Source: https://plexuslaw.co.uk/court-of-appeal-rules-on-fixed-costs-escape-where-costs-were-agreed-to-be-subject-to-detailed-assessment/
Timestamp: 2020-04-07 04:21:08
Document Index: 41429797

Matched Legal Cases: ['EWCA ', 'art 7', 'art 36', 'art 36', 'art 36', 'art 36', 'art 36', 'art 36', 'art 36']

Home Case Alert Court of Appeal rules on fixed costs escape where costs were agreed to be subject to detailed assessment
Mrs Siu Lai Ho v Miss Seyi Adelekun [2019] EWCA Civ 1988
The underlying accident occurred on 26/6/12 with the claim notified within the RTA Protocol on 15/1/14. Absent a liability admission the claim left the Protocol with Part 7 proceedings commenced on 7/1/15. The claim was allocated to the Fast Track. On 18/1/17 the Claimant applied for re-allocation to the Multi Track as the claim value had increased. That application was listed to be heard on 24/4/17. On 19/4/17 the Defendant made a Part 36 offer of £30,000. On 20/4/17 the Defendant chased a response to the offer and advised they consented to the re-allocation to Multi Track. On 21/4/17 the Claimant accepted the offer and attached a Tomlin Order. That draft Order provided for the Defendant to pay “the reasonable costs of the Claimant on the standard basis to be subject of detailed assessment if not agreed.”. The Defendant asserted fixed costs only were payable whereas the Claimant asserted that hourly rate/non fixed costs were payable.
The first Appeal was heard before His Honour Judge Wulwik. It was held that the fixed costs regime was not applicable. The basis of the decision was that the terms provided for in the agreed Tomlin Order were not consistent with an agreement to pay costs on the usual basis of fixed costs. It was further noted that by time of agreeing that Order the Defendant had agreed to re-allocation to the Multi Track and the costs provision in the Order was therefore entirely consistent with re-allocation to the Multi Track.
Dispute before the Court of Appeal
Both parties focussed upon the Defendant’s offer letter of 19/4/17 with neither party arguing before the Court that the Claimant’s response to that letter was a counter offer or that the Tomlin Order was important. The Claimant argued in the alternative the claim ought to have been re-allocated to the Multi Track.
The relevant part of the offer letter was as follows:
“If the offer is accepted within 21 days, our client will pay your client’s legal costs in accordance with Part 36 Rule 13 of the Civil Procedure Rules such costs to be subject to detailed assessment if not agreed.”
The Claimant placed reliance upon the reference to CPR 36.13 and particularly the words “such costs to be subject to detailed assessment if not agreed”. It was said the reference to CPR 36.13 rather than CPR 36.20 indicated an offer for conventional costs not fixed costs with such confirmed by the following wording. It was further said that the case circumstances supported that as logical, namely the agreement to re-allocate to the Multi Track.
The Court decided that the offer letter did not offer to pay anything other than fixed costs.
It was held that a reference to CPR 36.13 rather than CPR 36.20 was not of “any great significance”. The standard form N242A similarly contains a reference to CPR 36.13 and none to CPR 36.20. What matters more is that CPR 36.13 itself highlights that CPR 36.20 applies to a claim formerly under the RTA Protocol. If the offer letter had stopped at “Part 36 Rule 13 of the Civil Procedure Rules” there could have been no real question of the matter being removed from fixed costs.
It was held that the Defendant was intending to make a compliant Part 36 offer. The letter would not however have contained a valid Part 36 offer if it proposed anything other than fixed costs as the “self-contained procedural code” of Part 36 makes it plain that fixed costs are to apply.
It was held that the reference to “detailed assessment” was far from ideal but not wholly inapposite as the fixed costs regime does involve an assessment of some kind. It would not therefore displace fixed costs where other indications suggested fixed costs.
It was held that it was inherently improbable that a reasonable recipient of the letter would have believed the letter to offer conventional rather than fixed costs on the basis that fixed costs could be expected to be It was held that the fixed costs regime is designed to ensure that both parties begin and end the proceedings with the expectation that fixed costs will be paid.
The Court finally decided that it was not appropriate to re-allocate the claim to the Multi Track as there was not jurisdiction to do so in this case and such would run counter to the agreement of the parties for payment of fixed costs.
The case will provide a sigh of relief to those Defendants who have settled claims on less than clear terms. The Court did however conclude with a clear warning to Defendants that it would be wise to take note of: “For the future, a defendant wishing to make a Part 36 offer on the basis that the fixed costs regime will apply would, of course, be well-advised to refer in the offer to CPR 36.20, and not CPR 36.13, and to omit any reference to the costs being assessed.” As noted above the precedent form N242A refers only to CPR 36.13 not CPR 36.20.
A final point of interest concerned the disapplication of fixed costs where the matter is re-allocated to the Multi Track from Fast Track. The Court of Appeal seems to cast doubt upon the view that in such cases fixed costs are disapplied entirely. Rather the Court suggested the “more natural” interpretation may be that fixed costs apply up to re-allocation to Multi Track with conventional costs thereafter. While re-allocating is not common it is not unknown by any means and may present the Defendant with the benefit of limiting costs in part at least to fixed costs in such cases.
Chris White, Associate & Technical Director
Jonathon Tetley, Partner
T: 0113 4681 642 | M: 07879 424 806 | E: jonathon.tetley@plexuslaw.co.uk