Costs Draftsman Nishma Shah examines the importance of a well-placed Part 36 offer
I recently dealt with a personal injury claim where the Claimant was awarded indemnity costs for part of the claim. Negotiations ensued, Points of Dispute and replies were served and the Defendant made a full and final offer of £28,000.00 but this was rejected.
The claim was then provisionally assessed in the sum of £28,051.97 plus interest at £6.15 per day and costs awarded in the sum of £2,720.00. Both parties agreed the assessed figure but the Defendant wrote to the Court arguing that as the sum awarded was close to the Part 36 offer they had made, the Claimant should not be awarded costs of the assessment. The Defendant’s relied upon CPR Rule 47.20 (3)(a) and (b).
The Claimant indicated that the Defendant’s approach was incorrect and that should the Defendant had wanted to challenge an aspect of the provisional assessment, that an oral hearing should have been requested and the Defendant would have to appeal the order already made.
The Court in reply stated that the Defendant would need to formally request an oral hearing in the manner set out in CPR 47.15 and that whilst the Practice Direction indicates that challenges to the order for costs are likely to be dealt with on paper that does not mean that the formal requirement can be circumvented, not least because there may be costs flowing from the challenge which would need to be dealt with in accordance with the specific provisions of 47.15.
The Court then went on to indicate that as the reductions made to the Bill of Costs related mainly to the hourly rates and the success fee as opposed to the documents there was a misleading percentage reduction. Moreover the Court indicated that it appeared that the Defendant did not make a sufficient Part 36 offer despite the extent of the reduction. The Court also dismissed the arguments raised by the Defendant as being dismissed in the case of Carver v BAA and as such the extent by which the offer was beaten is not material even if the interest question is ignored.
To conclude, as a Defendant, a well placed Part 36 offer will be the difference between having to pay additional assessment costs and recovering part of their own costs of the assessment.
As a Claimant, careful consideration will need to be given as to whether the costs of continued litigation will outweigh a good Part 36 offer when costs are to be assessed to the standard basis.
