AN AGREEMENT TO PAY COSTS WAS TO PAY FIXED COSTS ONLY:NOT DISPLACED BY LATER “PART 36” OFFER: DEFENDANT SUCCESSFUL ON APPEAL

I am grateful to Simon Fisher from DWF for sending me a copy of the judgment of HHJ Luba QC, sitting with Costs Judge Rowley, in Soares -v- Wilson (27th May 2022). A copy of which is available Soares v Wilson (1)  An appeal was allowed on the basis that it was clear that the parties had reached a binding agreement to pay fixed costs only.

“I am satisfied that the only properly available construction of the correspondence is that the Defendant was offering settlement on the basis that only fixed costs would be payable and the Claimant was accepting that offer.”

THE CASE

The claimant was injured in a road traffic accident in 2016. The claim was made within the appropriate portal. It fell out of the portal as the defendant did not admit liability.

Proceedings were issued, with the claim limited to £100,000.  A defence was filed denying liability. The matter was allocated to the multi-track but later allocated to the fast track.

The case settled with the claimant accepting £9,000 in damages.

THE TERMS OF THE DEFENDANT’S OFFER

The defendant made an offer which included an offer to pay the “Claimant’s fixed costs and disbursements.”

That offer was accepted in the following terms “Please note that your offer in the sum of £9,000 plus fixed costs (pursuant to the Fast Track fixed costs regime is accepted.”

The defendant then, after prompting from the claimant, made a Part 36 offer which included a term that “our client will pay your client’s fixed recoverable costs in accordance with Part 36.13 to be subject to detailed assessment if agreed.”

THE CLAIMANT’S BILL OF COSTS

The claimant served a bill of costs that was not limited to fixed costs.   The bill claimed (1) costs to be assessed on the standard basis up to the date of re-allocation of the claim from the multi track to the fast track (2) fixed costs thereafter.

On provisional assessment the costs judge allowed the costs claimed on this basis.  The defendant requested an oral review. The defendant’s arguments that fixed costs applied were unsuccessful. The judge held that there a concluded agreement that was binding on the claimant.

THE DEFENDANT’S SUCCESSFUL APPEAL

The defendant’s appeal to HHJ Luba QC was successful.  On appeal it was held that the appeal rested entirely on an analysis of the relevant correspondence and the application of well-established principles of the law of contract and compromise.   The question was “Did the Defendant make an offer that provided only for fixed costs and did the Claimant accept that offer?”

It was held that the judge below was wrong to conclude that there was not a binding offer.

“I am satisfied that the only properly available construction of the correspondence is that the Defendant was offering settlement on the basis that only fixed costs would be payable and the Claimant was accepting that offer.”

Amongst other things.

• The offer letter explicitly stated that the offer was on the basis only of fixed costs.
• The offer letter was not and was not stated to be a Part 36 offer.
•  The reference in the offer letter to a potential “future assessment” of costs did not point to a different outcome. The courts regularly assess costs when fixed costs are payable, for instance when there are issues in relation to disbursements.
• The acceptance of the offer was unqualified.
• The Part 36 offer was used as a mechanism to avoid the need to lodge a consent order or pay a court fee. A Part 36 acceptance gave ground to an immediate stay.  The fact that it was used did not detract from the basic fact that compromise on fixed costs had been agreed.  The offer was used to confirm the facts of a settlement and did not constitute a new offer.
• It was always open to the claimant’s solicitors to make a counter-offer, on the basis of fixed costs only applying for part of the claim.

“… the judge was wrong to hold that the framing of the later correspondence as a “Part 36 offer” in some way trumped or displaced the agreement already made or represented some resiling from it. The “Part 36 offer” again offered fixed costs viz “we will also pay your fixed recoverable costs.”