Court of Appeal – Multi‑Track Allocation Does Not Retrospectively Disapply Fixed Costs Where a Part 36 Offer Was Made Before Allocation to the Multi‑Track
The Court of Appeal has overturned a High Court decision in Laura Attersley v UK Insurance Limited [2026] EWCA Civ 217. This is significant as the Court of Appeal has once again held that Part 36 trumps Part 45. That said, caution must be adopted, as this interpretation addresses claims under the pre‑October 2023 rules and both Part 36 and Part 45 have since been amended. It is a very technical judgment but what practitioners need to be aware of is that:
a) If a Part 36 offer is made on a claim proceeding on the basis of fixed costs (such as a claim commenced in the MOJ Portal), and the relevant period of that offer expires while the claim remains subject to fixed costs, then the Claimant would only be entitled to fixed costs—irrespective of when the offer is accepted and even if the claim is subsequently allocated to the Multi‑Track. In short allocation to the Multi-Track would not have retrospective effect.
b) There is a lack of clarity and certainty regarding what happens where a Part 36 offer is made on a claim initially subject to fixed costs after the claim is no longer subject to fixed costs (i.e. after allocation to the Multi‑Track). The Court of Appeal declined to determine this issue but indicated that it is a matter requiring further consideration.
c) Similarly, the Court flagged the issue of a Part 36 offer made before allocation to the Multi‑Track, where the relevant period expires after allocation. Again, the Court declined to address this point but suggested that the rules require clarification
d) The Court of Appeal was considering the interplay between the pre‑October 2023 versions of Part 36 and Part 45. As these rules were amended in October 2023, additional uncertainty and ambiguity remain for claims proceeding under the current rules. There is scope to distinguish aspects of Attersley between pre‑ and post‑October 2023 cases.
e) Practitioners need to be aware that if a Part 36 offer is made on a claim which is at the point it is made subject to fixed costs then even if the claim leaves fixed costs, that offer would appear to consign the Claimant to fixed costs if later accepted. This may see Defendants making earlier Part 36 offers more frequently, seeking to secure protection against future costs exposure.
f) Further, if a Part 36 offer is made and accepted on any prime facie ex-Fixed Costs matter then there is ambiguity around what the basis of costs would be. This applies even where the offer and acceptance is after the claim is no longer strictly subject to fixed costs (i.e. allocated to the Multi-Track). Though the Court of Appeal declined to address this point, the fact they have raised it as a prospective issue highlights that Part 36 offer and acceptance in prime facie ex-Fixed Costs cases will leave uncertainty as to what costs apply.
The argument for time‑based costs where the Part 36 offer is made after the claim has left the fixed‑costs regime appears rational, but uncertainty will remain unless and until the point is tested or the rules clarified. Ambiguity also persists where a case moves from fixed costs to time costs during the relevant period.
This leaves a complicated patchwork of permutations, but in simple terms it reinforces what has been expressed previously: there is a complete disconnect and contradiction between various aspects of the rules governing fixed costs. Fixed costs are intended to provide certainty, but Attersley highlights the significant nuance hidden within the fine print.
Background
It is useful to set out the chronology in brief:
a) The claim commenced via the MOJ Portal.
b) The Defendant made a Part 36 offer pre-allocation. The relevant period expired pre-allocation.
c) The matter was later allocated to the Multi-Track.
d) The Part 36 offer was accepted by the Claimant, after expiry of the relevant period and after allocation to the Multi-Track.
The argument for the Claimant largely hinged on the findings in the Court of Appeal case of Qader. There the court had found that a claim commenced via the Portal would be restricted to fixed costs unless and until the claim was allocated to the Multi-Track.
The High Court had found that this meant fixed costs did not apply and that the Claimant would get time costs and the punitive impact would be the deprivation of post-expiry costs and the Defendant’s entitlement to such costs.
The Appeal
The Defendant appealed the decision on the grounds that:
a) The appropriate costs when the relevant period expired was fixed costs as the claim had commenced by the MOJ Portal but not been allocated.
b) They relied on the provisions of CPR 36.20 which prescribes that where a Defendant’s Part 36 offer is accepted after the relevant period “the Claimant will be entitled to fixed costs […] for the stage applicable at the date on which the relevant period expired”
c) Alternatively they said costs should be assessed at fixed costs anyway in line with the decision of Williams. This was on the grounds that the offer should and could have been accepted within the relevant period.
