Kerry Underwood

CONSENT ORDER TRUMPS FIXED COSTS

with 2 comments


The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Adelekun v Lai Ho Case No: A06YQ205 Central London County Court (18 October 2018)

a Circuit Judge held that in a fixed costs case under CPR 45, Section III A, where the parties had entered into a consent order providing for the claimant’s reasonable costs to be paid on the standard basis, the claimant succeeded in escaping the fixed costs regime.

The judge held that the consent order, following acceptance of a Part 36 offer of £30,000, was incompatible with fixed costs and overruled them and that the Deputy District Judge had been wrong to vary what the parties had agreed.

The relevant wording in the order was:

“The defendant do pay the reasonable costs of the claimant on the standard basis to be subject of detailed assessment if not agreed.”

This wording, in the view of the Circuit Judge on appeal, allowed him to distinguish previous cases such as

Bratek v Clark-Drain Limited, Cambridge County Court, 30 April 2018

where it was held that a consent order settling a fast-track employers’ /public liability claim, and which provided for payment of costs on the standard basis, could not overrule the mandatory provisions of CPR 45.29D.

The facts here were slightly unusual in that the claimant had applied to re-allocate the claim to the multi – track the day before the Part 36 offer was made and the defendant agreed to the terms of the consent order after making the Part 36 offer.

The Circuit Judge held that the costs consequences were consistent with that, and would have been in the parties’ minds when signing the order.

The court suggested that it might have been sensible to include the issue of re-allocation to the multi-track as a term of the consent order.

In fact re-allocation never took place.

The hearing of the application to re-allocate would have taken place within the 21 day period for accepting the Part 36 offer, had the parties not settled.

In

Solomon v Cromwell Group Plc [2011] EWCA Civ 1584 (19 December 2011)

the Court of Appeal held that, as a matter of construction, general rules gave way to specific rules in the Civil Procedure Rules, and therefore the general Part 36 rules gave way to the specific rules in CPR 45, Section II.

True it is that in that case the relevant wording was “reasonable costs” without mention of the standard basis.

It is also correct that in Solomon the Court of Appeal recognised the possibility of the parties agreeing costs outside the fixed costs regime, even in a fixed costs case.

Here, the Deputy District Judge held that that principle applied in this case and that the order to the contrary was ultra vires and should not have been approved by the court.

In

Qader v Esure Services Ltd [2016] EWCA Civ 1109

the Court of Appeal held that fixed costs in an ex-portal case, as here, applied unless and until a matter has been allocated to the multi-track, whatever the settlement value.

That principle was subsequently enshrined by Parliament in an amendment to the Civil Procedure Rules.

A potential, but not actual, allocation to the multi-track is clearly capable of being an exceptional circumstance allowing an escape from fixed costs under CPR 45.29 (J)(1), a point accepted in this case, but that was not the issue here.

Indeed the Deputy District Judge, while holding that fixed costs applied here, specifically left it open for the claimant to argue that there were exceptional circumstances in the case, and these exceptional circumstances provisions are within the fixed costs rules themselves.

In

Sharp v Leeds City Council [2017] EWCA Civ 33 (01 February 2017)

the Court of Appeal held that the costs of an application for pre-action disclosure were governed by the fixed costs regime, although there, there was no agreement apparently to the contrary.

In

Hislop v Perde [2018] EWCA Civ 1726 (23 July 2018)

the Court of Appeal held that late acceptance of a Part 36 offer by a defendant did not allow a claimant to escape fixed costs.

Again, unlike here, there was no issue of contracting out of the fixed costs regime, and in any event many commentators believe that the decision in Hislop is wrong as a matter of law – see my blog

PART 36 AND FIXED COSTS:  CLAIMANTS’ OFFERS POINTLESS RULES COURT OF APPEAL

The Circuit Judge here held that the parties had consensually varied the usual rule, as envisaged in Solomon as being possible, and that the consent order was not vitiated by fraud, mistake, misrepresentation or incapacity,  and indeed it was not suggested otherwise.

He also held that the Deputy District Judge had no power to vary that consent order.

Matters were further complicated by the case of

Conlon v Royal Sun Alliance Insurance Plc [2015] EWCA Civ 92 (26 February 2015)

where the Court of Appeal held that the court had power, even after the end of a case, retrospectively to re-allocate it and thus retrospectively to alter the basis of assessment of costs.

Here the Deputy District Judge declined to re-allocate to the multi-track, which, in the absence of the issue of consensual variation would have left the case firmly caught by the Qader decision.

Comment

I have found this an extremely difficult matter to form a view on and have enormous sympathy with the judges having, yet again, to grapple with the mind-numbing contradictions of the Civil Procedure Rules.

It may be that the case, ultimately, is of limited importance moving forwards, as clearly the defendant’s solicitors were ill advised to leave the matter in any doubt by using the wording in the consent order.

The claimant’s solicitors may have been better advised to have delayed accepting the Part 36 offer until after re-allocation, although that would hardly have been consistent with the overriding objective of saving court time and costs.

It also seems pretty obvious as a matter of contract law that the parties were not, to use the old phrase, ad idem which means a meeting of the minds.

If two parties to a contract understand the terms and conditions of a contract in the same manner, then it is said that the parties are “ad idem”.

Such “meeting of minds” is essential to a valid contract.

How can that possibly have been the case here?

The point was seemingly not argued, – certainly it is not referred to in a very impressive and comprehensive judgment-  possibly because everyone involved seemed to be looking at the issue from a costs and personal injury point of view, rather than basic contract law.

Also, it is not clear why an agreement to pay standard costs in a fixed costs case means anything other than fixed costs.

After all they are the “standard” that is usual, or normal, costs for that type of work.

The true differentiation is between standard costs and indemnity costs, not between standard costs and fixed costs.

Conclusion

There are no score draws at court, or in my blogs.

On balance, but we are talking 51-49, my view is that the Deputy District Judge was right, that the Circuit Judge was wrong, and that the Court of Appeal should reinstate the Deputy District Judge’s decision, that is that fixed costs apply.

My unanimous decision, a 100-0, is that the Civil Procedure Rules Committee is not fit for purpose.

Advertisements

Written by kerryunderwood

January 24, 2019 at 7:37 am

Posted in Uncategorized

2 Responses

Subscribe to comments with RSS.

  1. Isn’t the distinction between Standard Costs and standard costs?
    Waiting till allocation to the MT seems the only safe course but what if you have a P36 offer between service and allocation ?

    Michael Haycock

    January 24, 2019 at 12:06 pm

    • Michael

      Don’t think that there is any difference between Standard and standard. In the absence of the nature of costs being identified, then they are on the standard basis, not the indemnity basis. The point is that in the absence of anything else – and of course here there was something else- then are not normal, or standard costs the norm for that type of case – that is fixed where appropriate.

      An award of standard costs does not override, for example, the indemnity principle. I see no logical reason why, absent a clear statement to the contrary, standard costs should override fixed costs.

      Point noted re – allocation and Part 36, but that is life. Time limits always have the potential to cause arbitrariness.

      One of the problems is that firms rush to put matters on the portal without always considering whether they should go on in the first place.

      Kerry

      kerryunderwood

      January 24, 2019 at 3:35 pm


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: