Further word of caution at time of settlement – ensure your final offer reflects the intended agreement
27 July 2022
My article in last month’s newsletter discussed the importance of ensuring that ambiguity within the settlement correspondence does not afford Claimants an opportunity to escape payment of costs under the small claims track when dealing with housing disrepair claims.
The Court of Appeal has since reached a decision on whether the wording of an order containing the words “subject to detailed assessment” should be interpreted as costs to be assessed on the standard basis, or an assessment of the fixed costs.
The relevant case, Doyle v M&D Foundations & Building Services Limited  EWCA CIV 927, was a low value personal injury case and so fell within the scope of the Pre-Action Protocol for Low Value Personal Injury (Employers’ Liability and Public Liability) Claims (“Protocol”). Such cases are commenced in a portal (employers’ liability or public liability), which fall within the fixed recoverable costs regime under Part 45 of the Civil Procedure Rules. There are two types of fixed recoverable costs for these cases – those which remain within the portal and those which fall outside of the portal (for reasons such as a denial of liability or allegations of contributory negligence) but remain within the scope of the Protocol.
On 16 July 2018, the Defendant made a Part 36 offer of £5,000 in full and final settlement of the claim. The Claimant confirmed they were willing to agree the sum of £5,000, but not via acceptance of the Part 36 offer because the offer had been made at a very late stage and less than 21 days before trial. The Claimant’s solicitors therefore provided a draft consent order for agreement containing a provision that the Defendant was to pay the Claimant’s costs and including the words: “such costs to be the subject of detailed assessment if not agreed”. The order was signed by both parties’ solicitors and subsequently filed at Court by the Claimant’s solicitors.
The Claimant lodged a Bill of Costs for detailed assessment on the standard basis, citing the terms of the order. The Defendant contended that as an ex-protocol low-value personal injury claim, the case fell within the fixed recoverable costs regime under Section IIIA of Part 45 of the Civil Procedure Rules (i.e. for those cases that fall outside of the portal). And, that the reference to detailed assessment, interpreted in that context, referred to the process of determining the amount of such fixed costs and disbursements (to the extent there was any disagreement).
The Defendant also relied on Ho v Adelekun  EWCA Civ 1988 in which the Court of Appeal had construed the identical phrase, in a Part 36 offer, as “not referring to conventional costs rather than fixed costs“.
The Court of Appeal held that there was no ambiguity whatsoever as to the natural and ordinary meaning of “subject to detailed assessment” in an agreement or order as to costs. In essence, the parties had “contracted out” of fixed costs due to the express terms that had been agreed in the order.
The Court distinguished from Ho in respect of the Part 36 argument on the basis that the wording of the offer letter in that particular case justified reading the term “detailed assessment” as applying to fixed costs. However, in this instance, the agreement reached was not because of acceptance of a Part 36 offer and there was therefore no other reason to construe “detailed assessment” as anything other than its ordinary meaning that costs are to be assessed on the standard basis.
This case further highlights that it is imperative for both the settlement correspondence and consequent order to clearly reflect the terms of the settlement which have been agreed so that no dispute can arise as to the costs which are payable.
The Court will consider both the settlement correspondence and the agreed order in order to reach a decision.
The Birketts view
We would always recommend that an order either uses wording “costs to be assessed on the standard basis subject to detailed assessment if not agreed”; or, if costs are to be offered on the small claims track, “The Defendant to pay the Claimant’s fixed costs of the claim pursuant to CPR 27.14(2)(a)(ii) in the sum of £260”.
Where the wording in an order is both clear and specific, opponents are far less likely to try to challenge the appropriate costs regime (and if they have done so in error would need to concede). Should the matter reach a Judge they are more likely to order in your favour where both the settlement correspondence and order are consistent with one another.
How can Birketts help?
Birketts has an in house costs team to assist our clients in challenging tenant’s costs. Our expert lawyers can advise on where the costs can be challenged, appropriate settlement parameters and negotiations. If required, we can also assist with the preparation of Points of Dispute/Replies and detailed assessment hearings.
If you have any queries regarding the content of this article or wish to discuss any issue regarding costs, please contact Sarah Burwood, Melanie Bonté or Naomi Chan-Jackson to see how Birketts can help you.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at July 2022.