Make a Genuine Part 36 Offer or Risk Counting the Cost Consequences
Introduction
Part 36 of the Civil Procedure Rules (CPR) incentivises parties to make sensible offers to settle their disputes by attaching cost consequences to a party’s failure to beat an opponent’s Part 36 offer at trial.
CPR 36.17 sets out the usual cost consequences when a claimant fails to either obtain a “more advantageous” judgment than a defendant’s Part 36 offer, or a judgment is made against a defendant that is “at least as advantageous” as its own Part 36 offer.
When dealing with monetary claims, a “more advantageous” Part 36 offer is one that is financially better by whatever sum. The expression “at least as advantageous” is construed similarly.
Where a claimant obtains a judgment that is at least as advantageous as its own Part 36 offer, CPR 36.17(4) provides that, unless the court considers it unjust, the claimant is entitled to:
Interest on the whole or any part of any sum of money awarded, at a rate not exceeding 10% above base rate, from the expiry of the relevant period (as defined in the Party 36 offer);
Costs on the indemnity basis from the same date;
Interest on those costs, at a rate not exceeding 10% above base rate; and
An additional amount of up to £75,000, calculated as a prescribed percentage of the damages awarded.
Similarly, unless unjust, a defendant is entitled to costs (including recoverable pre-action costs) from the expiry of its Part 36 offer and interest on those costs.
One key factor the court must consider is “whether the offer was a genuine attempt to settle the proceedings” (CPR 36.17(5)(e)). A recent case illustrates how courts determine genuineness and when it may be just to depart from the usual cost consequences and adopt a more flexible approach.
Matière SAS v ABM Precast Solutions Ltd [2025] EWHC 2030 (TCC)
Matière SAS (Matière) commenced proceedings against ABM Precast Solutions Ltd (ABM) for unpaid invoices totalling £373,295.06 under a Consortium Agreement. ABM accepted that £157,241.91 was due (subject to set-off), but disputed the balance, bringing a counterclaim for £4.8 million, later amended to over £15 million.
At trial, only £35,000 of Matière’s claim and the counterclaim remained in dispute. Alexander Nissen KC (sitting as a Deputy High Court Judge) gave judgment for Matière in the sum of £373,295.06 plus interest and dismissed ABM’s counterclaim.
The judge subsequently considered consequential matters, including the parties’ entitlement to costs and interest on such costs.
THE PARTIES’ PART 36 OFFERS
Matière made a valid Part 36 Offer to ABM to settle “the entire proceedings, including the whole of the claim and your … counterclaim” for £350,000. ABM did not respond but later made its own Part 36 offer shortly before trial, offering to accept £5 million to settle the proceedings.
Matière ultimately achieved a “more advantageous” result at trial, triggering CPR 36.17(1) and the cost consequences set out in rule 36.17(4) unless deemed unjust.
Matière sought indemnity costs and enhanced interest from 25 April 2022 (expiry of the relevant period for its Part 36 offer) for the counterclaim. The costs of the counterclaim, which was distinct from the primary claim relating to unpaid invoices, were significant.
ABM disputed this, arguing that although Matière’s offer was genuine in relation to its claim, it was not a genuine attempt to settle the counterclaim, which Matière had previously described as “unmeritorious and entirely speculative”.
THE JUDGE’S DECISION
The judge was required to consider “all the circumstances of the case”, including:
The terms and timing of the Part 36 offer;
Information available to the parties;
The parties’ conduct and crucially,
Whether the offer was a genuine attempt to settle the proceedings.
The Judge concluded that Matière’s Part 36 offer was a genuine attempt to settle its claim but not the counterclaim. Applying CPR 36.17(5)(e) flexibly, the judge took a “broad brush” approach as described in the White Book, considering:
The value of the claim, which was less than 8% of the counterclaim’s original value;
Although the counterclaim was pleaded as a set off, it raised discrete issues arising from a separate fact pattern.
Matière’s offer represented c. 88% of the value of its own claim, with no allowance (“total capitulation”) for the counterclaim.
The lack of justification for Matière’s characterisation of the counterclaim as “bound to fail”.
After considering the above and other arguments made by the parties, the judge declined to order indemnity costs and enhanced interest in relation to the counterclaim, concluding CPR 36.17(5)(e) made meant it would be unjust to do so.
WHY IT MATTERS
This judgment demonstrates that Part 36’s cost consequences do not operate on an ‘all or nothing’ basis when an offer covers multiple claims. Even a claimant who beats its own Part 36 offer at trial may lose the enhanced Part 36 costs benefits if its offer does not represent a genuine attempt to settle all parts of the proceedings.
Parties should take care to ensure that their settlement proposals reflect a realistic assessment of every live issue in the litigation, not just the element(s) on which they feel most confident of success. This is particularly important when counterclaims are significant in value and complexity or arise from separate facts.
Practical Tips
Be clear and comprehensive
Specify exactly which claims, counterclaims, and issues a Part 36 offer covers. Ambiguity can undermine the “genuine attempt” requirement.
Consider proportionality
Make sure Part 36 offers attribute a realistic value to each component of the dispute. Overreaching on weak counterclaims can backfire.
Timing matters
Make offers early enough to give the other party a genuine opportunity to consider settlement, but late enough to ensure it has the information it requires to make an informed decision.
Document your reasoning
Set out the basis on which the offer is made and why it represents a fair compromise. This can help persuade the court of its genuineness.
Review offers made as the case progresses
Consider updating Part 36 offers as the case develops. New evidence or changes in circumstances might justify revisiting a previous Part 36 to ensure it remains “genuine”.
Conclusion
Matière SAS v ABM is a reminder that the “genuine attempt to settle” requirement in CPR 36.17(5) has real bite. A Part 36 offer seeking total capitulation on major aspects of a dispute is unlikely to attract the full range of favourable Part 36 cost consequences, even if the offering party succeeds at trial.
Strategically drafted Part 36 offers, which realistically address all claims and counterclaims, maximise the protective effects of the rule and genuinely incentivise settlement.
This article is intended for information purposes only and provides a general overview of the relevant legal topic. It does not constitute legal advice and should not be relied upon as such. While we strive for accuracy, the law is subject to change, and we cannot guarantee that the information is current or applicable to specific circumstances. Costigan King accepts no liability for any reliance placed on this material. For further details concerning the subject of the article or for specific advice, please contact a member of our team.
Amanda Lee
Disputes Specialist
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