Legal Cost Specialists

Part 36 offers and detailed assesment proceedings

The Association of Costs Lawyers often used to have an examination question along the lines of: “There is no point in a receiving party making an offer to settle in detailed assessment proceedings. Discuss.”

The reasoning behind the question is that receiving parties currently have a presumption in their favour that they will be awarded their detailed assessment costs. Unless and until the paying party makes an offer that puts them at risk they can carry on regardless. If a receiving party does make a successful offer (usually by way of Part 47.19) there is no bonus (eg by way of enhanced interest or costs on the indemnity basis)) for making such an offer. All that is likely to happen is that the receiving party will be awarded their assessment costs; which is no more than the general presumption allows for in any event.

From 1 April 2013, Part 47.19 offers, as they now are, go. Part 36 will then apply. I have already written about one of the problems this creates and there are others. Nonetheless, Part 36 is here to stay.

The wording of Part 36 is changed slightly (eg “receiving party” substituted for “claimant”), but with the amended wording this is the position where a paying party makes a successful Part 36 after 1 April 2013 and that offer is not beaten at assessment:

“Costs consequences following detailed assessment


(1) This rule applies where upon completion of the detailed assessment –

(a) a receiving party fails to obtain an outcome more advantageous than a paying party’s Part 36 offer;

(2) … the court will, unless it considers it unjust to do so, order that the receiving party is entitled to –

(a) his costs from the date on which the relevant period expired; and
(b) interest on those costs.”

Subparagraph (a) is much the same as one would expect now (although “from the date on which the relevant period expired” may be worse than now where a successful offer may result in all detailed assessment costs being awarded to the Defendant). The only benefit to the current position is interest on those costs. This is likely to be of little extra incentive.

On the other hand, where the receiving party makes a successful offer and the matter proceeds to assessment:

“Costs consequences following detailed assessment


(1) This rule applies where upon completion of the detailed assessment –

(b) the outcome of the detailed assessment hearing is at least as advantageous to the receiving party as the proposals contained in a receiving party’s Part 36 offer.

(3) … the court will, unless it considers it unjust to do so, order that the receiving party is entitled to –

(a) interest on the whole or part of any sum of money (excluding interest) awarded at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired;
(b) costs on the indemnity basis from the date on which the relevant period expired;
(c) interest on those costs at a rate not exceeding 10% above base rate and
(d) an additional amount, which shall not exceed £75,000, calculated by applying the prescribed percentage set out below to an amount which is—

(i) where the claim is or includes a money claim, the sum awarded to the claimant by the court

Amount awarded by the court             Prescribed percentage
up to £500,000                                  10% of the amount awarded;
above £500,000 up to £1,000,000       10% of the first £500,000 and 5% of any amount above that figure”

Subparagraph (d)(i) appears to be drafted widely enough to cover a claim for costs. The successful receiving party therefore gets a 10% uplift on whatever the bill is assessed at plus the other benefits listed at (a) to (c). (Again, not clear how the judge undertaking the provisional assessment will deal with (a) or (c).)

Taken together, this change means a receiving party who makes a successful Part 36 offer will find themselves, on average, somewhere in the region of 15-20% better off at the end of an assessment than currently.

This change will act as a massive incentive for receiving parties to make sensible early Part 36 offers. The days of silly drip feeding of offers by receiving parties will hopefully end. (Yes, I know some paying parties are also guilty of this and the new rule does little to discourage this.) Claimant Costs Lawyers and law costs draftsmen who do not advise on sensible Part 36 offers at an early stage are likely to leave themselves open to negligence claims.

I will shortly be setting up shop as an expert witness to help deal with these negligence claims. I’ll need something to keep myself busy post-April.

15 thoughts on “Part 36 offers and detailed assesment proceedings”

  1. Truly Eminent Costs Professional

    I remember a certain ”Costs Lawyer” who used to advance a without prejudice offer upon serving the N252.

    This makes no sense as the onus will always be on the paying party to either pay in full or make an offer.

