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High Court overrules Senior Costs Judge on part 36 uplift in detailed assessments

RCJ [1]

Slade J: claimant penalised for “reasonable” offer

The Senior Costs Judge, Master Gordon-Saker, has been overruled by the High Court after he denied a claimant who made a successful part 36 offer in detailed assessment proceedings the additional 10% uplift to which he was entitled.

His decision that essentially the uplift would have given the claimant an unjustified windfall was held not to accord with the intention of CPR 36.14.

Under CPR 36.14(3)(d), those who make a successful part 36 costs offers are entitled to an additional uplift of 10% on the figure allowed at assessment unless it considers it unjust to do so.

“The approach adopted by the Master penalises the claimant for making what turned out to be a reasonable part 36 offer,” Mrs Justice Slade said.

She said it was the terms of the part 36 offer, not the level of the sums claimed in the bill of costs, which must be considered under the rule.

The court heard in Cashman v Mid-Essex Hospital Services NHS Trust [2015] EWHC 1312 (QB) [2] that Michael Cashman, a medical negligence claimant, originally claimed costs of £262,000 after winning £90,000 in damages from a hospital trust. Later he made a part 36 offer of £152,500, but on assessment Master Gordon-Saker awarded him over £173,000.

Awarding him interest but not the additional 10%, which would have been worth over £17,000, Master Gordon-Saker argued that costs should be “treated slightly differently” to ordinary judgments where part 36 applied.

Holding that it would be unjust to require the defendant to pay the additional amount given the “significant reduction” in the claimant’s bill, the Master said he would have preferred to have applied the uplift only to the difference between the costs allowed and the part 36 offer.

However, Slade J said: “The rule was introduced not only to provide an incentive to a claimant to make a timely realistic part 36 offer but also to penalise a defendant for not accepting such an offer.”

She said the Master declined to make the award “not because he considered the making of such an award unjust but because he thought it unjust to make an award of the required amount, 10% of the assessed costs”.

This did not accord with the regime put in place in April 2013: “In this case it is the claimant who has been penalised for making a reasonable part 36 offer rather than the defendant for not accepting it. In my judgment that approach is contrary to the intent and effect of CPR 36.14(3)(d).

“As he stated, Master Gordon-Saker was dealing with fairly new provisions in CPR 36. His judgment was given ex tempore. However, whilst recognising his expertise in matters of costs, I have concluded that he erred and the appeal is allowed.”