Rokvic v Peacock

A settlement agreement is assessed objectively. An offer to discontinue proceedings may be accepted by the other party’s payment of the specified sum. A qualification that payment is made without admission of liability does not ordinarily prevent settlement where it adds nothing substantive to the bargain.

Discontinuance does not determine costs. Although CPR 38.6(1) creates a presumption that the discontinuing claimant pays the defendant’s costs, the court may depart from that presumption. Where settlement gives the claimant the substance of the relief sought, the claimant may properly receive its costs. Any award must nevertheless be reasonable and proportionate to the work required.

The claimant sought to enforce two adjudication decisions concerning defective building works and delay. An earlier adjudication had established a credit in favour of the defendant. After correspondence, the parties agreed that the defendant would pay the net balance claimed by the claimant, and that the claimant would discontinue the enforcement proceedings.

The defendant paid the agreed sum but disputed liability for the claimant’s legal costs, relying on the proposed discontinuance and maintaining that one aspect of the adjudication decision remained of uncertain enforceability. The court had to determine whether a binding settlement had been made, whether the settlement resolved costs, and how costs should be dealt with under the rules governing discontinuance.

1. Settlement. The correspondence, judged objectively, amounted to an offer that the claimant would discontinue the proceedings if the defendant paid £43,892.37. The offer was capable of acceptance by conduct. Payment of that sum constituted acceptance and created a binding agreement.
2. The statement that payment was made without admission of the enforceability of the second adjudication did not prevent settlement. It was, in substance, a reservation of liability and did not alter the agreement. The enforceability of an unquantified indemnity for certain defects remained open because that issue had not formed part of the offer and acceptance.
3. Costs. The agreement to discontinue was to be understood as discontinuance under the Civil Procedure Rules. Under CPR 38.5(3), discontinuance did not affect the court’s jurisdiction to deal with costs. The presumption in CPR 38.6(1) that a discontinuing claimant pays the defendant’s costs was rebuttable and subject to the court’s discretion.
4. The claimant had recovered, in net terms, the whole amount claimed under the second and third adjudications, after crediting the amount due under the first adjudication. The proceedings had been necessary because the defendant had challenged enforceability. The claimant was therefore entitled, in principle, to its costs.
5. The claimed costs of £17,426 were disproportionate to the simple enforcement claim and its early settlement. The court summarily assessed recoverable costs at £5,500 inclusive of any applicable VAT, payable within 14 days.

This was a first-instance decision in proceedings concerning enforcement of adjudication decisions. The judgment does not state any prior court decision or appeal.