Costs Law Update by Partner & Costs Lawyer Gary Knight

Lowin v W Portsmouth & Co LTD [2016] EWHC 2301 QBD Elisabeth Laing J – 20/06/16

An appeal against a decision of a Costs Judge following a provisional assessment of the receiving party’s costs.

The Claimant was entitled to costs following a successful claim for damages arising from the death of the Claimant’s mother as a result of malignant mesothelioma. Damages were recovered in October 2014 in the sum of £70,200.

The Claimant made a Part 36 offer in respect of costs for £32,000. Absent acceptance the matter proceeded to a provisional assessment in respect of the Bill of Costs which sought in excess of £55,000.

The provisional assessment undertaken on 8 February 2016 resulted in the allowance of costs in the sum of £32,255.35 and the Costs Judge ordered that pursuant to the provisions of CPR 36.17(4) the Defendant was to pay interest on costs at a rate of 10% per annum for the period 21 days from the Claimant’s Part 36 offer plus costs of the assessment to be summarily assessed on the indemnity basis with interest on those costs at 10%.

The Claimant produced a statement of costs for the assessment amounting to £6,091.20 the Costs Judge assessed the same at £2,805.

In giving reasons for his decision the Master considered that whilst an assessment of the Claimant’s costs could properly be undertaken pursuant to Part 36.17(4) (c) this did not “dislodge the effect of CPR 47.15(5) which has the effect of trapping the “maximum amount the court would award” to the receiving party to £1,500 plus VAT plus Court fee…”

The Claimant sought leave to appeal, the Costs Judge refused the application referring to Broadhurst v Tan [2016] EWCA Civ 94 and finding, in the view of the Costs Judge, the same to have “no application as there is a contractual difference between “fixed costs” and as here, assessed costs subject to the cap in CPR 47.15(5).”

Notice of Appeal was filed and leave to appeal granted.

The Appeal was heard by the Judge with Master Leonard sitting as a Costs Assessor.

The matter of “Broadhurst” was considered in great detail as was the relationship between Part 36 and Part 47.

The Judge (and costs assessor) considered there to be a conflict in a sense between Part 47.15(5) and Part 36 in that r 47.15(5) potentially derogated from the entitlement to having costs assessed on the indemnity basis conferred by Part 36. “For it to derogate in fact, the draftsman would, it seems to us, have had to provided specifically in rule 47.20 that the provisions of Part 36 would not apply to the costs of the detailed assessment with modifications that included 47.15(5)”.

It seems to us (see paragraph 32 of the judgement) that, because he has not so provided, it must follow that the provisions of Part 36 apply to this case and that they should not be displaced by a provision of rule 47.15(5).

Addressing the arguments raised by both parties urging the Judge on the undesirable consequences of accepting the other side’s argument, the judge added “It seems to us that there is one potentially undesirable consequence from our conclusion. That is that it may reduce the incentives for people to keep the costs of a provisional assessment as low as possible. On the other hand, it seems to us that, one consequence of our conclusion is that it increases the incentives on parties to accept sensible Part 36 offers because, if they do not, then there is the potential for them to incur further costs if that rejection is proved wrong by a detailed assessment.”

Accepting the Claimant’s argument on the construction of the two provisions was correct, the appeal was allowed.

Harmans comment – Why did the claimant not seek/recover the extra 10% on the costs recovered per 36.17 (4)(d)?

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