Assessed costs should beat fixed costs when claimants secure more than they had proposed to settle for in their Part 36 offer, according to the Court of Appeal.
Lord Dyson, the Master of the Rolls, along with Lord Justice McCombe and Lord Justice David Richards made the ruling in Broadhurst & Anor v Tan & Anor after dealing with two cases that began under the RTA protocol where successful part 36 offers had been made.
The cases, were brought together on appeal after local judges in Sheffield and Newcastle had disagreed on whether to equate indemnity costs with fixed costs in their rulings.
In the case in Sheffield it was ruled that part 36 applied but that there was no difference between profit costs assessed on the indemnity basis and the fixed costs prescribed by Table 6 of rule 45.29C. In Newcastle, it was held that part 36 applied but did not equate indemnity costs with fixed costs.
“These appeals are concerned with a point of construction which arises from the apparent tension between the rules fixing costs in most lower value personal injury cases (found in section IIIA of Part 45 of the CPR) and the provisions in Part 36 which specifically apply to such claims,” explained Lord Dyson.
Referring to the version of Part 36 which applied before 6 April 2015, he said: “HH Judge Robinson (sitting in the County Court at Sheffield) held that rule 36.14(3) applies in a section IIIA case where a claimant makes a successful Part 36 offer.
“But, he said, in such a case there is no difference between profit costs assessed on the indemnity basis and the fixed costs prescribed by Table 6 of rule 45.29C, subject to the possibility of awarding a greater sum than fixed costs in exceptional circumstances pursuant to rule 45.29J.”
Lord Dyson agreed with the appeal in the Broadhurst case, saying that the judge was “wrong to equate indemnity costs with fixed costs in this way”.
The defence said that Parliament had not intended to draw any distinction between fixed costs and costs assessed on the indemnity basis and said that there would be practical difficulties if the appeal was accepted, but Dyson dismissed their interpretation.
“I am not persuaded that the problems identified by Judge Robinson, if they exist at all, are so serious that they cast doubt on the interpretation which I favour or that they justify the surprising conclusion that fixed costs are to be equated with assessed costs […] these are conceptually different,” said Lord Dyson.