PI Brief Update

Court of Appeal Settles the Debate: Liability Only Part 36 Offers on the Fast Track - Georgina Pressdee, Temple Garden Chambers

23/01/26. The Court of Appeal had handed down a unanimous judgment in Smithstone v Tranmoor Primary School [2026] EWCA Civ 13 providing clear guidance on when a liability only Part 36 offer will be effective on the fast track.

Background

The Claim was brought by a child who had suffered a minor injury when his fingers became trapped in a door. It originated in the Low Value Fixed Costs regime and was eventually allocated to the Fast Track following the Defendant’s denial of liability and allegation of contributory negligence.

The Claimant made two offers, both of which were rejected. A Part 36 Offer to settle liability 90:10 (pre-issue) and a WOP offer to settle for £3,500 (post-issue).

Ruling of DDJ Khan

The Claim settled on the door of Court when the Defendant’s witness failed to attend. £2,650 was agreed and approved by the trial Judge (DDJ Khan). DDJ Khan awarded fixed costs on the basis that neither offer engaged CPR 36.17.

Ruling of HHJ Baddeley

The Claimant appealed, but HHJ Baddeley considered that he was bound by the judgment of Collins-Rice J in Mundy v TUI UK Ltd [2023] EWHC 385 (Ch) that Part 36.17 does not apply to liability only offers.

The Appeal

The Claimant appealed again, arguing that the decision in Mundy was per incuriam and should be overruled. In addition, or in the alternative, the Claimant argued that it would be unjust to confine him to fixed costs.

Ruling: Appeal Dismissed

The Court of Appeal narrowed the issues to four questions.

1. Was there a judgment?

This question was answered unequivocally: an N24 ordering the Defendant to pay the Claimant’s costs and damages is both a judgment and an order and, “any attempt to distinguish between the two terms in describing it is misconceived.”.

2. Can a 90:10 offer engage the provisions of CPR 36.17(4)?

The Court considered the majority judgment in Huck v Robson [2002] EWCA Civ 398, which held that a 95:5 liability offer was effective for the purposes of Part 36 where the Defendant was found 100% liable. This decision had not been cited to Collins-Rice J in Mundy and the factual context of Mundy was also important. The Claimant in Mundy had offered to split liability 90:10 or settle for £20,000. The Judgment obtained was below even the Defendant’s Part 36 offer of £4,000. Unsurprisingly, the Claimant did not benefit from CPR 36.17 in those circumstances. However, insofar as Collins-Rice J had suggested (obiter) that a 90:10 liability offer is ineffective as a matter of principle, Mundy was overruled:

“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.” [34] per Bean LJ

3. On these facts, was the outcome “at least as advantageous to the Claimant” as his Part 36 offer?

Because liability had neither been admitted nor determined, the Court was unable to conclude that the outcome was more advantageous than the Claimant’s 90:10 offer. Accordingly, CPR 36.17(4) did not apply and the appeal failed.

4. Would it be unjust to confine the Claimant to fixed costs or require the Defendant to pay additional sums?

The Court reminded itself that the burden of showing that the usual Part 36 consequences are “unjust” is a “formidable obstacle” (Webb v Liverpool Women’s NHS Foundation Trust [2016] EWCA Civ 365 per Stanley Burnton LJ) and concluded that the result is not unjust for either party, whether CPR 36.17 is successfully engaged or not.

Comment

For a party sitting on a favourable liability only Part 36 offer, the key takeaway is to ensure that any settlement specifies how liability has been split in order to reap the rewards of CPR 36.17.

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