The Court of Appeal summarised its view at paragraph 55:
“55. In my judgment, in a case where, on the date on which the relevant period contained in a Part 36 offer expires the claim still falls within the scope of Section IIIA, the consequences of acceptance of the offer are governed by rule 36.20 rather than rule 36.13, even in a case which is subsequently allocated to the multi-track.”
In essence, what is of pertinence is the state of the case at the point at which the relevant period expires. This was elucidated in paragraphs 56 & 57:
“56. […] Where allocation to the multi-track has not occurred by the date on which the relevant period expires there is no difficulty in giving effect to the plain language of the rule. The relevant date is that on which the relevant period contained in the offer expired; and in the present case that was a date on which the claim remained within the fixed costs regime.
57. In my judgment the words in rule 45.29B, “and for so long as the claim is not allocated to the multi-track”, do not require, where a case comes to be allocated to the multi-track, that it is to be treated for all purposes as if it had never, at the previous stages, fallen within Section IIIA of Part 45.”
Further at paragraph 60:
“60. […] there is no universal rule that the words of rule 45.29B and the allocation of the case to the multi-track require that the case be treated for all purposes as if it had never previously come within the scope of the fixed costs regime under Section IIIA. In other words, the allocation of the case to the multi-track after the end of the relevant period of a Part 36 offer does not operate to remove the case from the scope of rule 36.20 by requiring one to treat the case as if it had never been within Part IIIA before the date of allocation. On the contrary, in my view, the most natural and straightforward reading of the rules is that set out in para 55 above.”
In other words, allocation does not retrospectively disapply fixed costs within the context of Part 36 itself.
The Court of Appeal addressed this rationale at paragraphs 63-65:
“63. If the Claimant had accepted the offer within the relevant period she would have been restricted to fixed costs. It would be surprising if the Claimant were to become entitled to a substantially greater amount of costs by accepting the offer after the expiry of the relevant period by reason of events occurring after the end of that period, and outside the parties’ control. Part 36 operates in part by placing the costs risk onto the claimant. The principle underlying rule 36.20 (and indeed rule 36.13) is that claimants who accept an offer after the relevant period will generally be entitled to the amount of costs they would have received had they accepted the offer on the last day of the relevant period, and no more. It appears to me that this principle is furthered if the defendant is able to anchor its liability to the costs environment applicable during the relevant period of the Part 36 offer. Here the costs environment during the relevant period was that of fixed costs.”
64. I agree here with HHJ Duddridge that it would be surprising if a claimant were to become entitled to a greater amount of costs by reason of accepting an offer after the expiry of the relevant period by reason of an allocation of the case to the multi-track in the meantime. Part of the purpose of the rules is to encourage early settlement and it seems to me to be implicit in the rules that 21 days is regarded as a reasonable period in the normal case for a party to be able to decide whether or not to accept the offer. A claimant may of course still be able to accept an offer after the end of that period but, as already noted, it is hard to see why a claimant who does so should be in a better position than one who accepts the offer within time.
65. Nor do I think that it answers this point to say that the Defendant could have withdrawn the offer after the end of the relevant period. The Defendant was, in my judgment, entitled to maintain the offer with a view to limiting its liability to the costs payable in the costs environment applicable on the date of expiry of the relevant period in the event that the Claimant decided to accept it after that date.”
So if a Part 36 offer is made whilst a claim is subject to fixed recoverable costs and the relevant period expires whilst the claim remains anchored to fixed costs then fixed costs apply, even if the offer is accepted after the relevant period expires and the claim has later been allocated to the Multi-Track.
So what happens if a Part 36 offer is made before allocation but the relevant period expires after allocation? And similarly what if the Part 36 offer is made and accepted after allocation to the Multi-Track?
The Court of Appeal declined to address these issues but did offer some commentary upon them:
“72. It is also unnecessary for the purposes of this appeal to decide how the CPR would operate in a case where a Part 36 offer had been made in an ex-Protocol case but after the allocation of the case to the multi-track; or indeed where the offer had been made before such allocation but the relevant period had expired afterwards. I would prefer not to express any concluded views about such cases. However, by way of footnote I would suggest that the Rules Committee may wish to consider these scenarios, as the existing rules do not yield entirely straightforward answers and they would benefit from clarification.
