UK: CPR Part 47 Meets Part 36: Abridgement Of The Relevant Period, Oral Hearing Costs And Strategic Settlements

Charlotte Wilk acted unled for the paying party, instructed by Jon Finebaum of Comptons Solicitors.

The case of Libreville Co Ltd v Hagai [2022] 10 WLUK 701 is a decision of the High Court (SCCO) which establishes that the 20% adjustment rule under CPR r.47.15(10) does not need to be achieved at the oral hearing itself and can potentially be achieved by way of a settlement. The judgment was recently reported on Westlaw in 2024.

The decision of Deputy Costs Judge Latham also provides commentary on the abridgement of the relevant period under CPR Part 36.

What is provisional assessment?

CPR 47.15 sets out the rules on Provisional Assessment of costs. Provisional Assessment is a procedure by which the court assesses costs provisionally without an oral hearing. The rules apply to any detailed assessment proceedings commenced in the High Court or County Court on or after 1 April 2013 in which the costs claimed are £75,000 or less.

The assessment is done on paper and parties are not permitted to attend the assessment. The assessment is based on the information contained in the bill and supporting papers and the contentions set out in Precedent G. A copy of the bill, as provisionally assessed (with the court's decisions noted on it) will be sent to each party. Parties will also be sent a notice stating that if any party wishes to challenge any aspect of the provisional assessment, they must, within 21 days of receipt of the notice, file and serve on all other parties a written request for an oral hearing. If none of the parties file a request for an oral hearing, the provisional assessment shall be binding on them, except for exceptional circumstances (CPR 47.15(7)).

A party cannot appeal a provisional assessment made on the papers. The rules provide for an oral hearing, and if a party is still dissatisfied with the outcome, the judgment from the oral hearing can be appealed.

With this background in mind, I will address the 20% rule.

CPR 47.15(10): "an adjustment in its own favour":

Pursuant to CPR 47.15(10), a party requesting an oral hearing does not have to pay the costs incidental to that oral hearing if they achieve a 20% reduction (or more) to the sum provisionally assessed, in their favour

The problem in Libreville Co Ltd v Hagai [2022] 10 WLUK 701 was that the costs proceedings settled prior to the oral hearing.

The court was asked to determine various issues in the detailed assessment hearing where the paying party (P) had accepted a CPR Part 36 offer made by the Receiving Party (R). The Part 36 offer said: "If the offer is accepted within 21 days of the service of this letter, your client will be liable for our client's costs of the detailed assessment in accordance with Rule 36.13." And then, later in the letter: "Our client offers to accept the sum of £18,269.86 in settlement of the total costs claimed by our client in his detailed assessment proceedings."

Abridgment of the relevant period under Part 36

Judge Latham addressed an initial dispute about whether that offer included the costs of the provisional assessment, and considered that it did not, and accordingly awarded a total of £2,601 in addition to the accepted offer.

The more difficult points to determine were the consequences of having accepted that offer, which was interlinked with the time for acceptance. The Part 36 offer was made on 7^th October 2022, which was made 21 days before the hearing, but not 21 clear days before the hearing (see CPR 2.8). R therefore made an application to abridge the relevant period so that CPR 36.13(4) did not bite, i.e., to avoid the court having to determine the costs, thereby making P automatically responsible for R's costs of the oral hearing.

R suggested that the issue of the relevant period not being 21 clear days was raised late, and that the overriding objective required the court to deal with matters proportionately, and it was appropriate to exercise discretion to abridge the relevant period. P submitted that there was no duty upon a paying party to point out to the receiving party their error, and that there was no power to abridge time. Judge Latham considered that there was an express power to abridge under CPR 36.17(7) in slightly different circumstances, but in any event, there probably was power to abridge deriving from the court's general case management powers under CPR 3. However, whilst there was power and jurisdiction to abridge the relevant period, there was no basis for doing so. The CPR sets out the consequences where an offer is made less than 21 days before trial (the detailed assessment being the "trial" for these purposes), and CPR 36.14(4) provides a discretion to make such a decision.

So, who pays?

Oral hearings of provisionally assessed costs are uncommon and can be a costly exercise. Having established that there could be no abridgement of the relevant period, it fell to Judge Latham to assess whom if anybody, ought to pay for the costs of the oral hearing.

Following a provisional assessment that year, P had requested an oral hearing to review R's bill, on the sole issue of proportionality. The assessment had resulted in R's bill being assessed at something in the order of £26,000. R had made an offer to accept £18,269.86, and that offer had been accepted. No guidance is given in CPR 36.13.4(a) as to the factors a judge should take into account, but the Judge considered that CPR 47.15(10) should feature in the exercise of discretion.

As set out above in this article, r.47.15(10) states that a party which has requested an oral hearing will pay the costs of and incidental to that hearing unless it achieves an adjustment in its favour by 20% or more.

The Numbers

It was submitted that £18,269.86 amounts to around 70% of the sum provisionally assessed and therefore reflects a reduction of around 30%. R submitted that the reduction was not achieved at the hearing, but the Judge considered that the rule does not state that the reduction needs to be achieved at the hearing, it simply provides that it is achieved. The Judge also considered the discretionary factors that might influence the making of another order, and did not consider any conduct points that weighed against P such that they should pay for the oral hearing:

The Judge did not consider that this meant that the pendulum should swing the other way to award P their costs but considered that no order as to the costs of and incidental to the oral review hearing was the appropriate order.

Practical Implications

This case serves a much-needed reminder for practitioners of the specific rules of CPR Part 36 more generally, and how careful one must be when making offers in the lead-up to a trial (or in this case, a detailed assessment). It is apparent from this decision that there must be clear and proper reasons for abridging the relevant period.

As the application to abridge the relevant period failed, the costs of the oral hearing were not automatically payable by P. Due to a strategic decision to accept an offer that reflected a 70% reduction, P had achieved what it had sought and therefore been released of any responsibility for R's substantial costs of the oral hearing.

Crucially therefore, the case is authority for the 20% reduction under rule 47.15(10) being capable of representation by way of a settlement. This will be easier to argue in cases where (as in this case), there is only one issue in dispute to be determined at the oral hearing. Parties facing an oral assessment should therefore think carefully and strategically about the percentage reduction of the provisionally assessed sum when considering offers on the table.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.