W Portsmouth and Company Ltd v Lowin

Where a receiving party beats its own Part 36 offer in detailed assessment proceedings, costs are assessed on the indemnity basis, but the cap for provisional assessment costs still applies. The cap limits the amount awarded after assessment; it does not change the basis of assessment or make the costs fixed. The reference to costs in Part 36 does not create an unlimited indemnity for every cost incurred, since unreasonable costs remain excluded. Part 47.20 contains no express modification or disapplication of the cap. The fixed-costs reasoning in Broadhurst v Tan therefore does not govern this different scheme.

The respondent recovered damages after the appellant accepted a Part 36 offer. She later made a Part 36 offer of £32,000 concerning the costs of the claim. The costs were provisionally assessed at £32,255.35. The costs judge ordered indemnity costs under CPR rule 36.17(4), but applied the cap in CPR rule 47.15(5) to the costs of the provisional assessment.

The High Court allowed the respondent’s appeal and remitted the matter for assessment without the cap. The appellant appealed to the Court of Appeal. The central issue was whether the Part 36 costs consequences displaced the provisional assessment cap.

Appeal allowed unanimously. The cap in CPR rule 47.15(5) applied to the respondent’s costs of the provisional assessment, despite her entitlement under CPR rule 36.17(4)(b) to costs assessed on the indemnity basis after beating her Part 36 offer.

1. CPR rule 47.15(5) is not a fixed-costs provision. It caps the amount which may be awarded after the receiving party’s costs have been assessed. If the costs assessed on the indemnity basis are below the cap, the lower amount is awarded; the specified cap is not automatically payable.
2. The indemnity basis does not amount to an absolute entitlement to every cost incurred. CPR rule 44.3(1) continues to exclude costs unreasonably incurred or unreasonable in amount. The word costs in CPR rule 36.17(4)(b) must be understood in that context.
3. CPR rule 47.20(4) expressly applies Part 36 to detailed assessment proceedings, subject to the listed modifications. It contains no modification or disapplication of CPR rule 47.15(5). Accordingly, Part 36 and the cap operate together and no conflict requiring resolution arises.
4. Broadhurst v Tan [2016] 1 WLR 1928 was not directly applicable. It concerned a direct conflict between fixed costs and assessed costs under different provisions. The Court of Appeal also explained the limited relevance of Courtney Webb v Liverpool Women’s NHS Foundation Trust [2016] EWCA Civ 365: its reference to all costs concerned the discretion to determine what costs should be assessed, not an unlimited entitlement immune from a separate cap.
5. It was unnecessary to decide the general-specific construction point considered in Solomon v Cromwell Group plc [2011] EWCA Civ 1584. If necessary, CPR rule 47.15 would have taken precedence as the provision directed to the discrete class of provisional assessments.

The High Court’s contrary conclusion was therefore reversed. The cap remained applicable.

1. Court of Appeal (Civil Division): On 19 December 2017, the court allowed the appellant’s appeal and held that the cap on provisional assessment costs applied.
2. High Court of Justice, Queen’s Bench Division: Elisabeth Laing J, sitting with Master Leonard as a costs assessor, allowed the respondent’s appeal, set aside the costs order of 17 February 2016, and remitted the matter for summary assessment without applying the cap.
3. Costs assessment: Master Whalan provisionally assessed the costs and ordered the costs of the provisional assessment on the indemnity basis subject to the cap in CPR rule 47.15(5).