The Court of Appeal has recently ruled on an appeal against an application for Security for Costs in the case of Sarpd Oil International Limited v Addax Energy SA & ANR [2016] EWCA Civ 120.

​At first instance, the Court had regard to the amount of the Defendant's costs budget when considering an appropriate figure for security. The Claimant suggested that the Court had erred in taking such an approach and that the Judge should have considered whether the incurred costs were reasonable and proportionate.

​Lord Justice Sales rejected that argument stating that "all the parties appreciated, or should have appreciated, that the first CMC was the appropriate occasion on which issues between them regarding the quantum of costs shown in their respective costs budgets should be debated". Lord Justice Sales went on to state that "parties must appreciate that if they wish to take issue with another's costs budget, they should do so at the first CMC".

​The Court of Appeal refused to go behind the 'settled budget' and proceeded to use the costs budgets as a relevant reference point when considering the order to be made for Security for costs.

​If this approach to incurred costs is adopted generally, then it is likely that many parties will have missed the chance to challenge incurred costs on detailed assessment. The Court does still have some discretion though as CPR 3.18 does state that the Court will "not depart from such approved or agreed budget unless satisfied that there is good reason to do so". It remains to be seen what might be considered a 'good reason' to depart from the agreed budget.

In news that is sure to be welcomed by the Claimant side of the profession, the Court of Appeal have confirmed that Fixed Costs do not apply where a Part 36 offer is beaten.

In the cases of Broadhurst v Tan & Taylor v Smith [2016] EWCA Civ 94, The Master of the Rolls, Lord Dyson, confirmed that fixed costs and assessed costs are 'conceptually different'.

​The appeal centred around the application of fixed costs in low value personal injury cases. Section IIIA of Part 45 of the CPR provides remuneration via a scheme of fixed costs​. These rules were introduced on 31 July 2013 as part of the Jackson reforms.

​Part 36 was also amended to include CPR 36.14A which confirmed that CPR 36.14 would apply subject to a number of amendments. The amendments did not refer to CPR 36.14(3), which provided the Claimant with their costs on the indemnity basis from the date on which the relevant period expired, enhanced interest and the additional 10% figure.

​It was argued by the Defendant that CPR 45.29 should be preferred as it states that the only costs allowed are fixed costs save for in exceptional circumstances.

Lord Dyson confirmed that he preferred the Claimant's case that, where fixed costs are intended to prevail, Part 36 says so.

​Lord Dyson referred to the differences between fixed costs and assessed costs describing fixed costs as 'awarded whether or not they were incurred and whether or not they represent reasonable and proportionate compensation for the effort actually expended' and describing assessed costs as 'costs that reflect the work actually done'.

​With fixed costs very much in the headlines, Claimants will be hoping that this approach applies to any extension of the fixed costs regime in the future.
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