Provision For Detailed Assessment In Consent Order Trumps Fixed Costs Regime For Ex-Protocol Claims

DOYLE V M&D FOUNDATIONS & BUILDING SERVICES LTD [2022] EWCA Civ 927

In Doyle v M&D Foundations & Building Services Ltd, the Court of Appeal considered the interpretation of a consent order in an ex-Protocol personal injury claim. The key issue was whether the phrase “subject to detailed assessment if not agreed” meant standard basis costs or fixed recoverable costs under CPR Part 45. The claimant had suffered a workplace injury, and the parties settled the claim by consent order, with the defendant agreeing to pay costs. The Court of Appeal unanimously held that “detailed assessment” has a clear technical meaning under the Civil Procedure Rules, referring to assessment on the standard basis under Part 47, and not to the assessment of fixed costs under Part 45. The court rejected the appellant’s arguments that the phrase could refer to fixed costs assessment, finding that the natural and ordinary meaning of the term is unambiguous. Critically, the court distinguished this case from the previous Adelekun decision, on the basis that the parties here had reached a free-standing settlement agreement, not a Part 36 offer, and therefore the usual meaning of detailed assessment should apply. The appeal was dismissed, confirming that the costs would be assessed on the standard basis.

In my judgment, and contrary to the appellant's contention, 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).

Citations

Solomon v Cromwell Group plc [2011] EWCA Civ 1584 The fixed costs regime under Part 45 applied to cases within its scope, even where a Part 36 offer had been accepted, unless the parties expressly contracted out of it. Adelekun v Ho [2019] EWCA Civ 1988 A reference to “detailed assessment” in agreement terms did not, by itself, displace the fixed costs regime, as detailed assessment could also be applicable under fixed costs rules in certain circumstances. Broadhurst v Tan [2016] EWCA Civ 94 Where a claimant in a fixed costs case obtained judgment at least as advantageous as their own Part 36 offer, they were entitled to indemnity costs rather than fixed costs from the relevant period. Hislop v Perde [2018] EWCA Civ 1726 In cases governed by the fixed costs regime, late acceptance of a Part 36 offer did not allow for recovery of standard basis costs unless exceptional circumstances were demonstrated. Sharp v Leeds City Council [2017] EWCA Civ 33 The fixed costs regime was intended to apply comprehensively to all stages of a claim within its remit, with only limited exceptions permitted under the rules. Pan Petroleum AJE Ltd v Yinka Folawiyo Petroleum Co Ltd [2017] EWCA Civ 1525 Court orders had to be construed objectively by giving the words their natural and ordinary meaning, taking into account the context in which they were made. JSC BTA Bank v Ablyazov (No 10) [2015] UKSC 64 A court order was to be interpreted in light of the circumstances in which it was made, considering what the court regarded as the relevant issue being determined. Sans Souci Ltd v VRL Services Ltd [2012] UKPC 6 Judicial orders should be read in light of the surrounding context and the issues they were intended to resolve, using the court’s reasoning as an interpretative aid. Wood v Capita Insurance Services Ltd [2017] UKSC 24 Contractual terms must be interpreted considering their natural meaning and the wider context, striking a balance between textual clarity and commercial purpose. Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 The meaning of a legal document was determined by what a reasonable person, with all relevant background knowledge, would understand the parties to have meant. Arnold v Britton [2015] UKSC 36 Greater weight should be given to the natural meaning of contractual words than to commercial common sense unless the words were particularly unclear or ambiguous.

