Horne v Prescot (No.1) Ltd (Rev 1)

In detailed assessment proceedings, a receiving party may make a valid Part 36 offer expressed to exclude interest. Judgment debt interest is ordinarily payable automatically on assessed costs and is not part of the claim being assessed. Words excluding interest therefore clarify the offer’s scope and do not invalidate it, provided the offer otherwise complies with Part 36 and does not conflict with its scheme. Alternatively, even if interest is treated as part of the claim, the offer may settle the principal part of the claim. Part 36 remains prescriptive, but additional words which do not conflict with its mandatory requirements do not invalidate an offer.

The claimant, acting as executrix, recovered the costs of an underlying mesothelioma claim. On detailed assessment, the claimant’s solicitors offered to accept £82,000 in full and final settlement of the costs claim, expressly excluding interest and the costs of assessment. The Master held that the offer was a valid Part 36 offer. Because the assessed costs exceeded the offer, the claimant obtained the associated costs consequences.

The defendant appealed. The central issue was whether an offer in detailed assessment proceedings could be a valid Part 36 offer if expressed to exclude interest. The claimant also advanced alternative arguments concerning construction of the offer and the court’s general costs discretion.

1. Appeal dismissed. The Master had correctly treated the claimant’s offer as a valid Part 36 offer.
2. Interest in detailed assessment proceedings is qualitatively different from interest in substantive litigation. The original costs order ordinarily gives rise automatically to judgment debt interest. The receiving party need not claim, plead or prove that interest in the detailed assessment. Interest is therefore not ordinarily part of the claim which the Costs Judge must determine.
3. The bill of costs does not include that interest. In the circumstances, the offer related to the whole of the claim in the detailed assessment proceedings. The words excluding interest did not sever interest from that claim; they served the practical purpose identified in paragraph 19 of the Practice Direction to Part 47. Without the qualification, the offer would ordinarily be treated as inclusive of interest.
4. The exclusion of the costs of assessment was surplusage and did not affect validity. If the offer had been accepted, those costs would have been dealt with under rule 36.13.
5. Alternatively, if interest were regarded as part of the claim or an issue in it, the offer was capable of settling the principal part of the claim. Rule 36.5(1) states mandatory requirements, whereas rule 36.5(4) provides how an offer is to be treated. The inclusion of non-conflicting words did not make the offer non-compliant.
6. Part 36 is prescriptive and requires careful drafting. However, the court did not need to decide the claimant’s fallback arguments. The observations concerning the general costs discretion and the difficulty of importing Part 36 consequences by analogy were therefore unnecessary to the result.

• High Court (Queen’s Bench Division): appeal from the Master’s detailed assessment decision dismissed. The Master’s conclusion that the offer was a valid Part 36 offer was upheld.