Fixed Recoverable Costs can survive Part 36 Acceptance
In his judgment in Executors of the Estate of Kenneth Collins v Thames Valley Police, Costs Judge Whalan clarified that accepting a Part 36 offer does not, by itself, disapply fixed recoverable costs (FRC). But given the nature of the substantive claim, FRC did not apply to this claim.
The Claim in Outline
Mr Collins was arrested in 2015, during which police seized numerous firearms and ammunition from his property. He was convicted in 2017 of several offences, leading to a destruction order of some, but not all, items and the revocation of his shotgun certificates. After submitting an application to the police for the remaining guns to be returned to him, Mr Collins was informed by the police that all of the guns had been destroyed. Mr Collins brought a negligence and wrongful interference claim against Thames Valley Police in 2019, with losses valued at around £228,000, and the Defendant was not able to identify a defence regarding the issue of liability. Following his death in 2022, the claim was continued by the executors of his estate.
In January 2023, prior to the issue of a Part 7 claim, the Claimant made a Part 36 offer of £50,000, which was met by a counter offer of £32,500 on standard Part 36 terms, including payment of the Claimant’s costs under CPR 36.13 if accepted within 21 days. The Claimant accepted that offer within the relevant period, but the parties were unable to agree costs, resulting in the Claimant issuing Part 8 costs-only proceedings in December 2024, which the Defendant opposed.
The Court found that the original claim did fall within CPR 26.9(10)(e), which requires certain claims against the police involving an intentional or reckless tort to be allocated to the multi-track. In addition, as the claim included an allegation of wrongful interference with goods, which would have been treated as an intentional tort, and the destruction of the firearms would have been characterised as an intentional act, if issued, the claim would have been allocated to the multi-track. The Court confirmed that the later Part 8 costs-only proceedings, including the original unissued damages claim amounted to a “claim” and would in principle have engaged the fixed recoverable costs transitional provisions. In practical terms, this could mean that a negligence claim which would ordinarily fall outside the fixed recoverable costs regime does not necessarily remain there if additional proceedings are brought and treated as part of the same claim. However, taking into account all of the circumstances of the claim, despite the Part 8 transitional provisions, the nature of the substantive claim meant that FRC did not apply.
Part 36: The Court’s analysis
The Court rejected the suggestion that acceptance of a Part 36 offer on standard terms amounts to contracting out of the fixed recoverable costs regime. It confirmed that Part 36 is a self-contained procedural code with a deliberately narrow scope and cannot be used to circumvent other costs regimes within the CPR. Applied to the facts, the standard reference to CPR 36.13 did not operate to disapply fixed recoverable costs, which continue to apply unless the parties expressly agree otherwise. In practice, departure from the regime depends on a rule-based exception or case allocation as to the impact of its application.
The judgment also reinforces how Part 36 operates where fixed recoverable costs apply. In those cases, costs consequences are governed by the relevant FRC provisions, rather than the general assessment framework under CPR 36.13, with CPR 36.23 now specifically addressing Part 36 acceptance within the extended FRC regime. Practitioners are therefore required to be clear and deliberate when making Part 36 offers in this context, particularly where any departure from fixed costs is intended.
More broadly, the decision is consistent with the wider existing authorities on fixed costs and reflects the underlying policy objective of certainty and predictability in costs recovery. It confirms that parties should proceed on the basis that fixed recoverable costs will apply unless and until they are expressly displaced by agreement or by operation of the rules.
Takeaways
1. Part 36 acceptance does not automatically mean full costs recovery
Accepting (or making) a Part 36 offer does not amount to contracting out of any applicable fixed recoverable costs regime. Part 36 operates as a self-contained procedural code, and the entitlement to costs arising under CPR 36.13 is expressly subject to any rules fixing recoverable costs. As such, acceptance does not automatically open the door to costs outside the FRC regime.
2. Standard Part 36 costs wording does not alter the applicable costs regime
Even where a Part 36 offer refers to costs being payable “in accordance with CPR 36.13”, this does not mean costs will be assessed on the standard basis. CPR 36.13(3) expressly preserves the application of fixed recoverable costs where they apply, and acceptance of a Part 36 offer does not overrise that position.
3. Early strategy on costs is as important as strategy on settlement value
The decision highlights the need to consider costs consequences at an early stage, particularly when evaluating settlement options. The way a claim is characterised, how it is likely to be allocated, and when proceedings are issued can all affect the costs regime that ultimately applies. Clients should be advised on these factors alongside the merits and value of any Part 36 offer, rather than treating costs as a secondary issue once settlement is reached.
Even where a claim settles sensibly and without proceedings, Claimants may still be forced into fixed costs if they later have to issue costs-only proceedings, and a standard Part 36 settlement offers no real protection against that risk.
Please reach out to the CMS contacts as shown, and we are also grateful for contribution to the article from Rishi Das, CMS Trainee.
