Part 36 offers in costs proceedings


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From 1st April 2013, Part 36 offers apply to detailed assessment proceedings.

A receiving party who makes a Part 36 offer that is not beaten at assessment (provisional or detailed) is entitled to a 10% uplift on the costs awarded.

Many claimant solicitors will be rubbing their hands in anticipation.

Whoa there cowboy.

Costs belong to the client. An award of the additional 10% is therefore an award to the client, not the solicitor. The solicitor has no right to retain the 10% uplift unless the retainer expressly allows for this. The current Law Society Model CFA certainly does not do this. Any solicitors caught sneakily pocketing the 10% uplift would be guilty of theft. I wonder if the new Law Society Model CFA, if and when it’s published, will deal with this.


11 thoughts on “Part 36 offers in costs proceedings


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    Anonymous on said:

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    Good point, thank you for that!!!!!!!!!


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    Greenhorrn on said:

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    Simon
    10% of profit costs or 10% of costs? The latter includes disbursements…court fees inc. assessment fees, counsels’s fees and any agents’ fees etc..
    And 10% on any items never/not in dispute


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    Truly Eminent Costs Professional on said:

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    Lets hope this will cause a flurry of satellite litigation. Thanks for the heads re the technical point!!


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    Simon Gibbs on said:

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    Greenhorrn,

    It will apply to the “the sum awarded to the [receiving party] by the court”. In the context of detailed assessment proceedings this will be the bill as assessed (excluding interest). Therefore: profit costs, VAT, court fees, disbursements, counsel’s fees, additional liabilities, etc.

    If costs claimed within bill are £50,000 and bill is assessed at £40,000, with the receiving party succeeding on their Part 36 offer, the 10% uplift will by £4,000.


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    Rob Pettitt on said:

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    Doesn’t the model CFA expressly preserve a client’s liablity for the unrecovered shortfall in costs? [under ‘Dealing with costs if you win’]

    Provided the shortfall is greater than the 10% (which it will be anytime the bill is assessed at less than 90.6%) then the issue will not arise.

    It will be interesting to see whether the indemnity principle will be preserved.


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    Functus Officio on said:

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    Simon
    Greenhorn could have gone on to say re:10%
    (1 This now makes it lawful to make a profit on a disbursement.Indemnity point?
    (2)The 10% on a bill virtually allowed as asked on the P.A and not varied on a D.H. may exceed the client’s liability.Indemnity point?
    (3)Rules ( inadvertantly it seems ) on the indemnity point made under an one Act cannot override the substance of another Act.
    (4)The 10% ” profit ” is not just a matter between the soliicitor and the client. It is a matter between ALL who have a financial interest..counsel,agents, experts etc..
    (4) Apart from the Indemnity points above and the self aggrandized power by the Court on the 10% aspect, where is the Courts’ power to increase the client’s liability..especially where costs are not recovered inter partes (P.P. bankrupt, absconded…. )?


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    John Robins on said:

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    Does the 10% increase on the bill of £40k which includes VAT mean the tax man gets a wind fall ??? or does the Client pocket it ?? or even the Solicitor who carried out the work ???


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    Anonymous on said:

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    yet more examples of rank stupidity on the part of the Rules Committee approving this nonsense change to the Rules

    @ JR I suspect the award will require to be apportioned for VAT, but given Functus’ prior post, there will be a fight no doubt with suppliers as to their share – assuming this is of course advised to them


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    . on said:

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    Does Pt 36 apply to provisional assessment or only oral hearings ?

    If it applies to provisional assessments, is there anything to stop a defendant objecting to provisional assessment / asking for oral hearing and then just accepting C’s Pt 36 offer out of time i.e. before oral DA Hearing – to get out of paying penalty interest & 10% penalty ?


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    Anonymous on said:

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    You receive a schedule pre 01 April 2013, accordingly detailed assessment proceedings have not yet begun. It is clear from the rules that you are unable to make a 47.19 offer post 01 April. However, are you able to make a Part 36 offer pre-proceedings as you are allowed in general litigation? Do you run the risk of an offer under Part 36 being deemed inadmissable? Is it advisable to make a Calderbank offer instead or perhaps even both? The intended offer if accepted will reduce the claim for costs by 35%. All help greatfully accepted.


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    Billy on said:

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    The additional amount can belong to the solicitor if they say it should in their retainer!

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