By Seamus Kelly, Solicitor at Carter Burnett 
Using a well-pitched Part 36 offer on costs can encourage negotiation and resolution. 
Part 36 dates back more than 25 years with Lord Woolf and it has remained ever present since. It is still one of the most powerful tools available to a litigator and one which continues to evolve and be challenged, even now. 
Our experience with Part 36 in the context of costs assessments has shown that with a well-pitched Part 36 offer, the rewards available can be significant. The case below will invariably be a familiar story to many Claimant litigators. 
Case Overview 
Damages of £13,000 were awarded to a male patient who received inadequate surgery which failed to resolve a serious injury to his heel, known as a Haglund’s bump. Six months after the initial operation failed, and following a series of complications, the Claimant had to undergo revision surgery to correct the issue. 
During this time, the Claimant had a number of reviews with nurse practitioners where he complained of pain and swelling to the back of his heel and ankle joint. 
Having pursued a medical negligence claim, an independent medical expert ascertained that the North Tees and Hartlepool NHS Foundation Trust had breached its duty of care because the surgery received was “sub-standard” and had no realistic chance of solving the problem. 
The expert determined that the procedure “fell below a reasonable standard of care” because no assessment was made during the surgery to determine whether the bony bump issue had gone and been rectified. 
Consequently, the Claimant successfully proved the Trust were guilty of clinical negligence and the case settled without the need for any court proceedings. Following a series of negotiations damages were agreed in the sum of £13,000.00. 
The commencement of detailed assessment 
A detailed and comprehensive Bill of costs was prepared by our team and served on the defendant NHS Trust in February 2020. We also agreed an interim payment on account of costs with the NHS. 
Unfortunately, the parties could not come to an agreement over the amount of the Claimant’s costs, so Part 8 Court proceedings were issued at the end of March 2020 in order to obtain an Order for costs so that detailed assessment proceedings could be commenced. 
The provisional assessment hearing 
During the assessment procedure the NHS Trust raised several Points of Dispute including a challenge to the Solicitor’s hourly rates, the fees incurred by the expert and those of Counsel. The Defendant Trust also raised proportionality over costs. 
The Points of Reply were served and at the end of April 2020, we made a request for provisional assessment with a Part 36 offer in the sum of £20,000 put forward. 
The outcome of the Provisional Assessment was that the Claimant’s claim for costs was assessed in the sum of £22,345.52 in May 2020. The Court determined that the instruction of Counsel was reasonable and allowed the fees of both Counsel and expert as claimed. As is often the case, the Trust challenged the Court’s decision and requested an Oral Review hearing to review the Court’s decision on proportionality; the allowance of Counsel and expert fees along with the amount allowed within the document schedule. 
The Oral Review Hearing 
At the Oral Review Hearing at York County Court, we managed to successfully defend the challenges raised by the Defendant with the Bill ultimately assessed in the sum of £21,505.52 – beating our original Part 36 offer of £20,000. 
At such hearings it is for the party challenging the assessment to show that the Judge should have made a different decision, based upon the evidence they had available to them at the original assessment. 
In terms of expert fees, the Defendant had argued that these were disproportionate in the Disputes. In the Replies we invited them to provide evidence of this, however they failed to. At the oral review hearing, the Judge agreed that the Defendant had every opportunity to address the issue prior to the initial assessment but had opted not to. Without evidence that the fees were disproportionate, the Judge said there was no ground for a reduction. Further, proportionality had already been considered at the initial assessment. The Judge allowed the expert fees as claimed. 
When addressing Proportionality, we explained that the Defendant Trust should have looked at a re-calculated bill figure, then stripped out unavoidable costs (as per West and Demouilipied [2019]) which reduced the bill to around £15.5k. The Judge agreed that this was the correct approach and found that costs were proportionate having considered the CPR 44 factors. 
The outcome of assessment meant that the Claimant had beaten its Part 36 offer. The Court awarded an additional payment of 10% (as per CPR r36.17), enhanced interest at 10% and the costs of the Provisional Assessment and Oral Review Hearing. 
Originally, the Bill of costs was claimed in the sum £30,418.13 and notably the total amount being recovered was the sum of £29,959.25. 
Part 36 offers are a great tool in litigation, especially for Claimants. Cases like this show the potential consequences for paying parties who fail to recognise a reasonable offer when it’s made. Key benefits include a 10% additional payment (up to £75,000), enhanced interest (not exceeding 10% above base rate) and indemnity basis costs (from the expiry of the relevant period of the offer). 
The Judiciary have largely resisted challenges to dilute Part 36 consequences with a genuine recognition that the benefits under Part 36.17 are not just compensatory, but help to accomplish the key policy objective to incentivise settlement and thus reduce delay and costs. This is just as important now as it was to Lord Woolf in 1994 and LJ Jackson in 2009. 
This view was reaffirmed by Mrs Justice O’Farrell in Hochtief (UK) Constructions Ltd & Anor v Atkins Ltd [2019] who made it plain that “the fact the [Claimant] beat [its] Part 36 offer by a very small margin does not displace the Part 36.17 regime” More recently HHJ Pelling QC in Gosden v Halliwell Landau (a firm) & Anor [2021] echoed the sentiment of Part 36 as a “powerful tool in the Claimants’ armoury” which ought to be sufficient to punish conduct issues in most cases. 
As mentioned before, Part 36 continues to evolve. The Civil Procedure Rules Committee decided against allowing Part 36 offers to exclude interest last year. However, the rules will be amended from 6 April 2021 so that a Part 36 offer can include accruals of interest and where they are silent on this issue, then the presumption by the Court will be that the offer is inclusive of interest. This is a subtle but crucial change as it could be the difference between beating an offer and obtaining the Part 36 ‘perks’. It will no doubt make it more difficult to determine the eventual winner. 
If it is not handled properly, this is a move which could cause confusion and litigators must proceed with caution. As shown above Part 36 can have many advantages and remains one of the most effective tools in a litigator’s arsenal. It is also one of the most-contested areas so ensuring you are up-to-date and using it correctly is key. 
If you are in doubt seek advice from a specialist. We routinely advise on such issues as there are many common pitfalls. If gotten wrong an extremely good day at court can become something much less and leaves a lingering feeling of injustice. 
A version of this article featured proudly in the April 2021 edition of Litigation Funding Magazine. 
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