The costs of costs-only proceedings

Crosbie v Munroe and another (CA TLR 25 March)

The claimant’s claim was settled for about £1,000 pre-action. When the claimant’s costs could not be agreed costs-only proceedings were commenced by a Part 8 claim under CPR rule 44.12A for costs amounting to £5,310.84. The defendant’s solicitors made an offer stated to be under rule 47.19 of ‘the all-inclusive sum of £2,650 in respect of your profit costs, disbursements, VAT and interest …’ Following an order for detailed assessment made in the Part 8 proceedings, the claimant’s solicitors accepted the offer stating ‘the only outstanding issue is the costs of the Part 8 proceedings’. Was it outstanding? The deputy district judge held that there had been a final and total offer to settle the matter and disallowed any further costs in respect of the detailed assessment proceedings. Where proceedings have been instituted, s46.2 of the Practice Direction supplementing CPR rule 47.19 provides: ‘Where an offer to settle is made, it should specify whether or not it is intended to be inclusive of the costs of preparation of the bill, interest and value added tax. The offer may include or exclude some or all of these items but the position must be made clear on the face of the offer so that the offeree is clear about the terms of the offer when it is being considered. Unless the offer states otherwise, an offer will be treated as being inclusive of all these items.’ Should that regime be significantly different where there had been no prior legal proceedings and, in the context of costs-only proceedings, what is the meaning of the words ‘a written offer to settle the costs of the proceedings which gave rise to the assessment proceedings’? It was agreed that ‘ the costs of the proceedings’ embraced all letters and negotiations between the parties which had led up to the rule 44.12A agreement. Accordingly, until the time that the substantive claim was settled, the ‘proceedings’ related to the liability and the amount of any compensation. After the substantive claim was settled, the ‘proceedings’ related to the assessment of the costs that the paying party had to pay. Accordingly, where an action has been settled without the need for proceedings and an offer has been made without specifying whether the sum offered is to include the costs of the preparation of the bill of costs, those costs are not included in the offer.