6.5 Part 36, Security for Costs and Assessed Costs
Key Takeaways
- If a claimant fails to obtain a judgment more advantageous than a defendant's Part 36 offer, the court must, unless it considers it unjust, order the claimant to pay the defendant's costs from the end of the relevant period and interest on those costs (CPR 36.17(3)).
- If judgment against the defendant is at least as advantageous as a claimant's Part 36 offer, the claimant's extra consequences under CPR 36.17(4) include indemnity costs from the end of the relevant period, enhanced interest of up to 10% above base rate, and an additional amount of 10% of the first £500,000 and 5% of any excess, capped at £75,000.
- Security for costs under CPR 25.27 requires both that an order is just in all the circumstances and that a listed gateway applies, for example that the claimant is a company and there is reason to believe it will be unable to pay the defendant's costs.
- From 1 October 2023 most fast-track and intermediate-track claims are subject to fixed recoverable costs in CPR Part 45; detailed assessment and costs budgeting remain the multi-track tools unless a claim is excepted.
- The CPR 36.17(5) injustice test weighs the terms of the offer, the stage it was made, the information available, the parties' conduct and whether it was a genuine attempt to settle; CPR 36.17(7) puts withdrawn offers and offers made less than 21 days before trial outside those consequences.
Part 36 and other offers
Part 36 is a self-contained code (CPR 36.1). A Part 36 offer must be in writing, make clear that it is made pursuant to Part 36, specify a relevant period of not less than 21 days within which the defendant will be liable for the claimant's costs if the offer is accepted, state whether it relates to the whole or part of the claim or to an issue, and state whether it takes account of a counterclaim. It is made when it is served. After the relevant period it may be withdrawn or varied to be less advantageous by serving notice, unless the offeree has already accepted it. Within the relevant period, the court's permission is needed to withdraw or lessen it.
Acceptance is by written notice. If a defendant's offer is accepted within the relevant period, the claimant is entitled to their costs of the proceedings up to the date of notice of acceptance, on the standard basis if not agreed (subject to the fixed-costs modifications in Section II of Part 36). Late acceptance generally means the offeree pays the offeror's costs from the end of the relevant period, unless the court otherwise orders.
Costs consequences following judgment (CPR 36.17) are the engine of the rule.
| Outcome | Usual order, unless unjust |
|---|---|
| Claimant fails to obtain a judgment more advantageous than a defendant's Part 36 offer | Defendant's costs from the end of the relevant period, plus interest on those costs (CPR 36.17(3)). "More advantageous" on a money claim means better in money terms by any amount, however small (CPR 36.17(2)). |
| Judgment against the defendant is at least as advantageous as a claimant's Part 36 offer | From the end of the relevant period: interest on the award at up to 10% above base rate; indemnity costs; interest on those costs at up to 10% above base; and an additional amount of 10% of the first £500,000 and 5% of any excess, capped at £75,000 (CPR 36.17(4)). |
The court must make those orders unless it considers it unjust. Injustice looks at the terms of the offer, the stage it was made, the information available, conduct, and whether the offer was a genuine attempt to settle (CPR 36.17(5)). A cynical 99.5% offer made the night before trial on a case that was always going to finish at 100% can be unjust. A well-pitched offer made with proper information usually sticks. Offers made less than 21 days before trial, withdrawn offers, and some changed offers fall outside 36.17(3) and (4) (CPR 36.17(7)).
Where fixed recoverable costs in Part 45 Sections VI–VIII apply, Part 36 Section II modifies the consequences (including a percentage uplift on the difference between stages instead of a full indemnity-costs switch). Do not recite the multi-track 36.17(4) package as if it were unmodified on a straightforward intermediate-track claim.
Other offers. A without prejudice save as to costs (Calderbank) letter is still useful where Part 36 cannot be made to fit (non-monetary terms that Part 36 handles poorly; offers between defendants). CPR 44.2 requires the court to have regard to admissible offers that are not Part 36 offers. They do not trigger the automatic 36.17 consequences. A purely open offer can be shown on the merits and on costs; think before you write one.
Worked figures (multi-track, not FRC): claimant's Part 36 offer to accept £100,000 expires unused. Judgment is £100,000. That is "at least as advantageous." Unless unjust, the claimant receives the 36.17(4) extras on top of the usual costs to the end of the relevant period. If instead the defendant had offered £100,000 and the claimant recovered £99,999.99, the claimant failed to do better by any amount, however small, and 36.17(3) is in play.
Security for costs (CPR 25.26–25.29)
A defendant (and a claimant defending a counterclaim) may apply for security for costs. The court may make an order only if it is just in all the circumstances and either an enactment allows security or a CPR 25.27 gateway applies:
- the claimant is resident out of the jurisdiction;
- the claimant is a company or other body and there is reason to believe it will be unable to pay the defendant's costs if ordered to do so;
- the claimant changed address after the claim started in order to evade the consequences of the litigation;
- the claimant failed to give an address on the claim form, or gave an incorrect one;
- the claimant is a nominal claimant (other than a Part 19 representative) and there is reason to believe they will be unable to pay;
- the claimant has taken steps in relation to their assets that would make enforcement of a costs order difficult.
Gateway plus justice: both are required. Impecuniosity of a company is not an automatic order if the claim is stifled, the defendant's conduct caused the poverty, or the application is tactical delay. The court sets the amount and the manner and time (payment in, bond, charge). CPR 25.28 allows security from a non-claimant in assignment / contribution-for-a-share cases. CPR 25.29 extends the same thinking to appeals.
Fixed and assessed costs
| Regime | Where it bites | What the winning party usually recovers |
|---|---|---|
| Small claims (CPR 27.14) | Small claims track | Very limited sums (issue fee, certain witness expenses, prescribed expert fee), not a full inter-partes bill. |
| Fixed recoverable costs (CPR Part 45) | Most fast-track and intermediate-track claims from 1 October 2023, plus specified protocols | A table figure driven by stage, value and complexity band, not the hours actually recorded. |
| Assessed costs | Typical multi-track, and other cases outside FRC | Standard or indemnity assessment, summary or detailed, with budgets constraining the standard-basis figure if the case was costs-managed. |
Summary assessment is a rough, same-day figure, usual after a hearing lasting not more than a day. Detailed assessment is the full bill procedure if the parties cannot agree. Do not promise a fast-track client that they will recover their entire hourly-rate file if they win; FRC will usually cap the recovery. Do not budget as if FRC applied on a costs-managed multi-track clinical negligence claim that Part 45 does not fix.
Exam traps
- Calling every settlement letter a Part 36 offer. The formalities have to be met.
- Forgetting that "more advantageous" on money is any improvement, however small.
- Mixing up claimant-offer extras (36.17(4)) with defendant-offer extras (36.17(3)).
- Treating security for costs as available against an individual claimant merely because they are poor — poverty of an individual is not a 25.27 gateway.
- Issuing a witness summons three days before trial without permission.
A claimant beats her own Part 36 offer at trial on an ordinary multi-track debt claim that is not in a Part 45 fixed-costs section. Unless the court considers it unjust, which extra consequences does CPR 36.17(4) attach from the end of the relevant period?
A defendant made a valid Part 36 offer of £50,000. The relevant period has expired. At trial the claimant is awarded £49,500 on a money claim. What does 'more advantageous' mean for CPR 36.17(1)(a)?
A defendant applies for security for costs against an individual claimant who lives in Manchester and is unemployed. The claim is genuine. Which analysis fits CPR 25.27?