Dadu Ltd v Barrowfen Properties Ltd  EWHC 90110
This matter was a preliminary issue in advance of a detailed assessment of a bill of costs to deal with whether the Claimant’s Solicitors were entitled to exclude from consideration by a Costs Judge a document in relation to negotiations for settlement when the underlying litigation was compromised on the basis that this document was marked without prejudice.
During the course of settlement negotiations, discussions took place regarding the level of the Claimant’s costs. At the Defendant’s insistence, a written estimate of the Claimant’s costs up to 01/05/07 was provided and they amounted to £38,250. This figure was contained within a document marked ‘Without Prejudice (Rough Estimate)’. In light of the sum advised, the Defendant agreed to pay the Claimant’s Bill of Costs, as part of the settlement agreement, up to and including 01/05/07, to be subject to detailed assessment if not agreed. This was enshrined within the final Consent Order.
The Claimant served a formal Bill of Costs which amounted to £70,393.65, which was in excess of 84% more than the estimate provided. The Claimant failed to provide an explanation for this discrepancy, despite there being more than a 20% difference between the costs claimed and the costs estimated.
The Defendant submitted that the costs estimate was reasonably relied upon and that the Claimant should be bound by the estimate of costs given.
The Claimant argued that the estimate given was no more than a rough figure provided at the Defendant’s insistence and without the file of papers. The Claimant also submitted that had the parties intended that the rough figure provided was to be binding, then this would have been provided for in the Consent Order.
It was held that from the authorities relied on by the parties, it was quite clear that documents marked ‘without prejudice’ should not be referred to subsequently. There were exceptions to the rule, but these were limited in extent.
Therefore, Master Rodgers held that a Costs Judge conducting a detailed assessment should not pay any regard to a document marked ‘without prejudice and rough estimate’.