The principles set out in Broadhurst v Tan  EWCA Civ 94, where a claimant beats its own Part 36 offer, have been extended by the High Court.
We previously reported on the Court of Appeal decision which held that, in a case where fixed costs would ordinarily apply, when a claimant beats their own Part 36 offer, indemnity costs apply.
In Lowin v W Portsmouth Co, the High Court has extended this principle to the costs decided in provisional assessment, despite the contention between CPR 47.15(5) and Part 36 rules.
The Claimant had accepted the Defendant's Part 36 offer in respect of damages, with costs to be resolved through provisional assessment if they could not be agreed. The Claimant's Part 36 own offer in respect of costs was beaten at the provision assessment by £255. Under Part 36 rules she would be entitled to indemnity costs, whereas CPR 47.15(5) provides for a £1,500 cap on costs where a conclusion is reached at provision assessment.
At first instance, Broadhurst was distinguished and it was held that although indemnity costs should be awarded to a successful Part 36 offer, this would be limited to the £1,500 cap. However, on appeal the High Court held that Broadhurst provided the answer to the rules conflict, with Part 36 rules therefore overriding the costs cap. The appeal was allowed and the Claimant was entitled to indemnity costs. The case will be remitted for the reassessment of costs on an indemnity basis.
Mrs Justice Laing thought, given that Part 36 has not been modified to reinforce the cap on costs, that must be the Rule Committee's intention. She also reasoned that this should encourage parties to make and accept reasonable offers, such as not to be subject to adverse cost risk. Careful considerations should therefore be made in this regard.
The implications of this decision are far reaching, given that provisional assessment applies to all cases valued at £75,000 or less subject to detailed assessment hearings.
This ruling marks a further setback to fixed costs, following the recent concession that fixed costs will not apply to clinical negligence claims by the anticipated date of 1 October 2016. Nevertheless, Jackson LJ is pressing ahead with his intentions for fixed costs to apply to all fast track and low-end multi-track cases.