Ho v Adelekun

Factual and Procedural Background

In April 2017, the parties to this appeal reached a compromise following a road traffic accident claim initiated by the Respondent against the Appellant. The core dispute concerns the extent of the Appellant's liability for costs. The Respondent argues for costs on the conventional basis, assessed item by item, while the Appellant contends that the fixed costs regime under Section IIIA of CPR Part 45 applies.

The accident occurred on 26 June 2012. The Respondent notified the Appellant's insurer of a claim under the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents (the RTA Protocol) in January 2014. Liability was not admitted, so the claim proceeded to proceedings issued in January 2015 and was allocated to the fast track. In January 2017, the Respondent applied for re-allocation to the multi-track due to an increased claim value.

Prior to the scheduled hearing for re-allocation in April 2017, the Appellant's solicitors sent a "Part 36 Offer Letter" offering £30,000 in full settlement, with costs payable in accordance with Part 36 Rule 13, subject to detailed assessment if not agreed. The Respondent accepted the offer, and a consent order was made staying proceedings except for carrying out the settlement terms, including the Appellant paying the Respondent's reasonable costs on the standard basis.

A dispute then arose over whether the Respondent was entitled to fixed costs or conventional costs. The Deputy District Judge ruled that fixed costs applied, but this was reversed on appeal by a judge who held that fixed costs did not apply. The Appellant now challenges that decision in this Court.

Legal Issues Presented

1. Did the Appellant’s solicitors, by their Part 36 offer letter of 19 April 2017, offer to pay conventional (detailed assessed) costs rather than fixed costs?
2. If not, should the claim be re-allocated to the multi-track with retrospective disapplication of the fixed costs regime?

Arguments of the Parties

Appellant's Arguments

• The fixed costs regime under Section IIIA of CPR Part 45 applies, limiting recoverable costs.
• The 19 April 2017 Part 36 offer letter intended to offer fixed costs, despite references to CPR 36.13 and detailed assessment.
• The reference to "detailed assessment if not agreed" was not intended to displace the fixed costs regime, which includes some form of assessment, particularly for disbursements or exceptional circumstances.
• It is improbable that the Appellant would offer conventional costs which would be more onerous.
• The claim should not be re-allocated retrospectively to disapply the fixed costs regime as it would run counter to the parties’ agreement and the consent order.

Respondent's Arguments

• The offer letter’s reference to CPR 36.13 and "costs to be subject to detailed assessment if not agreed" indicates an offer of conventional costs rather than fixed costs.
• CPR 36.5(1)(c) requires specification of which costs regime applies; the letter selected CPR 36.13, not CPR 36.20.
• The increase in claim value and application for re-allocation to the multi-track support an expectation of conventional costs.
• The fixed costs regime applies only "for so long as the case is not allocated to the multi-track," so re-allocation should disapply fixed costs retrospectively.
• Exceptional circumstances under CPR 45.29J might justify departure from the fixed costs regime.
• Fallback argument: the claim should be re-allocated to the multi-track with retrospective disapplication of fixed costs under CPR 26.10 and 46.13.

Table of Precedents Cited

Court's Reasoning and Analysis

The court undertook a detailed contractual interpretation of the Part 36 offer letter dated 19 April 2017, applying established principles of objective meaning and context. The court found that the letter did not offer conventional (detailed assessed) costs but rather intended the fixed costs regime to apply. The reference to CPR 36.13 was held to concern the period for acceptance rather than the costs regime applicable. The mention of "detailed assessment if not agreed" was not sufficient to displace the fixed costs regime, which itself involves some assessment, particularly for disbursements or exceptional circumstances.

The court emphasized that the fixed costs regime is designed to provide certainty and proportionality, with parties expected to begin and end proceedings on the basis that fixed costs apply unless they explicitly contract out. The court rejected the Respondent’s argument that re-allocation to the multi-track automatically disapplies the fixed costs regime retrospectively, interpreting CPR 45.29B and CPR 46.13 as applying fixed costs up to re-allocation and conventional costs thereafter, unless the court orders otherwise. The consent order staying proceedings except for carrying out settlement terms did not contemplate re-allocation or disapplication of fixed costs.

The court also rejected the argument that the stay under CPR 36.14 prevented consideration of re-allocation, holding that the stay did not extend to permitting the Respondent to revive the re-allocation application contrary to the consent order.

Overall, the court concluded that the parties did not agree to contract out of the fixed costs regime and that the fixed costs regime applies to the costs dispute. The appeal was allowed accordingly.

Holding and Implications

The appeal is allowed.

The court held that the Part 36 offer letter did not constitute an offer to pay conventional costs but was governed by the fixed costs regime under CPR Part 45 Section IIIA. The Respondent has no contractual entitlement to conventional costs. The claim was not re-allocated retrospectively to the multi-track for the purpose of disapplying the fixed costs regime. The consent order and procedural rules support this outcome.

The direct effect is that the Appellant is liable only for fixed costs as per the RTA Protocol and CPR Part 45. No broader precedent was set beyond confirming the strict interpretation of Part 36 offers and the fixed costs regime's application in these circumstances. The court advised that future Part 36 offers intending to apply fixed costs should explicitly reference CPR 36.20 and avoid ambiguous language concerning costs assessment to prevent similar disputes.