Costs disputes after court proceedings can feel particularly confusing, especially when the other party threatens further action and refers to technical rules such as Part 36 offers and detailed costs assessments. If you have already had a costs order made by the court, it is natural to want clarity on what can happen next, what the other party is required to do, and what risks you may face if you do not accept an offer.
Understanding the issue or context
In your situation, the court has already made a costs order in favour of the other party, approving their budget but reducing it to 75% at final judgment. After this, the winning party has sent a Part 36 offer based on their original approved budget and has suggested that they may pursue a detailed assessment of costs if the offer is not accepted.
This raises understandable questions. You may be wondering whether they are obliged to carry out a detailed assessment if you refuse the offer, whether the offer simply expires, and whether your liability can increase beyond what the court has already ordered.
The legal rules or framework
Under the Civil Procedure Rules, a Part 36 offer is a formal settlement offer. It is optional for the receiving party to accept it. If it is not accepted within the relevant period, it does not force either party to take further steps by itself.
A detailed assessment of costs is a separate process. The paying party does not automatically face a detailed assessment simply because a Part 36 offer has been made. The receiving party must actively choose to commence detailed assessment proceedings by filing the appropriate paperwork within the required time limits.
If the winning party decides not to proceed with a detailed assessment, the existing court order on costs remains in place. In that scenario, your liability is limited to the amount already ordered by the court.
If they do proceed with a detailed assessment, the court will examine the costs in detail. The assessment is not limited to rubber-stamping the original figure. The court may uphold the reduced amount, increase it, or reduce it further, depending on proportionality, reasonableness, and the arguments raised.
Importantly, a Part 36 offer does not oblige the offering party to pursue detailed assessment if it is not accepted. It simply creates potential cost consequences if a later assessment produces a less favourable outcome for the party who refused the offer.
Practical steps to take
There are several practical considerations when deciding how to respond.
First, review the wording of the existing costs order carefully. This sets the baseline for your current liability.
Second, assess the Part 36 offer in light of that order. If the offer exceeds what has already been awarded, it is reasonable to consider whether the threat of detailed assessment is being used as leverage.
Third, consider the risks of a detailed assessment. While costs could increase, they could also stay the same or reduce further. The outcome is not automatic.
Fourth, be aware of timing. If the other party does not commence detailed assessment within the permitted timeframe, they may lose the right to do so.
Finally, obtaining fixed-fee legal guidance on the specific figures involved can help you weigh the financial risk realistically before deciding whether to accept or reject the offer.
Common pitfalls to avoid
A common misunderstanding is assuming that refusing a Part 36 offer forces the other party to take further action. It does not.
Another pitfall is assuming that a detailed assessment will necessarily result in higher costs. The court will scrutinise the figures carefully.
Some parties also feel pressured into accepting an offer without fully understanding the existing costs order and how it protects them.
Finally, ignoring deadlines or correspondence relating to costs can weaken your position if further proceedings are started.
Frequently Asked Questions
Do we have to accept a Part 36 offer on costs?
No. Acceptance is voluntary.
Does a Part 36 offer expire if we do nothing?
Yes. If not accepted within the relevant period, it simply ceases to carry automatic cost consequences.
Is the winning party required to pursue a detailed assessment?
No. They must actively choose to start that process.
What happens if they do not proceed with a detailed assessment?
The court’s existing costs order remains binding.
Can costs increase on a detailed assessment?
Yes, but they can also stay the same or be reduced.
Is it sensible to get legal advice before deciding?
Yes. A short fixed-fee review can help you understand the real financial risk.
Conclusion
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This information is general guidance only and not legal advice. For personalised support, please contact Martin Taggart Legal Consulting.