The case of Mullaraj v Secretary of State for the Home Department has provided further judicial comment that a paying party should not expect to obtain a different order for costs at the conclusion of a provisional assessment hearing simply by relying on CPR 47.20(3)(b) when the paying party hasn’t beaten any previous offers made.
Background
The matter originated as the claimant, an Albanian national, had entered the country by lorry in December 2014 and was then detained by Thames Valley Police. Prior to her removal a claim was brought for unlawful detention. A settlement was reached in October 2019 where the SSHD agreed to pay damages of £12,500 plus costs on the standard basis, to be assessed if not agreed.
The claimant served a bill of over £74,060.46. It therefore fell within the range for provisional assessment. A provisional assessment was carried out in November 2020 and the bill was assessed in the total sum of £41,436.66 plus interest of £2,924.41, and costs of the provisional assessment of £1,500 and the court fee of £1,106. No request was made by the SSHD for an oral hearing to appeal the assessment. However, the SSHD made a subsequent application for the court to use the discretion provided to it under CPR 47.20(1)(b) to make a “different order” in respect of the costs of the provisional assessment.
The parties’ submissions
The nature of this “speculative” application is evident from the SSHD’s failure to specify what order they were seeking the court to make other than requesting the court make a “different” order to the one that it had previously made.
The main submissions relied upon by the SSHD for the making of a “different” order were two-fold, namely:
- Under CPR 47.20(3)(b), that the bill of costs had been reduced by £32,623.80 from the amount that had been originally claimed within the bill of costs.
- Under CPR 47.20(3)(a,) that the SSHD had made a without prejudice offer in the sum of £40,000 in full and final settlement of costs on 30 July 2020, which was ignored by the claimant until a formal rejection was received on 1 September 2020. No counter-offer was made by the claimant and the SSHD sought to rely on this as unreasonable conduct and enough to warrant a “different” order being made.
The claimant, on the other hand, rejected the defendant’s submissions and instead relied on the fact that the defendant’s offer of £40,000 was made on a fully inclusive basis, and that when the additional sums were taken into account the claimant had in fact beaten the defendant’s offer by £7,267.
Decision
Deputy Master Campbell rejected the SSHD’s application that a “different” order should be made. He noted that the starting position is set out in CPR 47.20(1) that the claimant is entitled to the costs of the assessment unless the court makes some other order, having regard to all the circumstances.
The first circumstance considered was whether the paying party has sought to obtain the protection afforded by Part 36. In this case the SSHD had not made a valid Part 36 offer. However, it was noted that they had made a fully inclusive offer to settle the costs. Unfortunately, this offer was still below what the claimant achieved at court. Therefore, the claimant had obtained a more advantageous result than the defendant’s offer, and, even if the offer had been by way of Part 36 the SSHD would not have received the benefit of the protection offered by Part 36.
Deputy Master Campbell considered that the CPR was clear in respect of the boundary of what constitutes a more advantageous outcome is and that a “near-miss” was not sufficient. Following this line of thought, it was considered that a party not making a Part 36 offer should not be placed in a better position, through arguing that there was a “near-miss”, than if they had made a formal Part 36 offer.
Deputy Master Campbell further stated that the amount that was reduced from the bill of costs claimed, whilst being a relevant factor, was not enough in this case. It was considered that to allow submissions purely under the CPR 47.20(3)(b) would be to essentially place a paying party who had not made any offers at all in a better position than a paying party who had sought the protection of Part 36. He considered that the floodgates could be opened to paying parties, regardless of whether they have made any offers, to make applications under CPR 47.20(3)(b) for different orders because they have had a successful day at court. Furthermore, the CPR does not provide any guidance on what level should be considered a significant reduction in the bill of costs to draw upon when considering making a “different order”.
However, Deputy Master Campbell has provided permission to appeal in the hope that the issue will proceed to the High Court and that a binding authoritative decision will be made.
Comment
The strength of the protection offered by a good Part 36 offer cannot be understated. It is clear from the outcome of this case that paying parties need to make good and early Part 36 offers during the course of costs assessment proceedings if they hope to avoid having to pay the receiving party’s costs of the assessment process. It is certainly unwise to not make any offers and to rely solely on a speculative application under CPR 47.20(3)(b) based on if a potential sizeable reduction to the bill of costs was achieved following a good day at court.
