| COSTS — Detailed assessment — Jurisdiction of costs judge — Claimant accepting Part 36 payment of £4,000 having claimed £150,000 — Defendant seeking percentage reduction of claimant’s costs before commencement of assessment — Whether costs judge having jurisdiction to make such order — CPR rr 36.13, 44.4, 44.5, 44.12
Lahey v Pirelli Tyres Ltd [2007] EWCA Civ 91
CA: Sir Anthony Clarke MR, Arden and Dyson LJJ: 14 February 2007
A costs judge had no jurisdiction to vary a deemed order for costs on the standard basis made on acceptance of a Pt 36 payment into court. He therefore had no jurisdiction, before conducting a detailed assessment of such costs, to order that a paying party must pay only a proportion of the costs that were ultimately assessed to be payable.
The Court of Appeal so held in a reserved judgment, dismissing an appeal by the defendants, Pirelli Tyres Ltd, from the order of Judge Appleton, sitting in Preston County Court on 6 June 2006, whereby he dismissed the defendants’ appeal from District Judge James, who, when determining a preliminary issue on a detailed assessment of costs on 21 February 2006, refused to order that the defendants should only be liable to pay 25% of the assessed costs of the claimant, Joseph Lahey.
DYSON LJ, delivering the judgment of the court, said that the question was whether a costs judge had the jurisdiction at the outset of a detailed assessment of costs to order that a paying party must pay only a proportion of the costs that were ultimately assessed to be payable. The issue arose in the context of a detailed assessment following the claimant’s acceptance of a payment made by the defendant under CPR Pt 36. But the point could also arise in the context of a detailed assessment following acceptance of a Pt 36 offer and following an order for costs already made after trial, where the court had not made an order under CPR r 44.3(6)(a) allowing only a proportion of the costs of the successful party. Miss Ayling submitted that the source for the jurisdiction contended for was to be found in CPR rr 44.4 and 44.5 and/or 44.14. She submitted that in determining whether costs had been “unreasonably incurred or are unreasonable in amount” within r 44.4(1), the court was not constrained only to look at items of costs individually, that it might conclude that a whole stage of the proceedings was unreasonable, and that it could look at the conduct of the parties in the round and not only by reference to specific items of costs. The court could not accept those submissions. The effect of CPR rr 36.13(1)(4) and 44.12(1)(b) was that, upon acceptance of the Pt 36 payment, a costs order was deemed to have been made on the standard basis. That meant that the claimant was entitled to 100% of the assessed costs, that is, the amount that the costs judge decided was payable at the conclusion of the detailed assessment. The district judge had no power to vary that order and decide that the claimant would only be entitled to 25% of the assessed costs. The power to vary or revoke an order under CPR r 3.1(7) was only exercisable in relation to an order that the court had previously made, and not to an order that was deemed to be made by operation of the rules: see Walker Residential Ltd v Davis [2005] EWHC 3483 (Ch) at [49].
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