Sandra Solomon (Claimant/Appellant) v Cromwell Group Plc
| Jurisdiction | England & Wales |
| Judge | Lord Justice Moore-Bick,Lord Justice Aikens,Lord Justice Pill |
| Judgment Date | 19 December 2011 |
| Neutral Citation | [2011] EWCA Civ 1584 |
| Docket Number | Case Nos: A2/2010/2172 & A2/2010/2483 |
| Court | Court of Appeal (Civil Division) |
| Date | 19 December 2011 |
[2011] EWCA Civ 1584
Lord Justice Pill
Lord Justice Moore-Bick
and
Lord Justice Aikens
sitting with
Senior Costs Judge Hurst as Assessor
Case Nos: A2/2010/2172 & A2/2010/2483
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM MANCHESTER COUNTY COURT
His Honour Judge Platts
District Judge Wheeler & District Judge Smith
9MA20271 & 6MA23097
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr. Alexander Hutton (instructed by MTA Solicitors) for the appellants
Mr. Jeremy Morgan Q.C. for the respondent Cromwell Group PLC (instructed by Taylor Rose Law LLP) and for the respondent Sandra Doughty (instructed by Keelys LLP)
Hearing date : 19 th October 2011
These two appeals have been heard together because they raise common issues relating to the construction of Part 36 of the Civil Procedure Rules and its inter-action with Part 44, which contains general rules about costs, and Section II of Part 45, which contains rules about costs in certain kinds of road traffic accident claims.
Each of these cases concerns a claim for damages suffered as a result of a road traffic accident and in each case the parties were able to reach agreement as a result of the defendant's making one or more Part 36 offers in sums totalling less than £10,000. In each case the defendant agreed to pay the claimant's costs, but in each case the parties were unable to agree on the amount of the costs and so the claimant started proceedings under rule 44.12A to have the costs assessed.
The claimant in each case asked the court to make an order for costs to be assessed on the standard basis, relying on rules 36.10(1) and (3) which provide as follows:
"(1) …where a Part 36 offer is accepted within the relevant period the claimant will be entitled to the costs of the proceedings up to the date on which notice of acceptance was served on the offeror.
…
(3) Costs under paragraphs (1) and (2) of this rule will be assessed on the standard basis if the amount of costs is not agreed."
The respondents argued that costs should be awarded in accordance with the provisions of Section II of Part 45, which provides for what are sometimes described for convenience (though inaccurately) as "fixed costs" in "costs-only" proceedings arising out of road traffic accident cases in which the agreed damages include damages in respect of personal injury and do not exceed in total £10,000. In such cases rule 45.8 provides that the only costs to be allowed are those prescribed in rules 45.9 to 45.11, unless the court is satisfied that there are exceptional circumstances making it appropriate to award a greater amount (rule 45.12). In Lamont v Burton [2007] EWCA Civ 429, [2007] 1 W.L.R. 2814 Dyson L.J. explained that the origin of these provisions lay in
"a series of negotiations which were conducted under the auspices of the Civil Justice Council. The parties to the negotiations were some liability insurers who promoted the interests of defendants, and a combination of claimants' solicitors (represented by Association of Personal Injury Lawyers and the Motor Accident Solicitors Society) and legal expenses' insurers who promoted the interests of claimants."
The court considered that the purpose of the new rules had been correctly summarised by Simon J. in Nizami v Butt [2006] EWHC 159 (QB), [2006] 2 All ER 140 as being to provide an agreed scheme of recovery which was certain and easily calculated by providing fixed levels of remuneration which might over-reward in some cases and under-reward in others, but which were regarded as fair when taken as a whole. It follows that in any individual case the sum awarded may be larger or smaller than that which would have been awarded following a detailed assessment on the standard basis.
In Solomon v Cromwell District Judge Wheeler held that on the acceptance of the defendant's offer rule 36.10 came into operation and that by virtue of rule 44.12(1)(b) an order for costs on the standard basis was deemed to have been made. As a result, Section II of Part 45 did not apply, but on a detailed assessment it would be open to the costs judge to have regard to the costs that would have been recoverable under that Section.
On appeal Judge Platts reached a different conclusion. He held that rule 36.10 applies only to the costs "of the proceedings" and since no proceedings had been started in relation to the substantive claim, it had no application. It followed that rule 36.10(3) had no application either and that no order for costs was deemed to have been made under rule 44.12. The case therefore fell squarely within Section II of Part 45. In addition, he held that since the claimant had invoked the court's jurisdiction under rule 44.12A, it was bound by rule 44.12A(4A) to assess costs in accordance with Section II of Part 45.
In Oliver v Doughty District Judge Smith held that the effect of Section II of Part 45 is to establish the reasonable and proportionate costs of the various items to which it relates for the purpose of the assessment of recoverable costs in cases of the kind to which it refers. He therefore reached the same conclusion, albeit by a different route.
In each case the claimant appeals against the judgment below refusing to award costs on the standard basis. It is said that the terms of Part 36 create a right to have costs assessed on the standard basis which cannot be overridden by Section II of Part 45. In Oliver v Doughty it is said in addition that the terms on which the parties settled the dispute provide for costs to be paid on the standard basis, whatever might otherwise be the effect of the rules. It will be necessary, therefore, to examine in greater detail the terms of the correspondence between the parties in that case. It is convenient to begin, however, by examining the Rules themselves in order to ascertain their effect aside from any agreement to the contrary.
The Civil Procedure Rules have been subject to continuous development since their introduction in April 1999. Part 36 was the successor to R.S.C. Ord. 22 (payment into court) and was intended to encourage parties to compromise proceedings by providing protection against liability for costs similar to that previously available under R.S.C. Ord. 22, as well as other incentives that had not previously been offered. It is not surprising, therefore, that in its original form Part 36 did not extend to offers to settle made before proceedings had been commenced, although provision was made for the court to take such offers into account when making an order as to costs. From the outset, however, one consequence of accepting a Part 36 offer was a right to recover costs in respect of the period up to the date of acceptance of the offer and by virtue of rule 44.12 an order for costs on the standard basis is deemed to have been made.
A desire to encourage parties to settle disputes before proceedings had been commenced led in October 2000 to the introduction of "costs-only" proceedings. A new rule, rule 44.12A, was introduced to enable parties who had reached agreement on all issues before the commencement of proceedings, including which of them should bear the costs, but who could not agree on the amount of costs to be paid, to start proceedings to have the amount of costs determined by the court. Before the introduction of that procedure the receiving party would have had to issue fresh proceedings to recover his costs under the settlement agreement.
The next development relevant to the present appeal came in October 2003 with the introduction of Section II of Part 45, to which I referred earlier. It was widely welcomed as a breakthrough in the search for a means of controlling the costs of low-value road traffic accident claims and provides an important part of the context in which the rules were amended in April 2007 to enable a Part 36 offer to be made before the commencement of proceedings. Rule 36.3(2) now provides:
"A Part 36 offer—
(a) may be made at any time, including before the commencement of proceedings;"
Both Mr. Hutton and Mr. Morgan contended for rather different reasons that there is no conflict between rule 36.10(1) and Section II of Part 45. Mr. Hutton submitted that Judge Platts was wrong in holding that rule 36.10(1) does not apply in the present cases because the word "proceedings" must be given a broad meaning and was clearly intended to encompass cases falling within the scope of rule 36.3(2)(a). Rule 44.12 provides that where a right to...
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