Costs News

15 November 2018
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Court cannot order payment on account once part 36 offer has been accepted

The court does not have power to order a payment on account of costs in a situation where a part 36 offer has been accepted, a High Court judge has ruled.

Mr Justice Birss found the absence of any provision for a payment on account in part 36 decisive.

He was ruling in Finnegan v Frank Spiers (t/a Frank Spiers Licensed Conveyancers) [2018] EWHC 3064 (Ch), a professional negligence case, noting that once the offer has been accepted, under rule 44.9(1) it was deemed that a costs order has been made on the standard basis.

Mr Justice Birss considered the broad relationship between part 36 and rule 44.2, which contains the payment on account provision at (8). “It is clear that, although part 36 is not a complete code, for example, given the existence of rule 44.9, nevertheless the consequences of acceptance of an offer are spelled out in part 36 and they have the effect that the majority of rule 44.2 (and other parts of part 44 as well no doubt) cannot be applicable to such a situation.”

He continued: “I can see compelling reasons why a payment on account in a part 36 case like this would be different from one considered after a trial, but that alone is not a reason not to do it, although it does show that the exercise is different in kind.

“What it does show, it seems to me, is that the place to find the court's ability to make a payment on account order after acceptance of a part 36 offer is in part 36 itself. It is absent from there. There is no reason, in my judgment, to read rule 44.2(8) to make a payment on account applicable when a part 36 offer is accepted.”

Portia O’Connor (instructed by Pegasus) appeared on behalf of the claimant/appellant; Rupert Cohen (instructed by Freeths) appeared on behalf of the defendant/respondent.

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