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Key Points

A consent order providing for costs to be “subject to detailed assessment” will typically be interpreted as requiring assessment on the standard basis, unless explicitly stated otherwise. [44-45]
The fixed costs regime under CPR Part 45 is a self-contained scheme that applies unless the parties have expressly contracted out of it. An agreement to detailed assessment can indicate such an intention. [19, 31, 45]
Where a claim falls within the fixed costs regime, costs must be determined in accordance with Part 45, and a detailed assessment under Part 47 is not the appropriate procedure unless the parties agreed otherwise. [47]

A reference to “detailed assessment” is not naturally compatible with fixed costs because assessed costs and fixed costs are conceptually distinct under the CPR. However, ambiguity in language may sometimes require consideration of context. [30-32, 46]
If parties wish to preserve the fixed costs regime in a settlement, they must use clear and unequivocal language. Where costs are stated to be “subject to detailed assessment,” without qualification, the presumption is that standard basis costs apply. [55-56]

It ... appears that specialist judges sitting in the Senior Courts Costs Office do not consider that detailed assessment is a permitted method for determining costs (or disbursements) under the Part 45 regime (although the parties can no doubt use that route by agreement). Mr Mallalieu asserted that that was not the general practice, but produced no authority or example supporting his contention.

Key Findings In The Case

The consent order of 18 July 2018 explicitly provided that the appellant was to pay the respondent’s costs, “such costs to be the subject of detailed assessment if not agreed”, and this wording was found to indicate an agreement to depart from the fixed costs regime under CPR Part 45. [11, 51]
The negotiations between the parties leading to the order demonstrated that the respondent’s solicitors explicitly rejected a Part 36 offer and instead proposed a draft order, which was agreed upon and signed by both parties without amendment to the costs provision. This indicated an intentional and informed agreement on the terms of the order, including the costs assessment mechanism. [9, 50]
The court determined that “detailed assessment” in the order was a technical term under the Civil Procedure Rules, referring to an assessment under Part 47, which entails costs being assessed on the standard basis unless explicitly stated otherwise. There was no ambiguity in this respect. [44-45]

The appellant argued that the term “detailed assessment” could still be interpreted as covering an assessment of fixed costs; however, the court rejected this on the basis that fixed costs and conventionally assessed costs are conceptually distinct, and that rule 44.3(4)(a) explicitly provides that costs are assessed on the standard basis where the basis is not otherwise specified. [46-47]
Unlike in Adelekun v Ho, where the court found an internal inconsistency in a Part 36 offer which led to the conclusion that fixed costs applied, the present case involved a free-standing settlement agreement unconnected to Part 36, with no contradictory language or contextual ambiguity. Accordingly, the costs provision was given its natural and ordinary meaning, requiring standard basis assessment. [53-56]

The rules do not make provision for the parties to contract out of the fixed costs regime, but it is recognised that there is no bar on them doing so: see Solomon v Cromwell Group plc [2011] EWCA Civ 1584, [2012] 1 WLR 1048 per Moore-Bick LJ at [22], cited in Adelekun v Ho [2019] EWCA Civ 1988, [2019] Costs LR 1963 by Newey LJ at [11].

Background

In the case of Doyle v M&D Foundations & Building Services Ltd [2022] EWCA Civ 927, the appellant (M&D Foundations & Building Services Limited) was ordered to pay the respondent (Allan John Doyle) damages of £5,000 following an injury the respondent sustained while employed by the appellant. The order, dated 18 July 2018, also mandated that the appellant pay the respondent’s costs, specified as “such costs to be the subject of detailed assessment if not agreed.”

The respondent subsequently lodged a bill of costs for detailed assessment on the standard basis. The appellant contested this, arguing instead that the claim was subject to the fixed recoverable costs regime as outlined in section IIIA of CPR Part 45. This contention was based on the assertion that the claim fell within the category of ex-Protocol low-value personal injury claims, thus entitling the appellant to fixed recoverable costs amount with a determination of only disputed amounts of such costs and disbursements through the fixed costs mechanism.

District Judge Rogers initially rejected the appellant’s contention, concluding that the fixed costs regime did not apply since the parties had contracted out of it, as reflected by the express terms of the consent order. On 13 May 2019, he assessed the respondent’s bill of costs at £14,467.44. The appellant’s appeal against this decision was dismissed by Her Honour Judge Ingram on 10 February 2021. Following this, the appellant brought a second appeal which was granted permission by Stuart-Smith LJ on the grounds of significant legal issues relating to the interpretation of the consent order and its implications for cost recovery under the CPR.

