Legal Cost Specialists

Part 36 offers in detailed assessment proceedings

The Association of Costs Lawyers’ response to the preliminary Jackson Report recommended that Part 36 offers be introduced into detailed assessment proceedings. So it has come to pass, with Part 36 in assessment proceedings from 1 April 2013. Iain Stark, ACL Chairman, writing in Costs Lawyer magazine, “applauded” this development.

Let me tell you a story.

Claimant firm Paye Cash & Praye are currently negotiating with defendant costs firm Kermit & Co over a £10,000 bill. Points of Dispute and Replies have been served.

On 2 April 2013 Paye Cash & Praye make a Part 36 offer to settle those costs for £7,000.

Kermit & Co accept the offer on 3 April 2013.

Acceptance of the offer creates a deemed costs order under the new CPR 44.9(1)(b). Under CPR 36.10(1) this means the receiving party is entitled to their costs of the assessment proceedings up to the date on which notice of acceptance was served.

The new CPR 47.20(5) states:

“The court will usually summarily assess the costs of detailed assessment proceedings at the conclusion of those proceedings”

However, the new CPR 44.1(1) clearly states:

“‘summary assessment’ means the procedure whereby costs are assessed by the judge who has heard the case or application”

In this example the matter has never come before a judge and summary assessment is not appropriate. All that’s left is detailed assessment proceedings in the absence of agreement.

In reliance on the deemed costs order Paye Cash & Praye serve a Notice of Commencement and new bill in respect of their assessment costs on 10 April 2013. (As an aside, where a matter settles prior to a provisional assessment being carried out, but the bill is for less than £75,000, does the £1,500 cap apply?) The costs claimed are £1,000. Service of the new Notice of Commencement amounts to commencement of new detailed assessment proceedings.

Kermit & Co, rather taken back by this turn of events, make a Part 36 offer of £800 in respect of those costs on 17 April 2013. No response to that offer is received within 21 days of service of the Notice of Commencement forcing Kermit & Co to serve Points of Dispute to the bill, which they serve on 1 May 2013. On 3 May 2013 Paye Cash & Praye serve Replies. On 4 May 2013 Paye Cash & Praye accept the Part 36 offer of £800. As the offer has been accepted within 21 days of it being made the Claimant is entitled to their costs of the new assessment proceedings up to the date on which notice of acceptance was served, including the period covering preparation of the new Replies.

Acceptance of the new Part 36 offer also creates a further deemed order for costs.

In reliance on the new deemed costs order Paye Cash & Praye serve a Notice of Commencement and new bill in respect of their further detailed assessment costs considering the Defendant’s Points of Dispute, drafting Replies and considering the Part 36 offer.

And so on, for ever.

Blindly incorporating Part 36 into detailed assessment was a terrible idea, unless you are a costs lawyer or law costs draftsman looking to make one case last you through to retirement.

24 thoughts on “Part 36 offers in detailed assessment proceedings”

  1. Tired Costs Draftsman

    I agree – a terrible idea. I can see lots of clients saying “why did you open me up to a further claim for costs”. It also doesn’t surprise me that the ACL thought this to be a good idea. They have been caught napping again as they were in the late 90s prior to the advent of the CPR – the phrase “stacking deckchairs on the Titanic” springs to mine.

  2. Sorry, Simon, but werent you a Council Member at the time? You are certainly very vocal here (which is good) but I wonder why, in all the circumstances, your little scenario wasnt vocalised to the ACL at the time they made their recommendation?

    I am not the biggest supporter of the ACL or its decisions at times, but surely this is not the time to be taking pot-shots at the Association, nor personally at Iain?

  3. The Association of Law Costs Draftsmen’s (as it then was) response to the preliminary Jackson report was dated July 2009. I didn’t join the Association until January 2010. I was not voted onto the Council until March 2011, by which time Jackson’s final report had long since been published.

  4. Does Claimant get upto 10% pentaly interest, DA Costs on the indemnity basis & 10% bonus payment if their bill of costs if provisionally assessed at more than their Part 36 offer (and if so how does this fit in with the fixed fee of £1500 for DA Costs in a Provisional Assessmment) / would this only apply to a DA Hearing ?

  5. bringbackscale1&2

    Is it me or have the people drafting the rules completely lost sight of what they are trying to achieve? Surely this is where the ACL should be vocal about reform that will clearly lead to meltdown in the profession?

    Part 36 in costs prcoeedings?? Do me a favour! More than one offer on the table at any time? Anytime acceptance? Useless against litigants in person?

    Whilst reform is required, what we dont need is implementation of rules that serve no real purpose, Part 47.19 works (albeit for one or two grey areas), why not just use this rule as a starting point.

    Who on earth engaged JK Rowling & Quentin Tarrantino for the latest twist in rule changes? Perhaps we should all gather in cloaks carrying magic wands at Hogwartz to discuss the next round of changes! Or in line with the theme of Mr Q’s latest movie, perhaps we shouldnt resist or fight for Human Rights, perhaps we should just accept that the few will profit at the cost of many and that the many don’t really care about the few!!

  6. but what you are missing, is that Part 36 is an option, not a requirement; the requirement, is to make an offer in an open letter when serving pods.
    does failure to make such an offer invalidate service of pods, one wonders?

