Does a Part 36 acceptance trump any fixed costs regime table?
This article is written by Costs Lawyer, Faith Cosgrove.
Whilst this question has already been resolved by the Courts back in 2019 by Ho v Adelekun [2019] EWCA Civ 1988 (19 November 2019) the more that the fixed costs regime starts to bite, the more relevant this question will become to many. This article services as a reminder to the question about the use of Part 36 offers.
A question we are frequently asked is does the acceptance of a Part 36 escape us from fixed costs. The simple answer is no. The Courts back in Adelekun confirmed that the 36.13 and 36.20 are in effect inter changeable when reading a Part 36 Offer. The Courts intention was rooted in the parties’ use of the Part 36 offer and acceptance mechanism. They did not wish to place any limitation on this self- contained procedural code nor did they in any way want to hamper settlement of a claim.
So how do you escape fixed costs? Again, it’s quite simple on the face of it, by way of allocation, or an agreement between the parties to contract out, which must be express and clear by both sides that you intend to contract out.
In Doyle v M&D Foundations & Building Services Ltd [2022] EWCA Civ 927 (08 July 2022) the Court of Appeal found that an Order for “subject to detailed assessment” is sufficient, stating that there is no ambiguity whatsoever as to the natural and ordinary meaning of “subject to detailed assessment” in an agreement or order as to costs. The phrase is a technical term, the meaning and effect of which is expressly and extensively set out in the rules. It plainly denotes 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 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.”
The lesson Solicitors need to be live to is what the words of an Order or an agreement mean and be clear in their impact. As the Court of Appeal concluded in Doyle, the agreement included a simple and well-understood provision that the appellant would pay costs subject to detailed assessment, that is to say, on the standard basis.
The parties must be really black and white on what is meant, and when they do so they contract out of fixed costs.
