Benefits of Part 36 do not apply to detailed assessment costs

The Senior Courts Costs Office has recently held that a Claimant is unable to obtain the benefits of a Part 36 offer in relation to the costs of detailed assessment. The judge concluded that the costs of detailed assessment proceedings do not, for the purposes of CPR 36.17(4), fall within “any issue that arises in the claim”, therefore the Claimant could not claim any uplift.

Natalie Best v Luton & Dunstable Hospital NHS Foundation Trust

Background

The Defendant accepted a Part 36 offer out of time in settlement of the Claimant's bill of costs. The detailed assessment hearing was relisted to consider summary assessment of the Claimant's costs of assessment. At this hearing the summary assessment of the Claimant's costs of assessment was completed and the parties agreed a settlement of £58,119.80. Prior to the hearing the Claimant had made a Part 36 offer of £52,000.00 in relation to the costs of assessment.

Raising the issue post-hearing

After the hearing (but still within the allotted hearing time) the Claimant sought to claim the benefits of a successful Part 36 offer in relation to the costs of assessment.  Counsel for the Claimant explained she had omitted to address the issue during the hearing, which Costs Judge Leonard described as "a simple oversight". The Claimant submitted that the quick identification of the issue meant there was no real prejudice to the Defendant.

The Defendant submitted that a formal application to raise this issue should have been filed, and it was disproportionate to raise the issue post-hearing.

As the Part 36 point had been raised within the time originally allocated for the hearing Judge Leonard concluded that it was fair "to approach the issue on the basis that [the Claimant] did in fact do so before the hearing ended." In addition, the Court was not being asked to reconsider an issue already determined as the summary assessment figure remained undisturbed.

Part 36 offer and detailed assessment

Judge Leonard referred to his previous decision in Bourne v West Middlesex University Hospital NHS Trust. In Bourne, the Claimant bettered his Part 36 offer for assessment costs and then claimed the interest and an additional 10% of the assessed amount. Judge Leonard concluded that Part 36 had no application because CPR 47.20(7) "does not provide that the determination of the costs of detailed assessment proceedings is itself to be regarded as an independent claim."

The Claimant argued the provisions of Part 36 is to allow a party to make an effective Part 36 offer and levy a penalty where a good offer is not accepted. CPR 47.20 provides for detailed assessment proceedings to be treated as an independent claim, and within those proceedings a Part 36 offer can be made in respect of the whole or part of claim, or any issue that arises in the claim. The Claimant submitted this must include the costs of detailed assessment proceedings.

Judgment

The quantification of the costs of assessment did not fall within "any issue that arises in" for the purposes of CPR 36.2(3). Prior to the introduction of the Part 36 regime to detailed assessment proceedings in 2013, it "was already possible to make an offer in respect of the whole, or part of, any issue that arose in a claim" through CPR 36.2(2)(d).  Therefore, if the issues arising on the detailed assessment of costs were issues in the claim it would already have been possible to make a Part 36 offer in detailed assessment proceedings and the 2013 changes would not have been necessary.

The issues within the detailed assessment proceedings were set out in the bill of costs, points of dispute and replies. These were resolved when the Defendant accepted the Claimant's Part 36 offer. The award and quantification of the costs of assessment followed but were not issues in the deemed independent claim.

Judge Leonard concluded that the costs of the detailed assessment proceedings do not, for the purposes of CPR 36.17(4), fall within "any issue that arises in the claim". The Claimant's submission was "inconsistent with the way in which CPR 36 has been interpreted since well before 2013," and a "decisive obstacle" would be created if that interpretation was correct.

This would mean that a Part 36 offer re the costs of assessment would create, on acceptance of that offer, a further deemed order for costs under CPR 44.9(1)(b). This could result in "the potential for an indefinite cycle of Part 36 offers and new detailed assessment proceedings".

What can we learn?

• As the Claimant had raised the issue with the Part 36 uplift within the time originally allocated for the hearing, this was treated as though the "hearing had not quite ended when we thought it had, because not all the issues had been addressed." Judge Leonard agreed with the Claimant that the situation was "really not very different to the parties, having left for a short period, re-entering the courtroom within the time allocated for the hearing to pick up a point that had been overlooked."
• The Claimant sought to distinguish her case from Bourne by arguing there was "no question of double recovery". As provided for in CPR 36.17(4) the Claimant could recover an additional 10% only once in the course of detailed assessment proceedings.
• Judge Leonard stated that to accept the Claimant's submissions "would be to override [his] obligation to interpret the Civil Procedure Rules in accordance with the overriding objective."

This article was authored by Oksana Hudson and Jonathan Shaw.