Lowin v W Portsmouth & Co

Where a claimant makes a successful Part 36 offer concerning the costs of detailed assessment proceedings, the entitlement to indemnity costs is not displaced by the provisional-assessment cap in rule 47.15(5), unless the rules expressly provide for that modification. Costs subject to the cap remain assessed costs, rather than fixed costs. The relevant question is whether Part 47.20(4), which applies Part 36 to detailed assessment proceedings subject to specified modifications, includes the cap among those modifications. If it does not, Part 36 has full effect and the claimant may recover indemnity costs subject to the cap only where the rules so provide.

The claimant appealed from a decision of Costs Master Whelan concerning costs arising from a successful Part 36 offer. The claimant's costs were provisionally assessed, and the Master capped the costs of the assessment under rule 47.15(5). He considered that Part 36 did not displace the cap and that Broadhurst v Tan was distinguishable.

The appeal concerned the relationship between the indemnity-costs consequences in Part 36 and the provisional-assessment cap in Part 47.

1. The appeal was allowed. The court rejected the Master's construction that rule 47.15(5) continued to cap costs despite the claimant's successful Part 36 offer.
2. Rule 47.20(4) expressly provides that Part 36 applies to the costs of detailed assessment proceedings, subject only to four specified modifications. Those modifications did not include rule 47.15(5).
3. Part 36 therefore conferred an entitlement to costs assessed on the indemnity basis. Rule 47.15(5) did not displace that entitlement. The court reasoned that the rule would have needed an express modification in rule 47.20 to produce that result.
4. Costs subject to a cap are assessed costs, not fixed costs. The receiving party's costs are assessed by reference to work actually done and the applicable basis of assessment, but recovery may be limited by the cap.
5. The general reasoning in Broadhurst v Tan assisted because Part 47, like the regime considered there, contained a specific provision governing the relationship between Part 36 and the relevant costs rules. The court did not rely on whether capped costs should be classified as fixed costs.
6. The court noted competing policy consequences. The construction adopted might reduce incentives to minimise provisional-assessment costs, but it increased incentives to accept sensible Part 36 costs offers. The appeal was accordingly allowed.

• High Court (Queen's Bench Division) — On appeal from the order and reasons of Costs Master Whelan dated 8 December 2015, the appeal was allowed.