    Now things have become a little ”tasty” under CPR Part 36 – this surely puts even more pressure on paying rather than receiving parties?

  2. Has anyone seen the press release today about the panel being set up to monitor the insurance companies to make sure they pass on the huge savings they are about to make to the consumer through their car insurance premiums. Making sure they dont actually just pocket the savings as profit and line their own pockets instead!

    oh actually there is no panel being set up i was just dreaming!!! What a stitch up. Well done to them though. Classic – its like the great train robbery all over again!!!you watch the court system just fall apart! all those litigants in person waiting patiently in the reception to verbally abuse their opponants and the judge of course!

    Whats next on the menu! oh yes lets increase the small claims limit and put every law firm out of business north of Milton Keynes!Dont you just love it!!

    By the way isnt there supposed to be a new model form of bill and N260! were are they!!!

  3. whats the point of a successful beaten offer, and indemnity costs , where the £75k ceiling on provisional assessment means that masses of cases will be stuck with a fees maximum of £1500.00 inclusive?

  4. both sides of teh fence make stupid offers – its depends on the individuals involved

    When you get two like minded costs draftsman who know parameters and litigation risk then you really can get a bill settled quickly and effeciently.

    The problem arises when one sides really does believe their own claimant / defendant mantra and consider that the other side is always at fault. Fault occurs on both sides and there is always litigation risk, its just that some people do not and will not see it

  5. Truly Eminent Costs Professional

    The great train robbery – it is ironic that simon gibbs ryhmes with ronnie biggs – just saying!

  6. The point of the successful Part 36 if you are the receiving party is not the indemnty basis costs (probably worthless) but the 10% uplift on the costs as assessed (ie an uplift of up to £7,500).

  7. What is stopping a receiving party then presenting a part 36 offer to a paying party shortly before a DA hearing which is £50.00 above the Defendant’s best part 36 offer?

    The Defendant will either have to accept the offer (and DA costs up until that date) or risk running the case to a DA hearing and risk the penaltise as listed by Simon.

    Jackson said you now live or die by the Part 36 offer even if the receiving party succeeds by a tiny margin.

    This has not been thought through at all.

  8. @ Simon 15.03 12:53pm No, Im sorry, but the rule at 47.15(5) is clear and emphatic ;-
    (5) The court WILL not award more than £1,500 to any party in respect of the costs of the provisional assessment (my emphasis)

    more tension in the rules obviously, but given 36.14(3) contains the caveat “unless the Court considers it unjust to do so”, and bearing in mind the Courts discretion under the Overiding Objective is to ensure claims are dealt with justly, I suggest it unlikely a DJ (or DDJ more likely) is going to award a Recieving Party anything over the £1500.00 maximum come what may

  9. its still an award of costs, as its based on the amount of the costs awarded (and therefore suffers the limitation in 47.15(5))

    just as it would be extra damages, based upon the original damages award (and upon which there is no cap – different rules effecting it therefor)

  10. Anonymous @ 5:34pm, you are continuing to confuse the two. CPR 47.15(5) says: “The court will not award more than £1,500 to any party in respect of the costs of the
    provisional assessment.”

    The 10% “reward” for winning on a Part 36 offer is not a part of the “costs of the provisional assessment”. It is an enhancement on the underlying amount awarded by the court.

    To illustrate: a receiving party makes a Part 36 offer of £49,000. Their bill is assessed at £50,000 triggering the 10% uplift and giving them an extra £5,000 on top of the amount as assessed. Their detailed assessment costs amount to £2,000. Notwithstanding that their provisional assessment costs will be assessed on the indemnity basis those costs are limited to £1,500. The total recovered is therefore £56,500 (plus interest). At no stage is the amount of the “costs of the provisional assessment” allowed at over £1,500.

  11. Just had a provisional assessment where costs assessed exceed receiving part part 36 offer. Is this extra 10% still applicable where a CFA was in place ?
    Would appreciate any comments or specific regulation concerning this issue.

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