The Court of Appeal has held, in the matter of Doyle v M&D Foundations & Building Services Ltd [2022] EWCA Civ 927, that parties can contract out of fixed costs.
This case highlights the importance in ensuring the terms of the final order reflect the parties’ intentions.
This was a personal injury case arising from an accident at work. The matter was allocated to fast track and was being prepared for trial. The Defendant made a Part 36 offer shortly before trial in the sum of £5,000 damages, to which the Claimant responded to state that quantum was agreed but the terms of settlement would need to be set out in an order.
The parties thereafter agreed terms of a consent order which included provision that the Defendant pay the Claimant’s costs “such costs to be the subject of detailed assessment if not agreed”.
The Claimant lodged a Bill of Costs for detailed assessment on the standard basis, citing the terms of the Order. This Bill was assessed at £14,467 in the County Court – a sum considerably higher than costs payable under the fixed costs regime. The Defendant appealed to the High Court and then to the Court of Appeal.
In so appealing, the Defendant (paying party) disputed the basis for assessment, contending that the case fell within the fixed recoverable costs regime and, as such, the reference to detailed assessment in the consent order referred to the process of determining the amount of fixed costs and disbursements.
This last week, the Court of Appeal Judges ruled against the Defendant, ruling that the term detailed assessment was a technical term with a meaning and effect set out in the rules – “that the costs are to be assessed by the procedure in Part 47 on the standard basis (unless the agreement or order goes on to provide for the assessment to be on the indemnity basis).” The Court of Appeal went on to say “The phrase cannot be read as providing for an “assessment” of fixed costs pursuant to the provisions of Part 45 unless the context leads to the conclusion that the wrong terminology has been used (by the parties or by the Court) so that the phrase should be interpreted otherwise than according to its ordinary meaning”
This decision has considerable implications on the potential for recovery of costs for receiving parties, particularly should the proposed extension of fixed costs to most money cases worth up to £100,000 be implemented in April 2023, as is currently proposed. It can be certain, however, that paying parties will be more careful in the future to ensure that the terms of an order properly reflect the intended regime under which payment of costs will be made.
If you require any advice or assistance on the Doyle v M&D Foundations ruling or any aspect of legal costs, please contact our Senior Partner, John Mistri, by calling 0800 086 2929 or by emailing jmistri@elitelawsolicitors.co.uk
