The recent Court of Appeal case of Smithstone v Tranmoor Primary School [2026] EWCA Civ 13 (16 January 2026) overturned the previous judgment of the High Court in Mundy v TUI UK Ltd [2023] EWHC 385 (Ch) and held that a liability-only offer was capable of having Part 36 consequences (albeit it did not in this case).

Background

A claim under the Occupiers Liability Act 1957 was brought through the low value personal injury claims portal, which is subject to fixed costs, on behalf of a minor whose fingers were trapped in a door at the Defendant primary school. The Claimant made a Part 36 offer to settle liability on a 90/10 basis, which was rejected. The claim was allocated to the Fast Track and ultimately settled at the door of court when the Defendant’s witness failed to attend. The hearing then proceeded for approval of the settlement on behalf of the minor Claimant.

At first instance and on appeal to a Circuit Judge, the Claimant’s contention that Part 36 consequences should apply and remove the matter from the fixed costs regime was dismissed on the basis that the court was bound by the High Court judgment in Mundy v TUI UK Ltd [2023] EWHC 385 (Ch) which held that such offers were fundamentally incompatible with the binary structure CPR 36.17.

Orders and Judgments – a distinction without difference?

The costs consequences in CPR 36.17 apply where conditions are met “upon judgment being entered”. It was argued for the Claimant that approval of a settlement under CPR 21.10 did not amount to a judgment. The Court of Appeal rejected this argument, noting that N24 form on which the approved settlement was drawn up was headed “General Form of Judgment or Order” and that CPR 40 used the phrase “judgments and orders” without drawing a distinction. While commentary in the White Book suggests a possible distinction of “judgment” as a final decision of the court (which the order in this case would have been in any event), the Court of Appeal held there was no distinction to be derived from the rules themselves and any attempt to do so was misconceived.

Importantly, because a settlement on behalf of a child or other protected party will always require the approval of the court, there will always be a judgment entered at the conclusion of such cases.

What is more advantageous?

Under CPR 36.17(1)(a), Part 36 consequences follow for a Defendant if the judgment against them is “at least as advantageous” to the Claimant as the Claimant’s Part 36 offer, to be construed “in money terms” pursuant to CPR 36.17(2). The Defendant Respondent in Smithstone submitted that a liability-only offer was incapable of comparison with sum of money.

The Court of Appeal disagreed, overturning what was described as the obiter suggestion of Collins-Rice J that an offer must be in quantifiable financial terms and that a 90/10 liability offer was therefore ineffective as a matter of principle. It was noted that in Mundy, the Claimant had made two Part 36 offers, one on liability and one for £20,000, with final damages of £3,805.60 falling well below the quantified offer. Had the case been tried and the Defendant found 100% (or indeed, one must infer, 90%) liable, it could have been said that the outcome was at least as advantageous.

The (Part 36) consequences (or lack thereof)

Despite concluding that a liability-only offer was , in principle, capable of leading to Part 36 consequences, the Court of Appeal held that no such consequences followed in this case. The settlement was codified in a judgment, but there was never any finding or concession of liability and therefore it could not be said that the Claimant had achieved a result at least as advantageous as a 90/10 split on liability.

Notably, in this case the final settlement was for £2,650 and the Defendant had at one stage made an offer for £3,500 which expired. Had that been a Part 36 offer, and had the issue of liability been determined to the Claimant’s advantage, the result could ostensibly have been (as was contemplated by Collins-Rice J in Mundy) that both parties faced Part 36 consequences.

Key takeaways

1. There is no distinction between an Order and a Judgment under the CPR;
2. Part 36 offers can be on liability-only;
3. Part 36 consequences cannot follow a liability-only offer where liability has not been determined (or, presumably, admitted).

Benjamin Durodie