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Parties Can Contract Out of the Fixed Costs Regime: A Reminder for Caution when Drafting Consent Orders: Doyle M&D Foundations & Building Services Ltd [2022] EWCA Civ 927 - Grace Corby, Temple Garden Chambers

20/09/22. A claim for damages for personal injuries had settled for £5,000 by a consent order (“the Order”). The Order provided that the Defendant would pay the Claimant “such costs to be the subject of detailed assessment if not agreed”. Following the agreement, the Claimant had filed a bill of costs for detailed assessment on the standard basis. The Defendant disputed this approach, arguing that the case fell within the fixed recoverable costs regime under Section IIIA of CPR Part 45. At first instance the district judge ruled that the parties had contracted out of the fixed cost regime using the Order and assessed the costs at £14,467.44. The appeal concerned the interpretation of that provision, in particular, whether the fixed costs regime under CPR Part 45 applied.

The Decision

Philips LJ delivered the judgment of the court. He stated that it had been recognised previously that there is no bar to parties contracting out of the fixed costs regime: see Solomon v Cromwell Group plc [2011] EWCA Civ 1584.

The court noted that the words of the Order are to be given “their natural and ordinary meaning and are to be construed in their context”: see paragraph 25. In this situation, where the order was a consent order, the real question was the true interpretation of the parties’ agreement: paragraph 27.

The Defendant relied on the fact that in Ho v Adelekun [2019] Costs LR 1963, the Court of Appeal had held that an identical phrase used in a Part 36 offer referred to fixed costs, not conventional costs. Further, the Defendant argued that it was inherently improbable that the they would have agreed to pay standard basis costs when the fixed costs regime was likely to be much more favourable to the paying party. The necessary and inevitable conclusion, the Defendant argued, was that it had not been intended to contract out of the fixed costs regime.

Phillips LJ rejected these arguments at paragraph 44, stating that there “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.” Further, at paragraph 51 he continued that there was...

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