Indemnity Costs in Fixed Cost Case

Jonathan Flattery, Express Solicitors

05/09/17. Liability was denied and proceedings were issued 28th January 2016. Value was pleaded up to £5,000 so fixed costs applied.

Defendant’s Defence 22/4/16 denied and alleged the claim pleaded was ‘dishonest’. Defendant stated that there was ‘no likelihood that the Claimant was confused regarding the incident and where he was struck, the Defendant contends that the factual basis on which the claim made is dishonest.’ The significance of this is cl has the benefit of qocs, so if lost would not have to pay tp costs, save for finding of fundamental dishonesty. Defendant pleaded in the defence that they would seek to disapply qocs. In those circumstances the claimant would have to pay tps full legal costs.

We made liability part 36 on 18/8/16 on 50/50 basis. This was rejected on 25/8/16 but remained open for acceptance. Proceedings continued and tp then accepted our offer late on 25/1/17 4.5 months after expiration. We argued tp should pay non fixed indemnity costs from 8/9/16 to 25/1/17 due to their late acceptance. They refused and said will only pay fixed costs which effectively was the same whether they had accepted it in time or not. On 30/3/17 we accepted tp p36 £1500 net of 50/50 and the matter was concluded save for the costs point.

Claimant’s application for the Court to determine the basis of the liability for costs was heard on 31/7/17 at Stockport CC, before DDJ Scates. We argued as part 36 offer accepted out of time the Court had discretion under cpr 36.13 (4)(c) to determine the issue of costs where the parties cannot agree. We referred to Broadhurst v Tan which stated fixed costs and assessed standard basis costs are conceptually different and cannot be one and the same. We argued court should award indemnity costs as tp conduct was out of the norm by clearly alleging fraud against our client which was unfounded. We referred to Excelsior on the definition of out of the norm. Conduct should be taken into account pursuant to cpr 44.2(5) (a)(b)(c).

Tp argued is fixed cost so therefore fixed costs apply. Argued should be no consequences of accepting liability offer late in this or any fixed cost case. Alleged conduct was not out of the ordinary. Allegation was raised as evidence diametrically opposed but before served statements they reassessed and chose to compromise. Argued that 45.29D applied so no more than fixed costs could be awarded.

Court found that cost consequences of accepting offer out of time must be determined by the Court. As per guidance in Broadhurst, genral rule under 45.29 must yield to specific rule under 36.13. Agreed either standard or indemnity assessed costs applied for period between the end of the relevant period for accepting the Part 36 offer and acceptance, and not fixed costs as alleged by tp. Found conduct was out of the norm and TP allegations of FD had potentially serious repercussions. Court awarded indemnity costs for relevant period.

Defendant then further argued that the costs of the application were fixed under CPR Part 45.29H. Court disagreed and found that there was nothing whatsoever ‘interim’ about the application and summarily assessed costs on the standard basis.

Jonathan Flattery
Express Solicitors

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