Kerry Underwood

PART 36: LATE ACCEPTANCE, FIXED COSTS CAPPED COSTS – WHERE ARE WE?

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I deal with all of these matters at great length in my new book Personal Injury Small Claims, Portals and Fixed Costs, and in spite of the title it deals with Part 36 in the context of civil claims generally.

Available for £80.00 from me here or from Amazon here.

Part 36 is undoubtedly the most important of the Civil Procedure Rules, but unfortunately it is also the most complicated and difficult rule and, to put it mildly, is not well written.

I have written extensively on these subjects and a list of related blogs appears at the bottom of this piece, but this is a short piece summarising where we are in relation to Part 36 issues concerning fixed costs, capped costs and late acceptance.

These subjects are already important, but their significance will increase dramatically as fixed costs are spread to other areas of civil litigation and to claims with a higher value and we will know more once Lord Justice Jackson’s report is published later this month.

  1. Claim resolved by the end of Stage 2 of the portal process.

There are no Part 36 consequences of any kind if a matter is resolved by the end of Stage 2 of the portal process. A Part 36 offer is effectively suspended until a claim reaches Stage 3.

  1. Claim goes to Stage 3 and Claimant fails to beat Defendant’s offer.

The Claimant gets Stage 1 and Stage 2 costs but does not get Stage 3 costs and has to pay the Defendant’s Stage 3 costs which will be either £250.00 if there is a paper hearing or £500.00 if there is an oral hearing.

  1. Claim reaches Stage 3: Claimant matches or beats own offer.

There are no costs consequences in these circumstances but the Claimant will get enhanced damages under Section 55 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012.

  1. Post-Portal

Any claim which leaves the portal is subject to fixed costs unless and until it is allocated to the multi-track, with the single exception that ex-portal industrial disease cases go to open costs.

  1. Claimant accepts Defendant’s offer late or fails to beat Defendant’s offer at trial.

A Claimant gets fixed costs up to and including the stage where time for accepting the Defendant’s Part 36 offer expired.

The Claimant gets no further costs.

The Defendant gets costs capped, not fixed, for each subsequent stage, but this is subject to the indemnity principle, that is the Defendant needs to show what work they did and at what rate.

Because the costs in the Defendant’s case are capped and not fixed, the principles in Nizami v Butt [2006] EWHC 159 (QB) to the effect that the indemnity principle does not apply in fixed costs cases, has no application.

  1. Claimant matches or beats its offer at trial in a fixed costs case.

The Claimant gets indemnity costs for the whole period from expiry of the time for accepting its offer on the indemnity basis with no cap and subject only to the usual Costs Assessment Rules – see

Broadhurst v Tan & Taylor v Smith [2016] EWCA Civ 94.

  1. The Defendant accepts the Claimant’s Part 36 offer late and judgment is entered.

The Claimant gets costs on the indemnity basis as above – see the Broadhurst v Tan decision referred to above.

  1. Claimant matches or beats its offer at trial in a case involving capped, not fixed, costs.

The Claimant gets indemnity costs from date of expiry of the Part 36 offer and without the cap applying subject only to the usual costs rule.

This applies to provisional assessment cases, where the is a cap of £1,500.00 – see

Lowin v W Portsmouth & Co Limited [2016] EWHC 2301 (QB).

This applies to Intellectual Property Enterprise Court cases, where there are capped, not fixed, costs – see

Phonographic Performance Limited v Raymond Hagan [2016] EWHC 3076.

  1. The Defendant accepts the Claimant’s Part 36 offer late in a capped, not fixed, costs matter and judgment is entered.

The Claimant gets indemnity costs from time of the expiry of the Part 36 offer and these costs are not subject to the cap – see Lowin v W Portsmouth and Phonographic v Raymond Hagan above.

  1. The Defendant accepts Claimant’s Part 36 offer late in a fixed costs or capped costs case, but judgment is not entered.

This is the huge outstanding issue in relation to Part 36, both in relation to fixed and capped costs cases, and in relation to cases where the ordinary, open, costs rules apply.

There are no High Court or Court of Appeal decisions dealing with the current version of the Civil Procedure Rules and no Court of Appeal or High Court decision dealing with fixed or capped costs in this situation.

Different courts are coming to different conclusions and we await a definitive decision of a superior court.

I discuss this issue at length in my book and in my blog PART 36: DOES A CLAIMANT GET INDEMNITY COSTS ON LATE ACCEPTANCE?

Thus what has been established so far is that a late accepting Claimant is always liable for a Defendant’s costs from the date of expiry of the Part 36 offer until acceptance or Court Order, whether or not judgment is entered.

A late accepting Defendant where judgment is entered, or where the matter goes to trial, where the defendant fails to beat a Claimant’s Part 36 offer results in indemnity costs for the claimant from the date of expiry of the Part 36 offer until acceptance or Court Order.

The big remaining issue is what happens when a Defendant accepts a Claimant’s offer late, but judgment has not been entered.

Does the Claimant just get ordinary costs on the standard basis or does the Claimant get indemnity costs from the date of expiry of the Part 36 offer?

Time, or rather the Court of Appeal, will tell.

This issue is important in cases not subject to fixed costs, but is far more important in fixed costs.

The reason for this is that an award on the indemnity basis allows the Claimant to escape fixed costs and get paid by the hour.

Thus there is both an escape from Fixed Costs and an award on the indemnity, rather than standard, basis and thus the Claimant moves from fixed costs to indemnity costs without passing Go.

It is of less significance in open costs cases as the Claimant will get costs on the standard, not fixed, costs basis and in any event if the matter is settled by late acceptance, then generally costs will be agreed or will proceed to assessment as there is no default position of fixed costs.

Also see:

CLAIMANT ENTITLED TO INDEMNITY COSTS ON LATE ACCEPTANCE, COURT RULES

CLAIMANT’S PART 36 OFFERS: SIX NEW DECISIONS

PART 36 AND RESERVING COSTS TO END OF CASE

PART 36: WHAT HAPPENS WHEN THE OTHER SIDE’S OFFER IS BETTER THAN YOUR OWN

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Written by kerryunderwood

July 5, 2017 at 9:11 am

Posted in Uncategorized

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