Smith v Wigan Borough Council: Settlement Sum Not Determinative of Track Allocation [2026] EWHC 660 (SCCO)

Detailed Assessment — 2026-03-18

Costs Judge Nagalingam upholds provisional assessment, ruling that CPR 46.13 is discretionary and the settlement sum is not definitive of claim value for retrospective track allocation.

Overview

Date: 18 March 2026

Judge: Costs Judge Nagalingam

Nature of Proceedings: Oral review of provisional assessment; application to restrict costs to the small claims track under CPR 46.13

Key Issues:

Whether a claim settled pre-issue for £1,000 "would have" been allocated to the small claims track
The proper approach to retrospective track allocation under CPR 46.13(3)
Whether the settlement sum is determinative of value for allocation purposes under CPR 26.9(1)(b)
Relevance of a paying party's own conduct and offer wording to the exercise of discretion

---

The Facts

The Claimant, Gillian Smith, was an elderly and vulnerable tenant of residential premises owned by the Defendant, Wigan Borough Council. She suffered from asthma, diabetes, depression and anxiety, and had recently undergone shoulder surgery affecting her mobility. From December 2023, she reported issues of disrepair at her property.

A letter of claim was sent on 18 April 2024. Over the following months the parties engaged in protracted negotiations. The Claimant's first offer, dated 4 October 2024, proposed damages of £1,400 plus repairs and costs on the standard basis. The Defendant rejected this, asserting the repair value was below £1,000 and that costs should be on the small claims track, counter-offering £500 plus repairs on that basis.

A series of further offers followed. The Defendant made three formal Part 36 offers: £750 (3 December 2024), £850 (19 December 2024), and finally £1,000 (30 January 2025). Each Part 36 offer stated that the Defendant would pay "the Claimant's reasonable legal costs, to be assessed if not agreed" - notably omitting any reference to small claims track costs. The Claimant's own offers ranged from £1,400 down to £1,100, and on 6 January 2025 she set out a detailed damages calculation of £1,304.96 based on a 20% rent diminution over the period of disrepair.

The Claimant accepted the Defendant's final Part 36 offer of £1,000 on 4 February 2025, following oral confirmation that costs would be on the standard basis. A Part 8 costs-only claim was issued, an order for standard basis costs was made, and the bill proceeded to provisional assessment.

At provisional assessment, Costs Officer Piggott rejected the Defendant's preliminary point that costs should be restricted to small claims track levels. The Defendant requested an oral review, initially challenging all assessed items but ultimately narrowing the dispute to the single track allocation issue.

---

The Parties' Arguments

The Defendant's Case

Mr Joshua Munro, for Wigan Borough Council, submitted that CPR 46.13(3) entitled the Defendant to argue retrospective allocation to the small claims track regardless of the costs order already made. He relied on the settlement sum of £1,000 as the best evidence of the claim's value, arguing it fell within the small claims track threshold under CPR 26.9(1)(b)(iii). He accepted it was not the only relevant factor, but pressed its status as highly persuasive.

Mr Munro distinguished the authorities cited by the Claimant. He argued that O'Beirne v Hudson [2010] EWCA Civ 52 pre-dated CPR 46.13 and had been effectively codified by the rule. He submitted that Stojalowski v Bristol City Council [2024] EWCC 30 was not a costs case and did not address CPR 46.13. As to Birmingham City Council v Lee [2008] EWCA Civ 891, he argued that whatever the basis of the findings in Lee, the index matter remained subject to CPR 26.9 and an analysis of whether the small claims track threshold was met.

The Claimant's Case

Mr Owen Poole, for the Claimant, adopted a pragmatic approach, distancing his client from some of the arguments in the original replies. He accepted the settlement sum had "some" relevance but maintained it could not be the sole consideration. He relied on the chronology of offers, noting the Defendant's progressive departure from small claims track language and the making of three Part 36 offers - a mechanism that does not apply in the small claims track under CPR 27.2(1)(g).

Mr Poole argued that the Defendant's use of Part 36 and the language "to be assessed if not agreed" at least implicitly accepted fast track allocation. He submitted that had proceedings been issued, the Claimant would have pleaded damages of £1,000 to £5,000, and pointed to the Claimant's detailed damages calculation of £1,304.96 based on rent diminution, the Claimant's vulnerabilities, and the prolonged period of disrepair.

---

The Court's Decision

CPR 46.13 is Discretionary, Not Determinative

Costs Judge Nagalingam began by emphasising the nature of CPR 46.13(3). The rule provides that the court "may restrict" costs to the relevant track - it is discretionary, not mandatory. He observed that the rule "is not framed in terms which require that the settlement sum only be taken into account, but rather invites a retrospective hypothetical analysis using the language of 'would have' and 'if'."

