Part 36 offers cannot be made on the costs of detailed assessment, master rules

Master Leonard (pictured) has doubled down on his 2017 ruling that a part 36 offer cannot be made in relation to the costs of detailed assessment proceedings.

If it could, he said, this opened the way potentially to an indefinite cycle of part 36 offers and new detailed assessment proceedings.

In Best v Luton and Dunstable Hospital NHS Foundation Trust [2021] EWHC B2 (Costs), a clinical negligence case, the defendant accepted the claimant’s part 36 offer of £475,000 to settle the costs. The claimant then made a £52,000 part 36 offer in relation to the costs of assessment, which she bettered by £6,120 at the assessment and so sought the usual benefits of beating the offer.

Part 36 applies to detailed assessment proceedings by virtue of CPR 47.20, which provides for the detailed assessment proceedings to be treated as an independent claim.

In Bourne v West Middlesex University Hospital NHS Trust (SCCO reference CL1702494, 2 October 2017), Master Leonard concluded that a part 36 offer could not be made in relation to the costs of detailed assessment proceedings.

Summarising this in Best, he said: “I found that there was one authority for assessment, which was the order for costs in the underlying clinical negligence proceedings; that, in consequence, there could be only one set of detailed assessment proceedings; and that the determination of the costs of assessment was only a part of that process.

“Given that 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, I concluded that part 36 had no application and that the claimant was not entitled to the additional sums sought.”

The claimant in Best argued that, within detailed assessment proceedings, a part 36 offer could be made, as provided for at CPR 36.2(3), “in respect of the whole, or part of, or any issue that arises in” the claim. That must, she submitted, include the costs of the detailed assessment proceedings.

Master Leonard held that the award and quantification of the costs of assessment did not fall within “any issue that arises in” the claim.

He said the issues in the independent claim relating to the detailed assessment were set out in the bill of costs, points of dispute and replies, which were resolved on the defendant’s acceptance of the part 36 offer. The award and quantification of the costs of assessment followed, but they were not issues in the deemed independent claim.

This conclusion was supported by the wording of CPR 36.17(4) itself, the master went on. “The provisions of CPR 36.17(4) are prescriptive. The court must, unless it considers it unjust to do so, order that a claimant (in detailed assessment proceedings, the receiving party) receive all of the listed awards including indemnity basis costs and additional interest on those costs.

“That envisages a claim, or part of a claim or an issue in a claim, which is in itself capable of conferring an entitlement to costs. In short, it would be what is described at CPR 47.20(7) as an independent claim. The costs of detailed assessment proceedings do not carry their own costs and do not meet that criterion.”

This led to what Master Leonard described as “a decisive obstacle” for the claimant’s interpretation: “If the claimant is right, then any part 36 offer made as to the costs of assessment would, on acceptance, result in a further deemed order for costs under CPR 44.9(1)(b). By virtue of practice direction 44 paragraph 8.2, that deemed order would be an authority for detailed assessment.

“The receiving party would, accordingly, be entitled to draw up another bill to cover its costs of working on the costs of the detailed assessment, and to start a new set of proceedings for the detailed assessment of those costs.

“To avoid a default costs certificate, the paying party would have to file points of dispute. The receiving party could then apply for detailed assessment and, pursuant to CPR 47.20, seek not only ‘the costs of the costs’ claimed in its bill, but the additional costs of the new set of detailed assessment proceedings.

“The receiving party could also make yet another part 36 offer as to the costs of the new detailed assessment proceedings. If the paying party were to refuse to accept that offer, it would be at risk of incurring the additional penalties provided for by CPR 36.17. If it did accept the offer, then the receiving party could start again with another bill claiming ‘the costs of the costs of the costs’.”

This meant there was at least the potential for “an indefinite cycle of part 36 offers and new detailed assessment proceedings, each parasitic upon the last”. Even one was not consistent with the overriding objective, Master Leonard said.

Margaret McDonald (instructed by Penningtons Manches Cooper) for the claimant. Eric Clegg (Acumension) for the defendant.

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Costs News
Published date
03 Feb 2021

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