Legal Cost Specialists

Referring to Part 36 offers in detailed assessment proceedings

It is obvious that all those involved in civil litigation need to understand the operation of the “without prejudice” rule, be they insurance claims handlers, paralegals, solicitors, costs lawyers, etc.

The recent decision of Chief Master Marsh in Ravenscroft v Canal & River Trust [2016] EWHC 2282 (Ch) considered whether an exception to this rule existed in relation to interlocutory hearings.  As part of that judgment the judge observed:

“The boundaries of the exclusionary aspect of the without prejudice rule are not entirely clear”

The boundaries of exceptions to the rule are no doubt not 100% clear but it is alarming the extent to which some lawyers appear to have failed to grasp even the most rudimentary basics of the rule.

I recently had to make an application against a well-known firm of personal injury solicitors to strike out Replies which made express reference to the existence and amount of a Part 36 offer made during negotiations over costs.  By the time the matter reached court, all matters except for the costs of the application had been agreed.  Costs Judge Master James dealt with the matter on paper and the short written decision covers the relevant facts:

“I have read the Application and both sides’ version of events.

The decision to refer (in the original Replies) to the amount of a Part 36 offer is an extraordinary step.

Post Halsey it is much more likely than not, that the parties will have attempted some form of ADR (whether it be by way of Part 36, Calderbank offer or otherwise).

However, it is extremely trite law that the Court may be embarrassed to hear a matter, if it is made aware of the existence and in particular of the quantum of any Part 36 offers.

In the worst case scenario, a Master reading the original Replies on the morning of the Hearing could have said ‘I must now recuse myself from this case and it will have to be adjourned until another Master can hear it. That is likely to be several months off. The party responsible for this is the Receiving Party who will therefore now have to bear the costs of this adjournment.’

When the Paying Party pointed this issue out, the Receiving Party’s response was to remove reference to ‘Part 36’ but to leave in the reference to the existence of their offer, to the sum of their offer, and to the Paying Party’s rejection of their offer. To my mind this risked the same mischief as in the foregoing paragraph and whilst it must be said that most Masters (myself included) would likely press on, they would then have regard to the Receiving Party’s extraordinary conduct when dealing with the Costs of Assessment. Since it has been resolved before that point, what is to become of those costs?

I therefore ask myself, whose fault was it that the Paying Party made the Application? The Receiving Party would have me rule that it was an attempt to undermine the Provisional Assessment procedure, but I do not agree. I think that the Paying Party was entitled to pursue the Application, having given the Receiving Party due notice that it would do so if the Replies were not revised to remove the offending reference to the offer (whether described as a Part 36 offer or not).

As such the Paying Party is entitled to its costs of the Application.”

4 thoughts on “Referring to Part 36 offers in detailed assessment proceedings”

  1. Interesting that reference to own offers (not specifially Part 36 offers, if I have read the judge’s decision correctly) is problematic for the court.

    I can see why referencing an opponents offers can cause issues but I would have thought that revealing one’s own offer can only potentially cause damage to the offeror and that it is merely a method for converting a previously ‘without prejudice save as to costs’ offer into an open offer. Though, of course, I would expect that the offer ought to be repeated as a specific open offer rather than crudely revealing an earlier Part 36 offer.

    That being said I can’t see on what basis it would be appropriate to refer to costs offers within replies. They are entirely irrelevant to determination of the substantive costs.

  2. Costs Judge Master James’ comment that “it is extremely trite law that the Court may be embarrassed to hear a matter, if it is made aware of the _existence_ and in particular of the quantum of any Part 36 offers” [my emphasis] is at odds with the requirement in CPR 47 Practice Direction 14.3(d) that a receiving party must file at court with their request for assessment a sealed envelope marked “Part 36 or similar offers”.

    1. Interested Observer

      A sealed envelope marked “Part 36 OR SIMILAR offers”, doesn’t reveal exactly what type the offers are, or their value – which was the point being made by the Master, who’s attention had been drawn to the type and value of the offers in the Replies, an open Court document

      this is hardly at odds with CPR

      1. What’s interesting is that:

        (1) Anyone can make an open offer at any time.

        (2) CPD 8.3 requires a paying party to make an open offer.

        (3) CPD 12.1 and CPD 13.2(d) when read together require the parties to show the value of their proposals on an item by item basis.

        Obviously, this is different than Part 36 and maybe context has been lost somewhere along the way.

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