The procedural history also included details of the initial injury sustained by the respondent on 12 May 2014 at a construction site. The injury, while relevant to the procedural context, was not a prominent aspect of the costs issue. The respondent commenced a claim under the Pre-Action Protocol for Low Value Personal Injury (Employers’ Liability and Public Liability) Claims on 25 November 2016. However, after the appellant failed to issue a CNF response, the Protocol ceased to apply, and proceedings were initiated in court.

The case was allocated to the fast track with a trial date scheduled on 19 July 2018. However, before the trial, the appellant extended a Part 36 offer to the respondent, which the respondent did not explicitly accept, instead proposing a consent order for settlement. The settlement included a provision for costs to be “subject to detailed assessment if not agreed,” leading to the current dispute over whether the costs were to be assessed on the standard basis or as fixed costs under the fixed recoverable costs regime.

Costs Issues Before the Court

The costs issues presented required the Court to interpret the consent order’s provision that specified the costs were to be “subject to detailed assessment if not agreed.” Specifically, the Court needed to decide if this wording indicated that the costs should be assessed on the standard basis, or whether, considering the nature of the claim (an ex-Protocol low-value personal injury claim), the fixed recoverable costs regime should apply instead.

The appellant asserted that the fixed costs regime under CPR Part 45 Section IIIA should govern the case because the claim was initiated as an ex-Protocol claim. They argued that the reference to detailed assessment in the consent order implied the process of determining the amount of fixed costs and disbursements. Conversely, the respondent contended that the consent order’s language signified an intention to assess costs on the standard basis, completely outside the bounds of the fixed costs regime. The Court was thus tasked with clarifying whether the consent order’s stipulations contracted out of the fixed costs regime and necessitated a detailed assessment of costs on the standard basis.

The Parties’ Positions

The appellant argued that the term “subject to detailed assessment” could be interpreted to align with the assessment of fixed recoverable costs, particularly for disbursements, as suggested by cases such as Solomon v Cromwell Group plc. They contended that the fixed costs regime is intended to provide predictability and proportionality in costs, and the language in the consent order did not explicitly evince an intent to depart from this regime.

The respondent maintained that the phrase “subject to detailed assessment” is a term of art within the Civil Procedure Rules and unequivocally denotes an assessment on the standard basis unless otherwise specified. The respondent’s interpretation hinged on the rule’s provisions indicating that if an order does not specify the basis of the cost assessment, it defaults to a standard basis assessment. Therefore, they argued that the consent order, by specifying a detailed assessment, inevitably called for an assessment on the standard basis.

Both parties referenced pertinent authorities and principles of contractual interpretation to support their respective contentions. The appellant’s submissions leaned on interpreting the context of ex-Protocol claims and previous judgments that inferred the meaning of “assessment” within the landscape of fixed recoverable costs. The respondent, however, argued for a strict interpretation of the CPR rules and legal definitions, emphasising the consent order’s wording and procedural norms for detailed assessment.

The Court’s Decision

The Court of Appeal, in its analysis, supported the respondent’s interpretation, concluding that the natural and ordinary meaning of “subject to detailed assessment” indeed referred to an assessment on the standard basis. The Court underscored that according to rule 44.3(4)(a) of the CPR, where an order for costs or the method of assessment does not specify otherwise, it defaults to the standard basis.

Furthermore, the Court clarified that while the fixed costs regime does include forms of assessment, particularly regarding the determination of disbursements, this does not equate to a detailed assessment as traditionally understood within the rules for standard basis costs assessment. Citing established principles and prior authorities, the Court reiterated the clear demarcation between fixed costs and assessed costs, emphasising that the rules distinctly handle each to ensure clarity and procedural conformity.

The Court found no exceptional circumstances or compelling evidence to suggest that the parties intended to obfuscate the standard meaning of detailed assessment, nor to contract out of the fixed costs regime under uncertain terms. The reference to detailed assessment in the consent order, absent explicit contrary stipulations, mandated an assessment on the standard basis. Consequently, the appeal was dismissed, thereby affirming lower court rulings and clarifying the application of costs assessment terminology within the procedural framework of the CPR.

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