Legal Cost Specialists

Part 36 offers in costs proceedings

From 1st April 2013, Part 36 offers apply to detailed assessment proceedings.

A receiving party who makes a Part 36 offer that is not beaten at assessment (provisional or detailed) is entitled to a 10% uplift on the costs awarded.

Many claimant solicitors will be rubbing their hands in anticipation.

Whoa there cowboy.

Costs belong to the client. An award of the additional 10% is therefore an award to the client, not the solicitor. The solicitor has no right to retain the 10% uplift unless the retainer expressly allows for this. The current Law Society Model CFA certainly does not do this. Any solicitors caught sneakily pocketing the 10% uplift would be guilty of theft. I wonder if the new Law Society Model CFA, if and when it’s published, will deal with this.

11 thoughts on “Part 36 offers in costs proceedings”

  1. Simon
    10% of profit costs or 10% of costs? The latter includes disbursements…court fees inc. assessment fees, counsels’s fees and any agents’ fees etc..
    And 10% on any items never/not in dispute

  2. Truly Eminent Costs Professional

    Lets hope this will cause a flurry of satellite litigation. Thanks for the heads re the technical point!!

  3. Greenhorrn,

    It will apply to the “the sum awarded to the [receiving party] by the court”. In the context of detailed assessment proceedings this will be the bill as assessed (excluding interest). Therefore: profit costs, VAT, court fees, disbursements, counsel’s fees, additional liabilities, etc.

    If costs claimed within bill are £50,000 and bill is assessed at £40,000, with the receiving party succeeding on their Part 36 offer, the 10% uplift will by £4,000.

  4. Doesn’t the model CFA expressly preserve a client’s liablity for the unrecovered shortfall in costs? [under ‘Dealing with costs if you win’]

    Provided the shortfall is greater than the 10% (which it will be anytime the bill is assessed at less than 90.6%) then the issue will not arise.

    It will be interesting to see whether the indemnity principle will be preserved.

  5. Functus Officio

    Greenhorn could have gone on to say re:10%
    (1 This now makes it lawful to make a profit on a disbursement.Indemnity point?
    (2)The 10% on a bill virtually allowed as asked on the P.A and not varied on a D.H. may exceed the client’s liability.Indemnity point?
    (3)Rules ( inadvertantly it seems ) on the indemnity point made under an one Act cannot override the substance of another Act.
    (4)The 10% ” profit ” is not just a matter between the soliicitor and the client. It is a matter between ALL who have a financial interest..counsel,agents, experts etc..
    (4) Apart from the Indemnity points above and the self aggrandized power by the Court on the 10% aspect, where is the Courts’ power to increase the client’s liability..especially where costs are not recovered inter partes (P.P. bankrupt, absconded…. )?

  6. Does the 10% increase on the bill of £40k which includes VAT mean the tax man gets a wind fall ??? or does the Client pocket it ?? or even the Solicitor who carried out the work ???

  7. yet more examples of rank stupidity on the part of the Rules Committee approving this nonsense change to the Rules

    @ JR I suspect the award will require to be apportioned for VAT, but given Functus’ prior post, there will be a fight no doubt with suppliers as to their share – assuming this is of course advised to them

  8. Does Pt 36 apply to provisional assessment or only oral hearings ?

    If it applies to provisional assessments, is there anything to stop a defendant objecting to provisional assessment / asking for oral hearing and then just accepting C’s Pt 36 offer out of time i.e. before oral DA Hearing – to get out of paying penalty interest & 10% penalty ?

  9. You receive a schedule pre 01 April 2013, accordingly detailed assessment proceedings have not yet begun. It is clear from the rules that you are unable to make a 47.19 offer post 01 April. However, are you able to make a Part 36 offer pre-proceedings as you are allowed in general litigation? Do you run the risk of an offer under Part 36 being deemed inadmissable? Is it advisable to make a Calderbank offer instead or perhaps even both? The intended offer if accepted will reduce the claim for costs by 35%. All help greatfully accepted.

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