Receiving party reaps the benefit of a well-pitched Part 36 offer

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Moran v Smith (Bristol County Court, Deputy District Judge Napier, 17/12/2021)

Paragon Costs were instructed on behalf of the Defendant (the receiving party).

Unusually, a Provisional Assessment was undertaken in circumstances where the costs claimed were over £75,000. The issues that flowed from that were:

1. Whether the additional sum of 10% under CPR 36.17(4)(d) was payable.

2. Whether interest was recoverable; and

3. Whether the receiving party’s costs should be limited to £1500 plus VAT and court fees;

The original order declined to award any additional sums as the recital recorded that CPR 47.15(5) limited the receiving party to no more than £1500. On challenging this, Judge Napier accept this was an error of law as the cap only applied to the costs of the assessment proceedings, not interest or any additional sums under CPR 36.17(4)(4).

The receiving party beat its Part 36 offer by only £685.27 and the offer was made late in the costs proceedings. Nevertheless, it was a genuine offer to settle which, if accepted, would have meant the paying party would have been liable to pay much less. The Court had regard to JLE v Warringnton & Hospitals NHS Foundation Trust [2019] EWHC 1582 (QB) which confirm that the additional sum was an “all or nothing” award. The Court had regard to the fact that the receiving party had not received a penny despite the cost award having been made over two years ago. Accordingly the additional 10% on the assessed sums was payable.

The receiving party restricted its claim for interest to 8% despite the enhanced interest that could have been payable under CPR 36.17. In acknowledging this, the Court declined to postpone interest pursuant to Involnert Management Inc v Apilgrange Limited and Others [2015] EWHC 2834 (Comm). Accordingly interest was awarded as claimed.

On the slightly unusual point as to whether the Provisional Assessment cap should apply, the Court found that there was a Provisional Assessment, rightly or wrongly, and neither party objected to or appealed that process. Whilst CPR 47.15 did not strictly apply, the Court concluded that a just and proportionate way of dealing with this case would be to award the sum which would have been payable under the Provisional Assessment procedure.

The receiving party, having made a Part 36 offer of £75,000, ended up recovering £96,775.37.

Once again, the moral of the story- a well-pitched Part 36 offer is worth its weight in gold.

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