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Fixed costs or not fixed costs that is the question…

According to the case of Miss Seyi Adelekun v Mrs Siu Lai Ho (Central London County Court 18/10/2018), fixed costs do not apply when they are inconsistent with a consent order.

The case concerned an appeal by the Claimant against a decision of DDJ Harvey made on 7 February 2018 when he decided that the costs of a road traffic accident personal injury claim, following acceptance by the Claimant of the Defendant’s Part 36 offer in the sum of £30,000.00 gross and a subsequent consent order, were to be determined under the fixed costs regime under Section IIIA CPR 45.

Background to the Case

By way of background, the claim resulted from a road traffic accident on 26 June 2012 and was commenced by a claim notification on 15 January 2014 under the pre-action protocol for personal injury claims in road traffic accidents, applying to claims valued up to £25,000. In the absence of an admission of liability, the claim exited the portal on 6 February 2014, and proceedings were issued in December 2014. On 31 March 2015 the matter was allocated to the fast-track and directions were given. The claim was originally listed for trial on 7 January 2016, but subsequently that trial date was vacated, and further directions were given on 18 November 2015 and 6 July 2016. On 18 January 2017 the claimant issued an application to re-allocate the claim to the multi-track; the application being listed to be heard on 24 April 2017. On 19 April 2017, five days before the Claimant’s application was due to be heard, the Defendant made a Part 36 offer gross of recoverable benefits. Importantly, the Part 36 offer stated, “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 following day, 20 April 2017, the Defendant’s solicitors confirmed that they could consent to the matter being allocated to the multi-track (re-allocation never took place) and the next day, 21 April 2017, the Claimant accepted the Defendant’s Part 36 offer of £30,000.00. A Tomlin Order was drawn up which provided that; “the defendant do pay the reasonable costs of the claimant on the standard basis to be the subject of detailed assessment if not agreed…..”

In relation to the costs, the parties were unable to agree whether or not the fixed costs regime applied. The Defendant contended that the fixed costs regime applied; the Claimant disagreed and sought costs of £42,856.34. The Defendant issued an application to determine whether or not the fixed costs regime applied which came before DDJ Harvey on 7 February 2018. DJJ Harvey held that the fixed costs regime applied and varied the consent order, although he did record in his order that it was open to the Claimant to argue on detailed assessment that she should recover costs in excess of fixed costs by reference to the exceptional circumstances provisions of CPR 45.29J. The Claimant appealed.

There were four grounds of appeal by the Claimant:

(1) That the Deputy District Judge wrongly varied a consent order dated 24 April 2017, it being said that the Deputy District Judge had no power to vary the consent order containing the parties‟ contractual agreement that the claimant’s costs were to be subject to detailed assessment on the standard basis in the absence of fraud, mistake, misrepresentation or incapacity.

(2) That the Deputy District Judge did not give due consideration to the reallocation of the claim to the multi-track, with the Deputy District Judge being asked to reallocate the claim to the multi-track.

(3) That the Deputy District Judge, in making the decision he did, wrongly interfered with the detailed assessment proceedings, it being said that notwithstanding any power to vary the consent order dated 24 April 2017 the fixed costs issue should have been taken by the defendant on detailed assessment.

(4) That, on the basis the claimant’s appeal was successful, the claimant should have her costs

The Court of Appeal decisions of Solomon v Cromwell Group Plc & Ors [2012] 1 WLR 1048, Sharp v Leeds City Council [2017] EWCA Civ 33, and Hislop v Perde & Ors [2018] EWCA Civ 1726 were considered alongside the provisions of Part 36.

The Claimant succeeded on her first ground of appeal.  The parties’ agreement in the consent order, could not be construed as an agreement to pay costs on the usual basis of fixed costs. In particular, on the facts of the case, the parties had agreed that the claim should be reallocated to the multi-track and therefore the agreement in respect of costs was entirely consistent with the parties’ agreement.  In principle, there was no reason why, if parties choose to agree different terms, the agreement should not be enforceable by ordinary process.

The Claimant, having succeeded on the first ground of appeal, effectively meant that she succeeded on her appeal. However, turning to the additional grounds of appeal, the Claimant failed in relation to the second ground. HHJ Wulwik ruled that he did not consider that rule 36.14(5)(b) enabled the Claimant to apply to re-allocate the claim and as the Claimant’s application to re-allocate was vacated in paragraph 2 of the consent order dated 24 April 2017, it would run contrary to this order if that application could be resuscitated subsequently. It would have been sensible if the Claimant’s solicitors had included as a term of the consent order that the claim be reallocated to the multi-track. The third ground of appeal fell by the wayside as the Claimant’s counsel on the hearing of the appeal indicated that he was not pursuing this ground that the fixed costs issue should have been taken on detailed assessment as a standalone ground of appeal.

Conclusion

Although in practice, this case supports, in principle, the parties being able to contract out of fixed costs, those circumstances will of course be limited and case specific. However, this case shows that the issue of fixed costs is not always straight forward. If you have any queries regarding discontinuance, please do not hesitate to contact PIC for assistance.

Click here to contact Laura with any queries relating to this article or to arrange a training session at your firm.

Laura Harber – Costs Lawyer – Partners in Costs

07.05.19