Provisional Assessment - Part 36 Offers

The Part 36 offer is a tool that is designed to help parties in a dispute to settle. This mechanism can help provide clarity on costs, damages and interest, and offers a way of exerting pressure on the other party to settle. But what happens when things don’t quite go to plan? We recently advised the Claimants on the costs aspects of a case that was far from simple in terms of the Part 36 provisional assessment process.

How it started

The action we were involved in concluded by acceptance of what was purported to be a Part 36 offer (“The Offer”), out of time in the sum of £4,000.

After this, a Bill of Costs for £19,594.22 was prepared from the date of first instruction to date of acceptance of The Offer and served informally, inviting settlement by negotiations. An offer of £6,500 was then received and only one issue raised by the Defendant – premature issue of proceedings. The Offer was rejected and a counter offer of £15,000 made, to which there was no response. At this point the Bill was formally served, further offers made – but rejected – and the matter set down for provisional assessment.

All fairly commonplace up to now!

What happened next…

The Court issued a Final Costs Certificate indicating the Claimant’s costs at £18,830.27, including interest, plus another £2,250 for the assessment costs. In response, the Defendant forwarded a copy of an email they had sent to the Court the previous day, challenging the Final Costs Certificate on the basis that no annotated precedent G had been provided. Next, the Court revoked the Final Costs Certificate – which had been issued on the wrong case! – and the matter was re-listed for a provisional assessment.

Not so commonplace now.

Out of the blue…

A Court Order appeared stating that the Claimant was entitled to their costs up to expiry of The Offer, with the Defendant entitled to their costs thereafter. No further Order or Directions were made.

Writing to the Court, copying in the Claimant’s Solicitors, the Defendant invited the Court to complete the assessment, and challenged again on the basis of premature issue. Notably, the Defendants did not seek an amended Bill of Costs from the Claimant, pursuant to the Order.

The Court then list for an ORAL detailed assessment hearing!

The first twist

As the Claimant’s Costs Lawyers, we then suggested Directions: that the oral hearing be vacated, an amended Bill served, Points in Dispute and Replies served and set down for provisional assessment thereafter. These Directions were agreed.

However, the Court then – bizarrely - made another Order, striking out the assessment proceedings, no order as to costs.  In response to this, the Defendant, advised they were seeking a variation of this Order to state that the Claimant should pay the Defendant’s wasted costs of the assessment proceedings. All previous Part 36 offers were then withdrawn, save for their offer of £7,500. This was all despite the agreement between the parties as to Directions.

Twist number two

The parties then agreed a further Directions Order by consent and an amended Bill of costs was formally served. Further Points in Dispute were served with an open offer of £5,200, but a Part 36 offer of £7,500 was maintained. Replies were served with the Claimant’s Part 36 offer of £9,984, inclusive of interest, exclusive of costs of assessment. Supplemental Points in Dispute were also served – addressing the premature issue of proceedings point again (the fifth attempt at raising this argument).

At this stage, concerns were raised by the Claimant as to the increasing disproportionally of the assessment costs and suggesting a commercial resolution of splitting the difference between the two parties - no response. A request was then made to list for provisional assessment.

The Court dispatched the annotated precedent G. We recast the Bill by reference to the Deputy District Judge’s decisions and invited the Defendants to agree the outcome of the provisional assessment in the sum of £11,928.36.

The Defendant then wrote to the Court again seeking a review of the assessment on the basis of (again) premature issue of proceedings, alongside another 12 items – their 6th attempt at raising the point. Notably, there was no attempt to liaise with us, or to narrow the issues.

The hearing

An oral review was listed at Huddersfield County Court. All information from the file relevant to the premature issue point was disclosed by us prior to the hearing. However, Defendant’s counsel advised that the fee earner with conduct was on maternity leave and the fee earner now handling the case was “unable to agree anything.”

Before District Judge Heels, submissions were made by both parties in relation to premature issue (now, the Defendant’s 7th attempt at raising this point). The Judge ruled in the Claimant’s favour on the basis that it was reasonable for Claimant’s Solicitors to err on the side of caution and to issue the proceedings when they did. Defendant Counsel raised the issue of hourly rates, despite having agreed with us that this was a red herring. It then transpired that the amended Bill of Costs was not on Court file.

Perhaps logically, we then considered that a lot of the obstacles would now be resolved with the issue of premature issue having now been determined. Defendant’s Counsel sought further instructions and then confirmed that he was unable to agree to anything other than to reiterate the previous Part 36 offer. So, the oral hearing was adjourned to allow a clean copy of the amended Bill of Costs to be filed and provisionally assessed by District Judge Heels.

So what now?

The bill has now been provisionally assessed in the sum of £10,180.16. The Claimant has beaten their own Part 36 offer and, as a result, applied for an additional amount, penalty interest and costs of the assessment process on the indemnity basis (pursuant to the provisions of Part 36.17).

The Defendant is asking the Court to “deny the Claimant any benefit of any bonus they may otherwise be entitled to (under the Court’s discretion) under Part 36.” And that is currently where we stand.

Answers on a postcard….what do you think the Court has ordered nearly two years to the day after the Claimant originally requested their provisional assessment?

This article was written by Victoria Morrison-Hughes. Victoria is head of Burcher Jennings’ Manchester office and joined the firm in early 2016. A qualified Costs Lawyer with a degree in accountancy and finance, coupled with extensive experience working as a lawyer in high street practice provides Victoria with unique insight into both the operational and technical demands of a legal business. Her main areas of expertise include commercial litigation, clinical negligence, catastrophic injury, Court of Protection and solicitor & own client disputes together with Costs management and negotiations.  Victoria’s primary focus is on providing excellent client care and service where her priority rests on quality and ensuring clients receive a bespoke service.