LOWIN v W PORTSMOUTH & CO LTD (2016)

The appellant appealed against a master’s order concluding that the costs of a provisional costs assessment were capped under CPR r.47.15(5).

The appellant had claimed against the respondent company for damages, but accepted the respondent’s Part 36 offer. The appellant made a Part 36 offer for her costs. A judge ordered the respondent to pay the appellant’s costs, with a provisional assessment if not agreed. The master provisionally assessed the appellant’s costs at a higher sum than her offer, and ordered the respondent to pay under r.36.17(4), and to pay the costs of the assessment on an indemnity basis. However, the master concluded that r.36.17(4)(c) did not dislodge the application of r.47.15(5), which capped the maximum amount awarded for a provisional assessment.

The issue was whether, if a costs assessment went no further than a provisional assessment, the appellant, who could invoke Part 36 in her own favour, was limited to the capped costs under r.47.15(5), or whether the Part 36 provisions entitled her to a costs assessment on an indemnity basis.

HELD: The intention of r.47.20 was to import Part 36 into Part 47 with four express modifications. The appellant had submitted that the master erred in not applying the principles of Broadhurst v Tan [2016] EWCA Civ 94, [2016] 1 W.L.R. 1928 regarding the effect of an older version of Part 36 on the fixed costs regime in Part 45. That case was concerned with different provisions of the CPR, and a conflict between fixed and assessed costs. The costs in the instant case were subject to a cap, not fixed. In a fixed costs regime, a party received the fixed amount irrespective of the costs incurred, even if they spent less. In an assessed costs regime, they received the costs incurred, subject to assessment principles and whether a standard or indemnity basis applied. Where the costs cap applied, indemnity costs could be assessed and awarded, but would be subject to the cap,Nizami v Butt [2006] EWHC 159 (QB), [2006] 1 W.L.R. 3307 considered. The general scheme of reasons in Broadhurst was of assistance. Rule 47.20(4) considered how Part 36 should apply to the procedural provisions in Part 47. It applied to the costs of a detailed assessment, with modifications. There was a conflict between r.47.15(5) and Part 36, because r.47.15(5) potentially derogated from the entitlement to costs on an indemnity basis for an assessment under Part 36. However, for that derogation to occur in fact, r.47.20 would have to say that Part 36 applied with an additional modification, including r.47.15(5). It did not, so Part 36 applied to the instant case, and was not displaced by r.47.15(5), Broadhurst applied. While that might reduce parties’ incentives to keep the costs of the provisional assessment as low as possible, it would increase the incentive to accept a sensible Part 36 offer.

Appeal allowed

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