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The difficulties of contracting out of fixed costs - Andrew Roy, 12 King's Bench Walk

25/02/20. Ho v Adelekun [2019] EWCA Civ 1988; [2019] Costs LR 1963 concerned the application of the fixed costs regime for ex-Protocol cases at Section IIIA of CPR Part 45, following acceptance of an ostensible Part 36 offer for damages and costs to be assessed. The Court of Appeal allowed the defendant’s second appeal and held that fixed costs applied notwithstanding that the defendant’s offer letter was poorly drafted. It also provided guidance on how such defendants could in future avoid such disputes.

Background

The underlying claim was a road traffic accident which occurred in 2012. This began under the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents but dropped out when liability was not admitted. The claim was duly allocated to the fast track. Its value then increased. The claimant therefore applied to re-allocate to the multi-track. The application was due to be heard on 24 April 2017. On 19 April 2017 the defendant sent what was described as a Part 36 offer for £30,000. It provided that “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 claimant accepted the offer via email on 21 April 2017 and attached a draft Tomlin order. This provided that the defendant pay “the reasonable costs of the claimant on the standard basis to be the subject of detailed assessment if not agreed”. In the interim, on 20 April 2017, the defendant had indicated that she would consent to re-allocation to the multi-track.

A consent order was made on 24 April 2017 reflecting the Tomlin order. The parties subsequently disagreed as to whether fixed costs applied. If they did, costs would be limited to £14,500-£16,000 (subject to the claimant establishing exceptional circumstances under CPR 45.29J). The costs claimed on a conventional basis totalled c.£42,000.

At first instance, Deputy District Judge Harvey found that fixed costs applied, albeit it remained open to the claimant to argue for the exceptional circumstances escape clause. He also rejected the claimant’s application to re-allocate to the multi-track in order to displace fixed costs. The claimant appealed.

His Honour Judge Wulwik allowed the claimant’s appeal, holding that terms of the settlement were incompatible with fixed costs. He rejected (obiter) the appeal against the refusal to reallocate.His primary reason for doing so was that under CPR 36.14 the claim stayed save as regards question of costs and the claimant was “impermissibly trying to piggyback the provisions of CPR 36.14(5)(b) with an application to reallocate the claim to the multi-track.” The defendant appealed the decision on fixed costs. The claimant served a respondent’s notice in respect of re-allocation...

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