Smithstone: Part 36 Liability Offers Can Be Effective [2026]

Fixed Costs — 2026-01-16

In Smithstone v Tranmoor Primary School [2026] EWCA Civ 13, the Court of Appeal held that a genuine 90:10 liability offer can engage CPR 36.17 and overruled Mundy on that point. The claimant still recovered only fixed costs because the global settlement contained no admission or determination of liability.

Overview

Date: 16 January 2026

Judges: Bean LJ, Phillips LJ and Stuart-Smith LJ

Court: Court of Appeal, Civil Division

Citation: [2026] EWCA Civ 13

Nature of Proceedings: Appeal concerning the costs consequences of a 90:10 claimant Part 36 offer in a fast track personal injury claim

Key Issues:

Whether an approved settlement embodied in a court order was a judgment for CPR 36.17
Whether a claimant's 90:10 liability offer can engage the enhanced consequences of Part 36
Whether a global monetary settlement was at least as advantageous as the liability offer
Whether the claimant should escape fixed costs despite liability never being determined

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The Facts

Smithstone v Tranmoor Primary School, reported as [2026] EWCA Civ 13, confirms that a Part 36 offer to accept 90 per cent of the value of a claim can be a valid and effective offer on liability. The Court of Appeal disagreed with the contrary reasoning in Mundy v TUI UK Ltd.

The claimant nevertheless lost the appeal. His case settled globally for money without any admission or determination of liability. He could not show that this outcome was at least as advantageous as his earlier proposal for a 90:10 division of liability.

Jayden Smithstone was aged 10 when his fingers became trapped in a door at the defendant school on 25 September 2018. The low value claim entered the relevant protocol portal. On 13 December 2018, before a medical report had been served, the claimant made a Part 36 offer to settle liability on a 90:10 basis. The school rejected it.

Proceedings followed. Liability and contributory negligence remained disputed, and the claim was allocated to the fast track. In March 2020, the claimant made a separate without prejudice offer of £3,500, but it was not accepted.

The matter reached trial on 26 November 2020. The defendant's witness did not attend and the parties negotiated a global settlement of £2,650. Because the claimant was a child, the agreement required approval under CPR 21.10. Deputy District Judge Khan approved the settlement, with the full damages going to the claimant.

The remaining dispute concerned costs. The claimant argued that he had beaten the 90:10 liability offer and should receive the benefits under CPR 36.17(4), including indemnity costs after the relevant period. The defendant argued that fixed costs applied. The judge awarded fixed costs of £7,114.50.

HHJ Baddeley dismissed the first appeal, considering himself bound by Mundy. The Court of Appeal addressed the point of principle and the application of that principle to a settlement which had left liability unresolved.

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Key Holdings

1. The approval order was a judgment

The defendant argued that the settlement approval did not amount to a judgment, so CPR 36.17 could not apply.

The Court of Appeal rejected that submission. The N24 was headed “General Form of Judgment or Order” and finally disposed of the claim. It allowed the claimant to accept £2,650, directed the defendant to pay damages and costs by a specified date and summarily assessed the fixed costs.

The Civil Procedure Rules use the terms judgment and order without drawing a rigid distinction. Looking at the substance and effect of the document, it was both. The fact that the damages followed agreement and approval rather than a contested trial did not prevent the final order from being a judgment for this purpose.

2. A 90:10 liability offer can engage CPR 36.17

The central issue was whether a liability offer expressed as 90:10, without a monetary figure, could in principle trigger CPR 36.17(4).

In Mundy, Collins-Rice J had reasoned that such offers did not fit the binary structure of CPR 36.17 and could conflict with competing money offers. The Court of Appeal noted that two important authorities, Huck v Robson and Broadhurst v Tan, did not appear to have been cited in Mundy.

In Huck, a 95:5 liability offer was effective when the claimant later established full liability. Such an offer reflects the reality that a claimant may give a discount to obtain certainty and avoid trial. Broadhurst confirmed that the generous consequences of beating a claimant's Part 36 offer accord with the policy of encouraging settlement.

Bean LJ held that liability-only and quantum-only offers should be encouraged even where all issues would otherwise be resolved together at a fast track trial. A 90:10 proposal can be a genuine offer to compromise. The court overruled Mundy on that point of principle.

The decision does not mean that any token concession will suffice. An offer must still be a genuine attempt to settle. A tactical proposal which gives up practically nothing may fail that test or make the prescribed consequences unjust.

3. The global settlement did not beat the liability offer

Success on the legal principle did not resolve the appeal in the claimant's favour.

