In our latest blog, Christopher Lothian-Field provides a brief examination of how to maximise costs recovery using the post-October 2023 Part 36 regime in Personal Injury cases.
October 2023 saw the introduction of wide-ranging reforms to existing fixed costs rules including the implementation of a new part 36 regime. The new regime illustrates the need for a change in tactics from PI practitioners to ensure that cases are settled expeditiously, and part 36 costs opportunities are maximised.
In the interest of brevity this article will focus on Part 36 consequences for the Claimant in matters proceeding on the Fast Track, however, the principles will apply equally to the Claimants and Defendants on both the Fast Track and Intermediate Track.
The ‘New Regime’
The new regime is set out in Civil Procedure Rules (‘CPR’) r36.24 and sees a move away from the well-known position of the receiving party recovering their costs on the indemnity basis from the expiry of the relevant period if their offer is beaten at trial. Instead, the costs the receiving party is entitled to are fixed by reference to the relevant staging posts within the applicable fixed costs regime.
If a Claimant achieves Judgment against a Defendant which is at least as advantageous to them as the terms of their part 36 offer they are entitled to the following in addition to their fixed costs: –
- 35% of the difference between the stage applicable when the relevant period expires and the stage applicable at the date of judgment;
- An additional sum being 10% of the amount awarded;
- Punitive interest on damages calculated at a rate not exceeding 10% above base rate; and
- Punitive interest on Part 36 costs calculated at a rate not exceeding 10% above base rate.
The practical consequences
The effect of the new part 36 rules is that parties will now receive far less than they previously did when beating their Part 36 offers at trial, and the amount they receive will be determined by reference to the stage of the litigation that was reached when the relevant period expired.
The table below sets out the additional costs a Claimant would be entitled to if they beat a part 36 offer at trial by reference to the stage at which that offer expired.[1]
The above table illustrates that a Claimant would be entitled to a 19% increase on the standard fixed costs sum if they beat an offer made pre-issue. However, if the same offer was made post-listing the Claimant would be entitled to no punitive costs as the costs stage at the point of expiry and point of trial will be the same.
I have not included the trial advocacy fee in my calculations as the position in that respect is not clear. A Claimant is entitled to 35% of the difference between the stage at which the offer expires and the stage of Judgment – I can see the force in an argument that a Trial Advocacy Fee is not a “stage” for the purposes of r36.24(5). Accordingly, we can only say with certainty that a Claimant is entitled to an uplift on the fixed costs. I intend to explore this issue in more detail in a separate article.
Practical tips
I have heard many practitioners say that the new regime removes the incentive to settle as matters get closer to trial, but I don’t think that’s quite right: the incentive to settle has been moved but it has not been removed. There is now a far greater incentive for realistic offers to be made pre-issue than at any other stage post-issue and practitioners would be well advised to consider making realistic part 36 offers pre-issue to ensure any potential part 36 benefits are realised.
With post-listing part 36 offers less tactically attractive, practitioners may also want to consider increasing the use of tactical time-limited Calderbank offers, particularly because Defendants now face the prospect of paying a trial advocacy fee, or a proportion thereof, if a matter settles within 48 hours of a listed trial date.
Ultimately, the changes to the part 36 regime require a change of tactics from practitioners. Previously there was a real tactical advantage to be had in finding the “sweet spot” where a well-timed part 36 offer would see a Claimant recovering a healthy amount of fixed costs together post-expiry indemnity costs for a significant period. Under the new regime, however, practitioners will see a greater benefit in making their part 36 offers pre-issue and then utilising tools such as “time-bomb” offers to encourage settlement.
Christopher Lothian-Field
April 2025
[1] The figures set out in the table assume an award in the sum of £11,000.00 on a Fast Track matter assigned to Complexity Band 2
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