Solomon v Cromwell Group Plc

When a Part 36 offer is made and accepted before proceedings begin, the claimant may recover costs incurred in contemplation of proceedings which would otherwise have been recoverable. No deemed costs order arises under rule 44.12 until substantive or costs-only proceedings exist.

For low-value road traffic accident claims within Section II of Part 45, that specific costs regime prevails over the general provision for standard-basis assessment in rule 36.10. A claimant using rule 44.12A therefore recovers the prescribed costs, subject to the exceptional-circumstances provision. Parties remain free to agree different costs terms, but such an agreement cannot enlarge the court’s powers under rule 44.12A and must be enforced by ordinary process.

Two claimants settled road traffic accident claims for less than £10,000 after accepting pre-action Part 36 offers. The defendants agreed to pay costs, but the amounts were not agreed. The claimants therefore commenced costs-only proceedings under rule 44.12A.

In Solomon, District Judge Wheeler held that a standard-basis costs order was deemed to have been made. Judge Platts reversed that decision and held that Section II of Part 45 governed the assessment. In Oliver, District Judge Smith also applied Section II of Part 45.

The claimants appealed together. The common issue was whether rule 36.10 entitled them to standard-basis costs or whether the specific regime for low-value road traffic accident claims prevailed. Oliver also raised whether the settlement correspondence created a contractual entitlement to standard-basis costs.

1. Both appeals dismissed. The claimants could recover only the costs prescribed by Section II of Part 45.

2. Rule 36.10(1) applies where a Part 36 offer is made and accepted before substantive proceedings are issued. In that context, “proceedings” includes steps taken in contemplation of proceedings. The claimant is entitled to costs incurred before acceptance to the extent that those costs would have been recoverable had proceedings already begun. The contrary construction would leave the Rules silent about the costs consequences of accepting a pre-action Part 36 offer.

3. A deemed costs order under rule 44.12 cannot exist independently of proceedings in which an order can be made. Where a Part 36 offer is accepted before any proceedings begin, rule 44.12(1)(b) does not itself create an order capable of founding a detailed assessment. The receiving party must obtain an order through substantive proceedings or the costs-only procedure under rule 44.12A. The contrary opinion in Alison Jones v Alcom UK Ltd was rejected.

4. There is a real conflict between rule 36.10(3), which generally provides for standard-basis assessment, and Section II of Part 45. The conflict is resolved by the principle that a specific provision prevails over a general one. Section II of Part 45 applies to its defined class of low-value road traffic accident claims and excludes inconsistent general costs provisions. Applying standard-basis assessment merely because settlement followed a Part 36 offer would undermine the fixed-costs regime and discourage defendants from making such offers.

5. Rule 44.12A applies whether the pre-action settlement resulted from Part 36 or from another form of offer. When costs-only proceedings under that rule concern a claim within Section II of Part 45, the prescribed regime governs, including its provision for exceptional circumstances.

6. Parties may settle on different contractual terms as to costs. Their agreement cannot expand or restrict the court’s powers in rule 44.12A proceedings, although genuinely different terms may be enforced by ordinary process. Neither settlement contained such terms. References to “reasonable costs” or costs “in accordance with CPR 36.10” merely invoked the ordinary consequences of the Rules and did not promise standard-basis costs outside the applicable regime.

1. Court of Appeal (Civil Division): Both appeals were dismissed. The specific costs regime in Section II of Part 45 prevailed, and neither settlement created a different contractual entitlement.

2. Manchester County Court — Solomon: Judge Platts allowed the defendant’s appeal from District Judge Wheeler. He held that the costs-only proceedings fell within Section II of Part 45.

3. Manchester County Court — Oliver: District Judge Smith held that Section II of Part 45 established the recoverable costs for the relevant items and refused standard-basis costs.