Claimant practitioners will give a warm reception to a decision providing clarity and interpretation to what is meant by an agreement for costs to be “subject to detailed assessment”.
The Court of Appeal, in Doyle v M&D Foundations & Building Services Ltd, has ruled that no ambiguity exists where there is a clear agreed court order requiring the payment of costs “subject to detailed assessment if not agreed”.
The matter arose following an injury to the claimant during the course of his employment at a construction site. The case was initiated within the relevant protocol via inception of a Claim Notification Form (CNF), however no response pack was provided, but liability was disputed, therefore the protocol ceased to apply to the claim.
Proceedings were commenced, with the matter being allocated to the fast track and trial also being listed. The parties proceeded to resolve matters for the sum of £5,000 in full and final settlement. Within the consent order, costs were agreed as, “…costs to be the subject of detailed assessment if not agreed”.
The matter was previously decided by both DJ Rogers and HHJ Ingram in favour of the receiving party that fixed costs did not apply.
Lord Justice Phillips, who gave the leading judgment, stated at paragraph 44:
“…there is no ambiguity whatsoever as to the natural and ordinary meaning of “subject to detailed assessment” in an agreement or order as to costs. The phrase is a technical term, the meaning and effect of which is expressly and extensively set out in the rules.”
He continued at paragraph 51:
“There is no objective reason to believe that the solicitors did not intend the term to bear its natural, ordinary (and in my judgment, obvious) meaning, not least because it would be impermissible (and to no avail) to speculate as to the parties’ respective legal or commercial motivations for reaching a settlement on the terms they did.”
An important factor to note here is that the court distinguished this matter from the previous Court of Appeal decision in Ho v Adelekun, which concerned the same issue but relating to settlement following acceptance of a Part 36 offer (paragraph 56, judgment) .
The result of this decision is that the implications are wide-reaching and care will need to be taken so as to ensure that the wording of any agreement is carefully considered. Part 36 settlements will continue to attract fixed costs, applying the reasoning in Adelekun, whereas an agreement that costs be the subject of detailed assessment if not agreed will mean just that; fixed costs do not apply.
Many may comment that previous applications of “subject to detailed assessment if not agreed” does not prevent such an argument being successful, see O’Beirne v Hudson in that regard, albeit relating to small claims costs. However, the distinguishing factor here is that the construction of the rules themselves, namely CPR 44.3(4)(a) and CPR 44.6(1), could not be clearer that an agreement or order for the detailed assessment of costs does not relate to fixed costs (paragraph 45 of Doyle).
The above decision is a reminder that fixed costs do not automatically trump all else. The rationale provided by the court upon how and why standard basis costs apply is, in my opinion, applying the rules as they were intended to be applied; an agreement must clearly specify the intentions of the parties and not be left to presumptions after conclusion.
