Part 47.19 Trap

CPR 47.19 allows a party to make an offer to settle the costs of proceedings. The corresponding Costs Practice Direction states that, unless the offer states otherwise, the offer will be treated as being inclusive of the cost of preparation of the bill, interest and VAT. It might therefore be assumed that if a Part 47.19 offer is made and accepted that will conclude matters. Unfortunately not.

The Court of Appeal’s decision in Crosbie v Munroe [2003] EWCA Civ 350 makes it clear that a Part 47.19 offer does not include the costs of the detailed assessment proceedings (ie the work relating to negotiations and assessment of the costs of the substantive claim). Therefore, acceptance of a Part 47.19 offer, even if the offer is expressed to be “fully inclusive”, would not conclude matters. It leaves open the possibility of the other side returning to seek further payment in respect of the assessment costs. This is a trap for the unwary.

The situation is further complicated by the fact that there is no automatic entitlement on the part of the receiving party to their assessment costs even upon acceptance of a Part 47.19 offer. There is a general presumption, but no more, that the receiving party is entitled to the costs of assessment (CPR 47.18(1)). When deciding which party to award these costs to, the Court must consider the factors listed in CPR 47.18(2) including CPR 47.18(2)(b) which is the amount by which the bill has been reduced. The danger, of course, is that despite reaching agreement on the substantive costs, one then has to proceed to assessment in relation to who should be entitled to the assessment costs.

The way to deal with this problem is to make clear in any offer that it is inclusive of the costs of the detailed assessment proceedings. Although this may technically mean the offer is no longer a Part 47.19 offer, the basis of the offer is clear and we have never experienced any problems at court with this approach.