The 2020 settlement fixed a global monetary sum. It did not contain an admission of liability, and the court made no finding on liability. The settlement could not therefore be treated as an outcome in which the claimant had established liability on terms more favourable than 90:10.

The Court of Appeal explained that the result might have been different if the defendant had admitted full liability or the trial judge had found it fully liable. In that situation, there would have been a case for awarding the claimant the Part 36 consequences relating to the liability issue from the date of the offer.

Here, however, no comparison could establish that the outcome was at least as advantageous as the proposal contained in the liability offer. CPR 36.17(4) was not engaged on the facts.

4. Fixed costs remained payable

The claimant argued in the alternative that it was unjust to limit his solicitors to fixed costs because the defendant had refused to admit liability or engage meaningfully in negotiations before trial.

The court rejected that argument. Refusal to admit liability and settlement at the court door did not, without more, justify departure from the fixed costs regime. The burden of showing that the usual Part 36 consequences would be unjust is a “formidable obstacle”.

The appeal was dismissed and the original fixed costs award remained in place.

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What the Judgment Does and Does Not Decide

The claimant failed because of the form of the eventual outcome, not because his liability offer was invalid. That distinction is the core of the decision.

The judgment establishes that:

A final consent or approval order can constitute a judgment for CPR 36.17.
A genuine 90:10 liability offer can be effective under Part 36.
Liability-only offers are not confined to cases where liability and quantum are tried separately.
The court must still compare the actual judgment with the proposal contained in the offer.

It does not establish that:

Any claimant who settles for money has beaten an earlier liability offer.
A global settlement automatically implies full liability.
A defendant's failure to negotiate is enough to disapply fixed costs.
A nominal liability concession will always be treated as a genuine attempt to settle.

The case arose under the fixed costs rules applicable to the underlying 2018 claim and 2020 settlement. Its wider reasoning on issue-based Part 36 offers and the need to compare the proposal with the actual outcome remains important beyond that procedural history.

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Practical Implications

For Claimants

1. Liability offers remain valuable. A realistic 90:10 or 95:5 proposal may protect a claimant where liability is later admitted or determined more favourably.

2. Draft the offer around a comparable outcome. State clearly whether the proposal concerns liability only, contributory negligence or the whole claim. Ambiguity makes the CPR 36.17 comparison harder.

3. Address Part 36 expressly in any settlement. If a global sum is agreed while liability remains disputed, the settlement may not beat an earlier liability offer. Consider agreeing the position on liability and costs rather than leaving the comparison unresolved.

4. Do not assume court approval supplies a liability finding. Approval of a child's damages settlement makes the arrangement binding but does not convert a compromise into an adjudication of disputed liability.

5. Use a realistic concession. The force of Huck and Smithstone depends on a genuine opportunity to compromise. An artificial 99.9 per cent proposal may be treated differently.

For Defendants

1. Evaluate liability offers on their own terms. A defendant cannot reject a 90:10 offer on the assumption that only a monetary offer can have Part 36 consequences.

2. Consider the risk of a later liability finding. If the claimant establishes 100 per cent liability, the enhanced consequences may apply to the costs of that issue even where quantum remains separate.

3. Make the settlement record precise. If liability is not admitted, say so. If the parties intend the settlement to resolve the costs consequences of earlier offers, record that agreement expressly.

4. Do not rely on Mundy as a general bar. The Court of Appeal has overruled its reasoning that a 90:10 liability offer is ineffective in principle.

For Costs Lawyers

1. Separate validity from achievement. First ask whether the offer was capable of engaging Part 36. Then ask whether the judgment was at least as advantageous as its proposals.

2. Analyse issue costs where appropriate. A liability offer beaten by a later liability determination may support enhanced costs relating to that issue, even if it does not resolve every aspect of the claim.

3. Examine the final order, not its label. The substance and effect of a consent or approval order determine whether it is a judgment for CPR 36.17.

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Conclusion

Smithstone v Tranmoor Primary School restores the principled effectiveness of genuine liability-only Part 36 offers. A 90:10 offer can promote settlement, save trial time and trigger the claimant's enhanced benefits where the eventual judgment is at least as advantageous.

The claimant did not obtain those benefits here because liability was never admitted or decided. The parties agreed only a global payment of £2,650, which the court approved. That outcome could not be compared as a better liability result than 90:10, so the claimant remained limited to fixed costs of £7,114.50.

The practical lesson is to connect the offer, the eventual order and the costs wording. A valid Part 36 offer is only the first step. The receiving party must still prove that the judgment actually matched or bettered what was proposed.

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Citation: Jayden James Smithstone v Tranmoor Primary School [2026] EWCA Civ 13

Full judgment available at: The National Archives

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