  7. Making an offer is not a requirement.

    New CPR 47 Practice Direction 8.3 says:

    “The paying party must state in an open letter accompanying the points of
    dispute what sum, IF ANY, that party offers to pay in settlement of the total costs claimed. The paying party may also make an offer under Part 36.” [emphasis added]

  8. Cockney Rebel

    If Timothy P is correct then the new CPD is as stupid and ill thought out as the old.

    A claimant has three months to draft a bill and if it is served a year late the only penalty is interest. Yet a defendant CL is expected to be instantly available to read a file, take instructions, prepare and serve Points and make an offer in 21 days.

    I can only assume the new CPD was written by claimant solicitors. They have actually made a bad situation worse.

  9. @Timothy P – the PD clearly states the PP MUST state what sum they offer, if any. this imposes an absolute requirement to send the letter with PODs, even if they state “we offer Nil”. Dont send, service defective?

    @Cockney Rebel – still the same old whinge? do you really honestly think it takes 3 months to draw the bill (and if so, please make your offers for time drafting accordingly please 🙂 ) the point is, you have 3 months to COMMENCE the process. The bill can be drawn and presented at any time in that period. The only reason most firms serve formally, is because Defendant Insurers & draftsmen take their sweet time in assessing files and making offers , so usually the only to guarantee getting them to deal with the matter efficiently, is formal service.
    the bit that still surprises me, is the comment about getting instructions. forget the fact of delegated authority, forget the fact most insurers dont know or care whats being offered as long as they achieve overall percentage reductions; if an insurer cant give instructions on legal advice on quantum of costs in 21 days, how on earth do they propose they deal with the new Protocols for liability decisions in 1/2 the time??

  10. I note the comments of Anonymous but it is a fact that many bills are served late and there is no effective penalty.

    Also Anonymous is once again showing his Marxist hatred of insurers. As it happens, many Defendant CL, including myself, do not act for insurers. However, some of my clients do take their time in sending instructions (usually for the good reason financial authority is required from a senior level) hence my genuine concern about this idiotic time limit.

  11. apologies Mr CR, when I said Insurers, i meant Paying Parties, is that better?

    Im no Marxist (not sure what that would entail anyway nor do I care); and as it happens, I have acted for a great many Paying Parties over the years

    point 1 – if you dont like the 21 days, dont do PODs, face the consequence, thank you

    Point 2 – if you see so many bills served late, why are you failing to make applications, surely in your clients best interests?

    Point 3 – If your clients cant be bothered making a decision when they know the value of the total bill and have your advice, without passing the buck higher up the line, there is something sadly lacking in the process they have

  12. Cockney Rebel

    This will be my final contribution to this blog. I do not waste my time with cretins. However, I will answer the 3 points:

    1. Such a stupid remark does not deserve a reply.
    2. Like all costs draftsman the first time I see a file is when it arrives on my desk after late service of the bill.
    3. I will recommend to my clients that the office boy should make a decision following my submitted advice on a £250,000 bill. I am sure they will approve and give him his own chequebook.


  13. Of the point being argued in the comments:

    Surely, if there is a difficulty in deciding what offer to make in the 21 days a PP should be able, at the very least, to make an offer which accords with the total sum of his/her PODS?

  14. Farewell Mr Rebel
    The blog will be a lighter place in your self-imposed exile
    Us cretins will continue to operate in the real world of costs, rather than throw bricks from behind the tinted glass walls you occupy in the Smoke

    PS. My clients I have given proper advice and training to regarding the operation of the time limits,Interest et all. I get instructions promptly in consequence. Bye Bye

    returning to Simons original post – Part 36 in DA proceedings is plainly stupid. Viva Calderbank!

  15. @ Tired – thank you for that meaningful riposte, I imagine you leave DA opponents in tatters on this evidence

  16. ah, there was me thinking this was a debate by costs professionals on specific subjects.
    turns out its a forum for making offensive personalised comments.typically, the comments that would not be made to ones face.

    sticking to the subect matter, Simons post is plausible, and will occur once – and be ripped apart by any sensible Judge hearing DA based on it. Part 36 in DA is a toothless nonsense

  17. Charles Wheatcroft

    This is obviously off topic but a response to some of the issues in the remarks thus far…

    The paying party is obviously on the back-foot and have collected a costs liability in the process. It would be unfair to make the receiving party wait unnecessarily for payment hence the fairly short timescale to respond to the bill.

    Of course, when the claimant loses and collects a costs liability, the tables are turned and the defendant can, and does, drag their heels serving a bill which demands a response in 21 days.

    So, the losing party – the party in the wrong – is put under time pressure. Is that wrong?

  18. Anonymous on March 5th, 2013 9:21 pm = me – oops.

    On the main topic:

    If the court does decide to adopt the approach stated by Simon, which is quite possible (but which I think can be avoided by a careful judicial distinction between summary assessment and summarily assess), then Part 36 will be top trumped by proportionality.

    When you’re arguing over the costs of the costs of the costs of the costs of the detailed assessment proceedings of the costs of the bill then proportionality will reduce those costs to nothing.

    But, really, I think the judiciary will find a way around it.

  19. Can’t Paye Cash & Praye just make an offer to include the costs of the detailed assessment as well?

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