising from road traffic collisions. In Smithstone the Court of Appeal has both expressly over-ruled Mundy and given us all a strong reminder that a successful offer on liability is likely to attract the benefits set out in CPR 36.17 – irrespective of whether the figure on offer represented a ‘likely outcome’ at trial – and even if the proposed split is as stark as 95:5.
This should encourage all practitioners, on both sides of the fence, to have a good hard think about whether any of their cases might benefit from a well-judged offer on liability. This will often make the most sense in cases where there may be a finding of contributory negligence, but even in cases where that is not a risk there will be many claimants (and some defendants) who would ‘prefer certainty to the ordeal of a trial and uncertainty about its outcome.’
Further, in cases where a finding of contributory negligence is in prospect and a trial looks likely, defendants in particular may feel that they have little to lose and a potentially a lot to gain from making such an offer.
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