Fixed costs did not apply to a personal injury case which had fallen out of the protocol, the Court of Appeal has asserted. In Doyle v M&D Foundations & Building Services Ltd, Lord Justice Phillips ruled that there was no ambiguity in an agreed court order requiring the defendant to pay costs that were ‘subject of detailed assessment if not agreed’.

In the proceedings following an accident at work, the defendant did not respond to the initial claim and the case dropped out of the protocol. The matter was allocated to the fast track and listed for trial, but was settled for £5,000. 

The county court assessed the bill of costs at £14,467 – considerably higher than if fixed costs had applied – and the defendant’s first appeal against that decision was dismissed in the High Court.

In the Court of Appeal the defendant argued that the use of the term ‘subject to detailed assessment’ in the order did not necessarily indicate that costs were to be assessed on the standard basis. It was contended that the term ‘detailed assessment’ referred to the process of assessing the amount of fixed costs and in particular the quantum of disbursements. 

But appeal judges ruled unanimously against the defendant. Lord Justice Phillips said ‘detailed assessment’ was a technical term with a meaning and effect clearly set out in the rules. ‘It plainly denotes that the costs are to be assessed by the procedure in Part 47 on the standard basis (unless the agreement or order goes on to provide for the assessment to be on the indemnity basis),' he ruled.

‘The phrase cannot be read as providing for an “assessment” of fixed costs pursuant to the provisions of Part 45 unless the context leads to the conclusion that the wrong terminology has been used (by the parties or by the court).’

The judge said the terms of the order were agreed by solicitors acting for the parties, both specialists in this type of litigation. They reached agreement in the course of correspondence in which a Part 36 offer by the defendant was expressly rejected by the claimant.

He added: ‘There is no objective reason to believe that the solicitors did not intend the term to bear its natural, ordinary (and in my judgment, obvious) meaning, not least because it would be impermissible (and to no avail) to speculate as to the parties’ respective legal or commercial motivations for reaching a settlement on the terms they did.’

Kevin Latham a specialist costs counsel and head of the costs team at Kings Chambers, who represented the claimant, said this was a significant decision as to parties’ ability to contract out of the fixed costs regime.

He added: 'It underlines the importance of parties taking considerable care when reaching agreement as to costs in cases to which the fixed costs regime applies, and which may have application in a significant number of claims, both those already settled and those yet to reach a conclusion.

'Care will need to be taken in each case where a similar costs order is agreed, to consider the context in which the agreement was made, but in the majority of cases, it now appears that an order which provides for costs to be “subject to detailed assessment” – even without reference to that assessment being conducted on the standard basis – will result in the claimant ‘escaping’ the fixed costs regime.'