Part 36 Offers in Detailed Assessment: How They Work and Why They Bite

Practice Guides — 2026-10-03

How Part 36 applies to detailed assessment: valid offer terms, current interest rules, receiving and paying party consequences, the injustice test and the provisional-assessment costs cap.

Part 36 applies to detailed assessment proceedings through CPR 47.20(4). The receiving party is treated as the claimant, the paying party as the defendant, and the outcome of the assessment replaces the judgment for the purposes of the rules. A valid offer can therefore affect liability for assessment costs, interest and an additional amount of up to £75,000.

This guide explains the current rules and two important judgments on their application.

Making a Valid Offer

A Part 36 offer must comply with CPR 36.5. It must be in writing, identify itself as a Part 36 offer, state its scope and address any counterclaim. Normally it must specify a relevant period of at least 21 days. Different provision applies to an offer made less than 21 days before the assessment hearing. Form N242A is available, but using a form does not excuse defective terms.

Interest must be addressed correctly. Under CPR 36.5(4), a monetary offer is treated as inclusive of interest to the end of the relevant period, or to the date specified by that rule where the offer is made close to the hearing. In King v City of London Corporation [2019] EWCA Civ 2266, the Court of Appeal held that an offer expressly excluding interest was not a valid Part 36 offer, including in detailed assessment proceedings (paragraphs 50 to 56).

The current rule also contains an important qualification. CPR 36.5(5) permits an offer to accept money to provide for interest accruing after the date specified in rule 36.5(4). If the offer makes no such provision, it is treated as inclusive of interest up to acceptance. An unqualified statement that interest can never be dealt with separately after the relevant period would therefore be wrong.

State clearly how the offer treats VAT, bill preparation and any payments already made. Review the applicable order and entitlement to interest before calculating the figure, and keep the costs of the assessment proceedings distinct from the bill being compromised.

Consequences: Receiving Party Beats Its Own Offer

Where the receiving party obtains an assessed bill at least as advantageous as its own Part 36 offer, CPR 36.17(4) entitles it, unless the court considers it unjust, to:

interest on the assessed costs at up to 10 per cent above base rate for some or all of the period from expiry of the relevant period;
its costs of the assessment on the indemnity basis from that date;
interest on those costs at up to 10 per cent above base rate; and
an additional amount: 10 per cent of the first £500,000 of the assessed bill, 5 per cent of any amount above that, capped at £75,000.

On a £400,000 bill the additional amount alone is £40,000. These are not marginal adjustments.

Consequences: Paying Party's Offer

Where the receiving party fails to obtain a result more advantageous than the paying party's Part 36 offer, CPR 36.17(3) ordinarily gives the paying party its assessment costs from expiry of the relevant period, with interest, unless the court considers that unjust. Matching the paying party's offer is not enough to avoid that risk.

The "Unjust" Escape Route Is Narrow: JLE v Warrington

In JLE v Warrington & Halton Hospitals NHS Foundation Trust [2019] EWHC 1582 (QB), the bill was £615,751.51 and the receiving party offered £425,000 inclusive of interest. The assessed costs were £421,089.16, with £10,723.89 interest, giving a total of £431,813.05. It was that interest-inclusive total which exceeded the offer by £6,813.05 (paragraph 11). The Master awarded the other enhancements but refused the additional amount.

Stewart J held that the court can find it unjust to award some, but not all, of the consequences in CPR 36.17(4), although different outcomes for the individual consequences would be unusual (paragraphs 23 and 32). However, the reasons given for withholding the additional amount in this case were wrong. The narrow margin, the substantial bill reduction and the size of the additional amount did not justify refusing it on these facts. The appeal was allowed and the 10% additional amount awarded (paragraphs 44 to 59 and 79).

That does not mean conduct or an inflated bill can never matter. The court must consider all the circumstances. The judgment expressly recognised that different facts, such as expense caused by investigating an inflated claim before the offer, could support an injustice argument (paragraphs 48 to 50).

The practical message from JLE runs in both directions. A receiving party should not be talked out of its enhancements because it beat its offer narrowly: narrowly is enough. A paying party facing a beaten offer needs something genuinely capable of making the outcome unjust, judged against the factors in CPR 36.17(5), which look at the terms and timing of the offer, the information available, the parties' conduct on information, and whether the offer was a genuine attempt to settle.

Offers Below £75,000: Provisional Assessment

For inter partes bills within the £75,000 provisional-assessment limit, the court ordinarily assesses costs on the papers. If the proceedings do not go beyond that stage, CPR 47.15(5) caps assessment costs at £1,500 plus VAT and court fees, excluding the costs of drafting the bill.

Part 36 still applies, but an indemnity-basis order does not itself remove that express cap. The additional amount concerns the assessed bill, not the £1,500 allowance. The bill, interest, bill preparation and assessment costs must be compared consistently when evaluating an offer.

Practical Points

Calculate before you offer. An offer pitched from the likely assessed figure, not from the bill total, is what produces enhancements.
Include interest to the date required by CPR 36.5(4). A receiving party wishing to provide for later interest should use clear terms consistent with CPR 36.5(5).
Diarise the relevant period. Acceptance within it carries ordinary consequences; the enhancements run from its expiry.
Revisit offers as the assessment develops. Establish whether an earlier offer remains open and what effect a new or improved offer has under CPR 36.9; a new offer does not automatically erase an earlier one.

How We Can Help

Mackenzie Costs advises on and drafts Part 36 offers in detailed assessment for receiving and paying parties, including the calculation behind the figure. If you have a bill to protect or an offer to respond to, contact us.

Sources

CPR Part 36, CPR Part 47, King: full judgment and JLE: full judgment.

Reviewed on 3 October 2026. This guide concerns inter partes detailed assessment; the applicable procedure and any special costs regime must be checked in each case.

Related Specialist Support

Costs Budgeting and Detailed Assessment: Precedent H, dispute documents, negotiations and assessment strategy.
Costs Lawyer Support: Direct help with costs procedure, strategy, drafting and advocacy.
Bills of Costs: Clear, defensible traditional and electronic bills prepared for recovery.