By Rowan Morton and Dominique Gillan
Background
The case of Timokhin v Timokhina [2026] EWHC 439 (KB) is a tale of differing jurisdictions: geographical and legal frameworks. The husband and wife were both Russian nationals, who entered into a post nuptial agreement (PNA) in Russia shortly before separation. The PNA saw the wife give up any claim to maintenance and was instead to receive certain assets. Upon separation, the wife commenced divorce proceedings in Britain while the husband petitioned in Russia. There followed years of highly complex proceedings in Russian as well as English courts. The Russian court interpreted the PNA, directed that each of the parties should pay the other identified sums of money. The net effect of this was that the wife was liable to pay the husband approximately £417,000. The husband applied under the Civil Procedure Rules (“CPR”) Part 8 for recognition and enforcement of the Russian judgment. The wife contended that the recognition and enforcement would be contrary to English public policy concerning post nuptial agreements, as stated in Radmacher v Granatino [2011] 1 AC 534 and reflected in the scheme of the Matrimonial and Family Proceedings Act 1984.
Regrettably for the wife, the English court determined that it should not be used as a form of appeal of the Russian decision but instead focussed on the key issue, namely a claim for recognition and enforcement. As such, the principles established in Radmacher were not applicable. The husband’s application was therefore granted.
What then followed was a dispute in respect of costs; the court’s decision on this discrete issue is set out in Timokhin v Timokhina [2026] EWHC 1194 (KB).
Costs in family cases
If the case had proceeded as a financial remedy case in UK, the applicable rule is Part 28 of the Family Procedure Rules[1], supplemented by PD28A[2].
The effect of these rules is that the cost rules set down in the CPR are not applicable in financial remedy cases, and a family court will generally not make a cost order in favour of the successful litigant at the conclusion of such proceedings. Cost orders are, however, still possible particularly when a party is has been able to establish that the other has embarked upon litigation conduct which should be penalised; a recent example of such is in LP v MP [2026] EWFC 36. A very useful overview of costs provisions in financial remedy proceedings can be gleaned from Azarmi-Movafagh v Bassiri-Dezfouli [2021] EWCA Civ 1184 from the observations of LJ King from paragraph 44 on.
Litigation conduct can also be found where 1 party has refused to enter into any discussion with a view to settlement or where that party has pursued a case which was obviously likely to fail.
Crucially, where the court is invited to consider imposing a cost order by virtue of a litigant’s failure to enter into negotiations, the court’s attention can only be drawn to open offers made by the parties. The contents of “Without Prejudice” offers are therefore never revealed and do not form part of the court’s determination: Rush & Tompkins Ltd v Greater London Council & Anor [1989] AC 1280 where Lord Griffiths said that “the without prejudice rule is a rule governing the admissibility of evidence and is founded upon the public policy of encouraging litigants to settle their differences rather than litigate them to finish….The rule applies to exclude all negotiations genuinely aimed at settlement whether oral or in writing from being given in evidence”.
The fact that there have been without prejudice communication and the date on which such communication took place may be admissible when withholding such fact would create a misleading impression.
The rule in respect of “without prejudice’ communication extends to things said or done within Financial Dispute Resolution Appointments, save where these are to form a part of the court’s directions in timetabling the matter to a final hearing: BC v BC [2025] EWFC .
Costs in Civil Cases
Costs in Civil cases, by comparison, is governed by the Civil Procedures Rule[3] and in particular Paragraphs 44-47. The starting point is that costs follow the event and ordinarily the loser will pay the winner’s costs, with an average assessment of those costs resulting in a payment to the winner of about 60-70% of the costs paid. Part 44 contains the general rules and includes a broad discretion to depart from the usual order.
Unlike in family proceedings, parties in civil litigation rarely make open offers, which risk implying an admission of fault or a perceived weakness in a party’s legal position.
Without prejudice offers if labelled “save as to costs” are revealed after the judicial determination of the issues of liability and quantum, referred to as “Calderbank offers”. Such an offer can assist a party in persuading a Judge to depart from the usual costs order, depending upon all the other circumstances of the case.
A far more powerful tactical tool to deploy is the Part 36 offer that carries automatic costs consequences that are extremely difficult to avoid.
As a basic example, if a claimant has issued a claim for £50,000 and they offer to accept a lower figure using Part 36 in a genuine attempt to settle the claim, and a defendant does not accept the figure but does worse at trial, the defendant is subject to the following financial consequences:
- Indemnity costs: which means paying closer to 90% of the claimant’s costs rather than the usual 60-70% on assessment of the figure.
- Enhanced interest on those costs and on damages up to 10% above base.
- An additional sum calculated as a percentage of the damages: up to 10% on the damages awarded.
The additional benefit of a claimant’s Part 36 offer is that, if accepted, the default position is that the defendant must also pay the claimant’s incurred costs (to be assessed on the standard basis).
