As well as insulating a successful party against increasingly unpredictable decisions on proportionality (BNM or Brian May anyone..?) it has now been found that beating your own CPR36 offer means you can circumvent the limit on the costs of provisional assessment.
A successful CPR36 offer in a provisional assessment removes the £1,500 costs cap, the High Court has ruled, overturning a decision of Master Whalan in the SCCO.
In Lowin v Portsmouth & Co Ltd  QBD, Mrs Justice Laing followed the lead of the Court of Appeal earlier this year in Broadhurst v Tan  EWCA Civ 94,  1 W.L.R. 1928, when it ruled that a successful Part 36 offer trumped fixed costs.
In Lowin, the Appellant claimed damages against the Respondent company, but ultimately accepted the Respondent's CPR36 offer. The Appellant then made a CPR36 offer for her costs. A judge ordered the Respondent to pay the Appellant's costs, which went to provisional assessment given the costs claimed were less than £75k.
Master Whalan provisionally assessed the Appellant's costs at a sum higher than her CPR36 offer, and as such ordered the Respondent to pay the costs of the assessment on an indemnity basis, but found that the rule did not dislodge the application of CPR47.15(5), which capped the maximum amount awarded for the costs of provisional assessment.
The Court distinguished Broadhurst in that it concerned fixed, rather than capped, costs. Where the costs cap applied, indemnity costs could be assessed and awarded but would be subject to the cap. However, the “general scheme of reasons” in Broadhurst was of assistance:
“Rule 47.20(4) considered how part 36 should apply to the procedural provisions in part 47. It applied to the costs of a detailed assessment, with modifications. There was a conflict between rule 47.15(5) and part 36, because rule 47.15(5) potentially derogated from the entitlement to costs on an indemnity basis for an assessment under part 36.
“However, for that derogation to occur in fact, rule 47.20 would have to say that part 36 applied with an additional modification, including rule 47.15(5). It did not, so part 36 applied to the instant case, and was not displaced by rule 47.15(5) – Broadhurst applied.”
The matter was remitted to Master Whalan to re-assess the appellant’s costs of the detailed assessment on an indemnity basis, and to disregard the limit under CPR47.15 (5).
While removal of the cap in cases where indemnity basis costs apply might reduce parties' incentives to keep the costs of the provisional assessment to a minimum, it should increase the incentives to accept a sensible CPR36 offer and reduce the number of provisional assessments overall. This decision might also end the continuing complaints that the cap of £1,500 was set too low; if you want to recover more, then make a competitive CPR36 offer (and beat it!).
They keep on coming, but this decision is yet another compelling reason why practitioners should make early and sensible CPR36 offers on their own claims for costs.
Oliver Jones, Costs Lawyer & Senior Associate.