A successful part 36 offer in a provisional assessment removes the £1,500 costs cap, the High Court has ruled.
Overturning a decision of Master Whalan in the Senior Courts Costs Office, Mrs Justice Laing followed the reasoning of the Court of Appeal earlier this year in Broadhurst v Tan, when it ruled that a party who beat a part 36 offer in a case where fixed fees applied was eligible for indemnity costs,
The thus-far unreported case of Lowin considered whether CPR 36.17(4) – indemnity costs on beating an offer – dislodged the £1,500 cap set out in rule 47.15(5) for the costs of a detailed assessment that concluded at provisional assessment stage.
According to a blog by Gurion Taussig, a barrister at 9 Gough Square who acted for the successful party, the master agreed that her costs should be assessed on the indemnity basis, but ruled that the cap remained intact. He drew a distinction the Broadhurst case.
Mr Taussig, who was instructed by Boyes Turner, said that on appeal, Mrs Justice Laing held that there was a conflict between rules 36.17 and 47.15(5), because the latter derogated from the entitlement to costs on the indemnity basis conferred by part 36.
“In resolving the conflict, the scheme of reasoning contained in Broadhurst provided the answer. If the draftsman of the rule committee had wished part 36 to be modified so that the cap would remain, then that would have been stated. The court further stated that the dislodging of the cap would incentivise parties to accept reasonable costs offers because, if they did not, they would be at risk of adverse cost orders pursuant to part 36.”
The matter was remitted to Master Whalan to re-assess the appellant’s costs of the detailed assessment on an indemnity basis.
Mr Taussig added: “The decision represents an important extension of the Broadhurst principle, and one that potentially affects all cases that proceed to provisional assessment of costs in part 47 proceedings.
“Parties should indeed be incentivised to make reasonable cost offers, but equally they must be aware that a failure to accept a reasonable part 36 offer is likely to have cost consequences if the offeror achieves a better result on provisional assessment.”