Tag Archives: Legal invoicing

It is uncontroversial that Part 36 offers can be made at any point, including before the commencement of proceedings (r.36.3(2)(a)) and, if accepted in time, the claimant is entitled to the costs of the proceedings up to the date on which notice of acceptance is served (r.36.10(1)).

However, there has been some uncertainty over whether costs would automatically follow the acceptance of a pre-issue Part 36 offer. The Courts offered some clarification in July 2011 when Thompson v Bruce [2011] EWHC B14 (QB) (Judgment 28.06.11) held that ‘proceedings’ in r.36.10 must include work taken pre-issue.

In December 2011 this position was cemented by the Court of Appeal in Solomon v Oliver [2011] EWCA Civ 1584 where it was confirmed that ‘costs of proceedings’ in r.36.10 does include the claimant’s costs where an offer is accepted before proceedings are issued.

However, the Court of Appeal emphasised that this will not go so far as to amount to a deemed order for costs under r.44.12. There is therefore no automatic right to ask the Court for a Detailed Assessment on the basis of the acceptance of a pre-issue Part 36 offer. Instead, the Court confirmed that the parties must bring costs-only proceedings under r.44.12A (Part 8 proceedings) for an order giving the Claimant a right to the assessment of costs.

This distinction was justified on the basis that a purposive construction of “proceedings” can easily and rightly include all steps taken before issue. However, a “deemed order” cannot possibly exist in isolation and must attach to some Court proceedings, hence the requirement for Part 8 in the absence of Part 7.

In reaching these general conclusions, the Court of Appeal also decided a distinct issue of the interplay between CPR Part 36 and CPR Part 45. The claim was a pre-issue RTA case that settled for under £10,000.00. The Claimant pursued costs on the standard basis using the argument that following the acceptance of a Part 36 offer an order for costs on the standard basis is deemed to have been made. The Defendant maintained that there was no “deemed order” and so fixed costs under CPR 45.II must apply.

At first instance the Court found in favour of the Claimant and awarded standard basis costs. If left, this judgement would have a huge impact upon costs recovery, taking many RTA cases outside the fixed costs regime of CPR 45.II. However, the Court of Appeal reversed the decision, confirming that it was not possible to have a deemed order for costs on the standard basis without the issue of proceedings. In this RTA case, the acceptance of the Part 36 offer would lead to a claim for the fixed costs set out in CPR 45.II only.

Generally, this is a positive judgement for those recovering costs after the acceptance of a Part 36 offer. However it is always advisable to express cost expectations as part of the settlement. This removes ambiguity and closes the gate on any potential challenges a paying party may concoct once a claim for costs has been submitted.

Nova Costs frequently make applications for Part 8 as part of our overall commitment to maximise the recovery of legal costs without delay.

If you would like to speak to one of our costs experts please call us today on 0161 276 2000 or email us at info@novacosts.com

Defendants are always thinking up new ways of attempting to argue out of paying reasonable costs at the conclusion of litigation.

The latest attack is upon any and all claims for costs where damages were finally agreed below the small claims track threshold. So, how do Claimants resist this latest challenge?

It has long been established that a Court will limit costs to the small claims track (or any other appropriate fixed costs regime) if a claim has been purposefully overvalued, pleaded on the basis of obviously incorrect information or where a Claimant has attempted to mislead (see Afzal v Ford Motor Co [1994] CA).

However, Defendants are using the recent case of Stuart Lisbie v SKS Scaffolding Ltd [2011] EWHC 90203 (costs) to extend this limitation to claims made in good faith, but which failed for whatever reason, to produce damages above the fixed costs threshold.

In this unlitigated RTA, costs were limited to the small claims track after contributory negligence reduced damages to under £1,000.00. The Court concluded that RTA fixed costs only apply if the amount of damages actually paid was above the small claim limit and that contributory negligence must be deducted before these damages are determined.

This case can be especially problematic when combined with O’Beirne v Hudson [2010] EWCA Civ 52, where the Court limited costs to those that would have been recovered on a fixed regime despite the Defendant agreeing to meet “reasonable costs on the Standard Basis” at the end of the main action. This was on the basis that “reasonable costs” cannot exceed those that would have been recovered had the correct regime been applied.

However, Nova Costs recommends that Claimants resist such challenges where damages were reasonably valued above the fixed costs threshold during the litigation and costs have been agreed on the Standard Basis.
The case of Lisbie was specifically decided by reference to the RTA fixed costs regime and so it should not be possible to argue for any wider application.

In any event, the decision of Master Gordon-Saker sitting as a Deputy District Judge appears to be at variance with the Court of Appeal judgement in Voice and Script International Ltd v Ashraf Alghfar [2003] EWCA Civ 736, which confirmed that costs would only be limited where the claim could not possibly have ever had a value above the applicable threshold. This decision was not considered in the case of Lisbie, which only concentrated upon the final damages agreed.

In order to strengthen the position, Claimants should be attempting to conclude damages settlements below £1,000.00 on the strict understanding that costs will be paid under the RTA fixed costs regime / Standard Basis assessment. If this is not possible then please contact Nova Costs, who will be happy to take these arguments forward.

If you would like to speak to one of our costs experts please call us today on 0161 276 2000 or email us at info@novacosts.com