73. It may assist to outline some of the potential issues. Rule 36.20(2) provides that where a Part 36 offer is made within the relevant period, the claimant is entitled to the fixed costs in Table 6B, Table 6C or Table 6D in Section IIIA for the stage applicable at the date on which notice of acceptance was served on the offeror. Rule 36.20(4) provides for the same entitlement where the offer is accepted after the relevant period. The rules assume that the fixed costs set out in the Tables are applicable at the date of acceptance of the offer. But where the case has already been allocated to the multi-track before the expiry of the relevant period (so that the case would fall within the exception contained in rule 45.29B) there would on the face of it be no applicable fixed costs. There would therefore appear to be a potential gap.
74. One way of filling the gap would be to revert to the default rule in rule 36.13, so that standard costs would be recoverable. This might be considered to have the benefit of coherence. Once the case has been allocated to the multi-track, by virtue of rule 45.29B, the fixed costs regime is disapplied and the case becomes subject to the usual costs rules under CPR 44. It might be thought to be more coherent if the consequence of accepting a Part 36 offer in such a case were that the claimant was entitled to standard costs. It might also be thought that there was no rational basis for suggesting that in such a case the defendant should be able to limit its liability to fixed costs (since the fixed costs regime no longer applies to the claim). Moreover, on this understanding, because of the allocation of the case to the multi-track, the fixed cost regime contained in rule 45 would not apply to the case as at the date of acceptance of the offer (see rule 45.29B). Reading rules 45.29A and 45.29B together, it may be thought that the case is no longer one where there were “fixed recoverable costs” as referred to in the heading to Section IIIA.
75. Other issues might arise in the case where on the date of the offer the case had not been allocated, but allocation to the multi-track happened during the relevant period. Again, the Rules Committee might wish to consider whether and if so how the rules might be clarified to cover such a scenario.”
So no answers—only questions and uncertainty. It would be undesirable for an ex‑Protocol claim to remain subject to fixed costs even after allocation to the Multi‑Track, particularly where a Part 36 offer is made after allocation. Practically, this creates real unease, ambiguity, and tension, as it leaves the door wide open for a paying party to argue in an ex‑Protocol case that settles by way of Part 36 that fixed recoverable costs apply irrespective. This could have the undesirable consequence of dissuading Claimants from making Part 36 offers in such claims and could also create practical difficulties when receiving Part 36 offers. The only certain way to avoid this is to settle outside Part 36 with express terms.
The question as to the impact of a Part 36 offer made pre-allocation but where the relevant period expires after allocation is more nuanced and complicated. This does require clarification.
One questions whether the CPRC would look to amend the pre October 2023 rules at all but it’s clear that even under Post-October 2023 rules tensions remain.
What about Post October 2023 cases?
This becomes again technical and complicated, a previous blog post considered the application of Qader post October 2023.
The difficulty here is that both Part 36 and Part 45 have been amended, so the rules analysed by the Court of Appeal are no longer the same.
There is no longer reference in Part 45 to "for as long as the case is not allocated to the multi-track” .
Similarly what was Part 36.20 no longer exists and has instead been replaced by 36.23. If Part 36 trumps Part 45 then Attersley may have practical application. The example would be a claim which is allocated to the Intermediate Track but later reallocated to the Multi-Track. If the Part 36 offer was made during the period on the Intermediate Track and the relevant period expired before reallocation then under Attersley the applicable fixed costs apply. However, Part 45.14 provides that reallocation has retrospective costs consequences, i.e. the claim is treated as having been on the corresponding costs regime for its entirety.
Attersley exposes that tensions remain between Part 36 and Part 45 under the Post October 2023 rules, though these were not expressly addressed in the Court of Appeal’s judgment.
In short, post-October 2023 Claimant’s will have to be mindful of Part 36 offers made whilst a claim is subject to fixed costs and the relevant period expires whilst the claim remains subject to the same that if they later look to accept that offer then under Attersley fixed costs may be held to apply.
Tactics and Strategy
In light of Attersley paying parties may look to make more Part 36 offers earlier to try to further limit costs exposure, particularly if it’s a borderline case which may or may not be fixed costs. All of this said there are cogent arguments to distinguish Attersley within the post-October rules, not least because the application of Qader may be brought into question.
Attersley ultimately generates further uncertainty and ambiguity around costs and is unlikely to be the final word on the interplay between Part 36 and fixed costs. Express clarification from the rule makers would be welcome—ideally sooner rather than later.
Should you have any queries arising from this article or upon costs generally then please do not hesitate to get in touch with our friendly team. You can also discuss details of our unlimited Fixed Costs retainer service. Please email FRC@carterburnett.co.uk for details or call 01482 534567 for an informal discussion.