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Costs of the Assessment: £1,500 cap continues to apply where you beat your own Part 36 offer

View profile for Marc Harris
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W Portsmouth and Company Ltd v Lowin (Daughter and Executrix of the Estate of Lowin, Deceased) [2017] EWCA Civ 2172

Summary

The Court of Appeal have ruled that the £1,500 cap imposed under CPR 47.15(5) continues to apply even where a party has successfully beaten their own Part 36 offer and awarded costs on the indemnity basis.

Issue

The issue raised by this appeal was regarding the relationship between CPR rule 47.15(5) and CPR rule 36.17(4). The question to be decided was:

  • Whether a party who successfully beats their own Part 36 offer and is awarded indemnity costs is still limited to the cap imposed under CPR 47.15; or
  • Whether CPR Part 36 entitles the successful receiving party to costs assessed on the indemnity basis without being subject to the cap.

Decision at First Instance

Master Whalan carried out the provisional assessment and awarded a sum greater than the Claimant’s Part 36 offer. Accordingly Master Whalan ordered that the Claimant was entitled to the cost consequences under CPR 36.17(4), those being costs on the indemnity basis, interest at 10% and a 10% uplift on the amount awarded.

Master Whalan made a Final Costs Order that the Claimant's assessment costs should be capped in line with CPR 47.15(5). Master Whalan held that CPR 36.17(4) did not dislodge the effect of CPR 47.15(5) in capping the ‘maximum amount the court will award’.

The Claimant sought permission to appeal relying on the decision in Broadhurst v Tan [2016] 1 WLR 1928. The Master refused permission on the grounds that the decision in Broadhurst had no application as there was a difference between ‘fixed costs’ and as in the present case assessed costs subject to the cap under CPR 47.15(5).

Permission to appeal was granted subsequently by Globe J.

Decision on Appeal

The appeal was heard by Elisabeth Laing J sitting with Master Leonard as a costs assessor. The court allowed the appeal and held that the cap under CPR 47.15(5) did not apply where the Claimant had successfully beaten their own Part 36 offer and was awarded indemnity costs. The court relied upon the reasoning in Broadhurst.

The Defendant appealed the decision.

Court of Appeal

Lady Justice Asplin provided the leading judgment and found that Master Whalan's approach to the matter was entirely correct. The Court of Appeal held that the Broadhurst decision is not directly applicable in this case as different provisions of the CPR were under consideration and that case was concerned with a conflict between fixed costs and assessed costs provisions in the CPR. The Court of Appeal held that CPR rule 47.15(5) is not a fixed costs provision like those under consideration in the Broadhurst case.

The Court of Appeal held that the cap imposed under CPR 47.15(5) continued to apply even where the Claimant had been successful in beating their Part 36 offer under CPR 36.17(4).

The Court of Appeal allowed the appeal.

Commentary

The Court of Appeal distinguished between ‘fixed fees' and 'caps' and thus distinguishing the case of Broadhurst which concerned where a party had successfully beaten their own Part 36 offer in a fixed fee matter.

Having regard to the explicit wording under CPR 47.15(5) this is a sensible decision. Furthermore, the cost consequences under CPR 36.17(4) already provide adequate benefits for a Claimant whom successfully beats their own Part 36 offer.

The decision is also in line with Jackson LJ’s intentions in creating greater certainty and control with legal costs. Jackson LJ is moving towards an era of awarding uplifts on costs to parties who successfully beat their own Part 36 offer, as opposed to providing ways to escape the fixed fee or costs cap regime.

It is important to note that the costs of issuing Part 8 proceedings fall outside the cap under CPR 47.15(5) and are therefore recoverable in addition (see Tasleem v Beverley [2013] EWCA Civ 1805 – Court of Appeal).

 

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