Christopher McClure examines the decision in Seyi Adelekun v Siu Lai Ho (Central London County Court, 18 October 2018) on the consequences of agreeing to an order to pay costs to be assessed on the standard basis in a case to which fixed recoverable costs would normally apply.
The central issue before HHJ Wulwik was whether an agreement between the parties that ‘the defendant do pay the reasonable costs of the claimant on the standard basis to be the subject of detailed assessment if not agreed’ ousted the otherwise applicable fixed recoverable costs regime under CPR r. 45, Section IIIA or, alternately, preserved the claimant’s entitlement to fixed costs only.
The factual background is relevant.
At first instance, DDJ Harvey determined that the claim was subject to the fixed recoverable costs regime and varied the parties’ consent order to reflect his determination albeit subject to the claimant’s right to make an application for exceptional costs pursuant to CPR r. 45.29J.
The claimant’s primary ground of appeal was that DDJ Harvey had no right to vary the parties’ agreement; the parties had agreed upon assessed costs and their agreement should prevail.
The defendant’s position was essentially that an order for reasonable costs to be assessed on the standard basis to be subject to detailed assessment was, for all intents and purposes, synonymous with an entitlement to fixed recoverable costs where CPR r. 45, Section IIIA applies.
HHJ Wulwik allowed the claimant’s appeal. It is noteworthy that the matter was originally allocated to the fast track. The claimant then made an application for reallocation to the multi-track which, although never heard due to settlement by way of Part 36 acceptance, was nevertheless agreed in principle by the defendant in the following terms:
“With regard to the application, we can consent to the matter being multi track.”
The Court of Appeal in Qader v Esure [2016] EWCA Civ 1109 held that ex-portal claims otherwise subject to the fixed recoverable costs regime are, for so long as they are allocated to the multi-track, exonerated from that regime. In that context, HHJ Wulwik held that an order for costs to be assessed on the standard basis “was entirely consistent with the parties’ agreement that the claim should be reallocated to the multi-track.”
Whilst HHJ Wulwik was undoubtedly influenced by the defendant’s agreement to reallocation to the multi-track, it is likely that the outcome of the case would have been the same regardless of impending application to reallocate.
At paragraph 36 of the Court’s judgment we read that “the defendant was to pay the reasonable costs of the claimant ‘on the standard basis’ (again my emphasis) to be the subject of detailed assessment if not agreed. This cannot be construed as an agreement to pay costs on the usual basis of fixed costs.”
At the time of writing an application for permission to appeal has been lodged with the Court of Appeal. But until such time as the matter is determined by the Court of Appeal, it would appear that parties can – even unwittingly – agree out of fixed costs notwithstanding the apparently mandatory provisions of CPR r. 45, Section IIIA.
Please contact Christopher McClure to discuss any query relating to this article. Christopher is based at our Manchester office and can be contacted on 0161 835 4087.