Similarly if a defendant makes a Part 36 offer to pay the claimant a sum lower than that being claimed, and the claimant does not beat that offer at trial comparable consequences arise, and while the claimant has won the litigation, they may have to pay more in costs to the defendant than vice versa, depending on how early the offer was made. The consequences run from the date the offer expired (21 days after it was made).
Parties should also be aware that even after the end of the expiry period, a Part 36 offer can still be accepted unless it has been formally withdrawn.
In order to avoid these financial consequences a party who has failed to beat such an offer can argue that the offer was somehow defective and did not comply with the requirements of CPR Part 36.
One common mistake litigants make is that the offer includes reference to costs being included within the sum, which immediately invalidates it. Another is that is includes references to a bargaining chip that has an unknown value (see the 2026 case below).
The other arm of attack is the submission that it would be unjust in all the circumstances to apply the consequences of Part 36.
The test of injustice sets a high bar or a formidable obstacle for a defendant who has failed to beat a claimant’s Part 36 offer. One such argument is that the offer was not a genuine attempt to settle the litigation but was a tactical tool designed only to take advantage of the benefits of Part 36, usually because of the insignificant value of the offer.
Two cases at either end of the spectrum are Shah & Shah v Shah & Shah [2021] EWHC 1668 (QB) and Rawbank SA v Travelex Banknotes Ltd [2020] EWHC 1619 (Ch).
In Shah & Shah there had been a consent order within litigation that required the defendant to ‘take all necessary steps to transfer their ownership of the apartment in dispute to a company nominated by the respondent’.
The defendant had not been able to effect the transfer and the claimants brought an action claiming breach of the obligation, seeking damages of £30,000.
At trial the claimants were unable to prove any loss and were awarded nominal damages in the sum of £10 but had served a valid Part 36 offer to accept just £1. The consequences of Part 36 were applied against the defendant who was ordered to pay indemnity costs after the expiry of the relevant period, despite the Judge concluding that the contrivances and shortcomings of the claimants’ claim were due to the fact that the recovery of genuine losses was not the objective of the disproportionate litigation.
The defendants appealed and while the intensity of their disagreement with the decision of the County Court Judge was recognised, the honourable Mrs Justice Collins Rice gave a thorough and reasoned analysis of the limitations of an appellant court when it comes to a discretionary decision on costs. The appeal was dismissed.
Rawbank SA v Travelex Banknotes Ltd involved a claimant’s Part 36 offer to settle for 97.7% of the claim value, the 0.3% having a value of £158,059. Despite the low percentage it was considered a genuine offer because a discount of any amount involved the claimant giving up something that it had a near certainty of obtaining, and the discount was larger than the interest that would accrue during the period of the offer and was likely to have been higher than the costs incurred.
These cases, and those that have followed at lesser extremes show that any challenge to the justice of Part 36 consequences is extremely difficult, and even more so on appeal. Each case is decided on its facts with consideration to all the circumstances, not just the value, percentage and strength of the claim.
It also should be noted that a Part 36 offer can be undermined if it does not make clear the value of the offer. Cooper, Powell & Powell v Ludgate house Limited [2026] EWHC 484 (Ch) was such a case.
The defendant had offered to settle the claim, along with any future rights, for the sum of £500,000 pursuant to Part 36. The claimant had insisted on damages of £7m, and was awarded just £350,000.
The Court recognised that the claimant’s offer was nowhere close to realistic, but that the defendant’s reference to future rights had made it impossible to be sure whether the offer had been beaten. The evidence suggested that the future rights value was far lower than the difference between the offer and the award, however that issue had not formed part of the trial, and as such there was no certainty as to whether it had been beaten.
Litigants should ensure that the offer being made is compliant with the requirements set out at CPR Part 36 and PD36 and avoid overcomplicating the terms of the offer. While the template form N242A is not necessary it certainly makes the job easier.
[1] https://www.justice.gov.uk/courts/procedure-rules/family/parts/part_28
[2] https://www.justice.gov.uk/courts/procedure-rules/family/practice_directions/pd_part_28a
[3] https://www.justice.gov.uk/courts/procedure-rules/civil
Dominique Gillan & Rowan Morton are experienced practitioners and feature in the Legal 500.
If you require advice, or representation, you can contact the clerks on 01483 539131 or email them at clerks@guildfordchambers.com
Disclaimer
This article has been provided free of charge for information purposes only. Although care is taken to ensure the information is accurate no responsibility is assumed by the author or any member of Guildford Chambers for reliance on the content or the accuracy of such content. The information, and/or commentary, does not constitute legal advice and if you have a legal dispute you should seek advice from a solicitor or barrister about your case. Accordingly, no member of Chambers shall be responsible for any action you take or refrain from taking in reliance of anything in this article or case summary.