The Settlement Sum is Not Definitive of Value

The Judge rejected the Defendant's submission that the settlement sum should carry elevated weight in the allocation analysis. He drew a clear distinction between the settlement sum and the true value of a claim:

> "Where parties agree a financial dispute by way of compromise, the settlement sum may be one measure of value but it is not definitive. Context and circumstance are important."

In a striking passage, Costs Judge Nagalingam observed:

> "The colloquial 'man of means' is far better placed to negotiate a favourable deal than a 'man of straw', because whilst the former can likely afford to wait for their compensation and hence hold out for the best bargain, the latter will come to a point earlier where their immediate needs outweigh the additional time and resources necessary to secure what a Claimant with deeper pockets may consider fair compensation."

He noted that the Claimant - elderly, vulnerable, and paying full rent on a property in disrepair - endured over a year of uncertainty. A settlement of £1,000 to cover 69 weeks of disrepair equated to just £14.49 per week against rent of £80 per week, a diminution of around 18%.

The Defendant's Conduct

The Judge found it significant that the Defendant's three Part 36 offers all used the language of costs "to be assessed if not agreed", without any reference to small claims track restriction. Given that Part 36 does not apply in the small claims track (CPR 27.2(1)(g)), this "might reasonably lead one to conclude that the Defendant acknowledged the likelihood of this case being allocated to the Fast Track had it been issued."

He observed that the Defendant's evolving conduct "likely led to the Claimant assuming that no form of fixed costs argument would be advanced at the detailed assessment stage."

The Overriding Objective

Costs Judge Nagalingam raised two broader policy concerns. First, if the Defendant's approach were permitted, "future agreements would likely be imperilled due to a lack of trust between parties or otherwise result in the undesirable practice of horse-trading offers which either by pennies or a few pounds exceed the threshold to escape 'would-be' allocation to the Small Claims Track."

Second, "the overriding objective is not best served by an approach to litigation which, in effect, requires Claimants to issue proceedings in order to achieve certainty as to costs recovery."

Outcome

The Judge upheld the provisional assessment. Costs Officer Piggott's original decision was confirmed and the Defendant was ordered to pay the Claimant's costs of assessment, now including the costs of the oral review hearing, to be summarily assessed.

---

Key Takeaways

For Costs Lawyers

1. CPR 46.13 is discretionary, not automatic. A paying party cannot simply point to a sub-£1,000 settlement and expect costs to be restricted to the small claims track. The court retains discretion and will examine the full factual matrix.

2. Settlement sums are not definitive of claim value. The court will consider what a claim was genuinely worth at the point proceedings would have been issued, not merely what it settled for. This is particularly important where vulnerable claimants may accept lower sums under financial pressure.

3. Offer wording matters. The Defendant's repeated use of Part 36 offers and standard basis costs language undermined its own small claims track argument. Paying parties who wish to preserve a track allocation argument should be explicit about it throughout negotiations.

4. Part 36 and the small claims track are incompatible. The use of Part 36 offers carries an inherent implication that the parties are operating outside the small claims track. Costs practitioners should note this when advising on offer strategy.

5. Evidence is everything. The Claimant succeeded in part because she had a detailed contemporaneous damages calculation in the correspondence. The Defendant offered no cogent explanation for why the claim would have been allocated to the small claims track beyond the settlement sum itself.

6. Policy considerations carry weight. The court was concerned about trust in the settlement process and the undesirability of forcing claimants to issue proceedings merely to secure costs certainty. These broader considerations informed the exercise of discretion.

---

Conclusion

Smith v Wigan Borough Council is a significant decision on the proper application of CPR 46.13(3) in housing disrepair claims settled pre-issue. The judgment makes clear that retrospective track allocation is not a mechanical exercise driven solely by the settlement figure. The court must undertake a genuine analysis of what track the claim "would have" been allocated to, taking into account all relevant circumstances including the nature and duration of the claim, the claimant's personal circumstances, the parties' correspondence and conduct, and the pattern of offers exchanged.

For paying parties, the case serves as a cautionary tale. A defendant who negotiates on the basis of standard costs throughout, makes Part 36 offers, and agrees to costs "to be assessed if not agreed" will face an uphill battle in subsequently arguing that costs should be restricted to the small claims track. The judgment underscores the importance of consistency between a party's negotiating conduct and their subsequent costs arguments.

For receiving parties and their costs advisers, the decision reinforces the value of maintaining detailed contemporaneous evidence of claim valuation throughout the pre-action protocol process. The Claimant's detailed damages calculation, set out in correspondence well before settlement, proved decisive in demonstrating that the claim was genuinely worth more than the small claims track threshold, notwithstanding the final settlement sum.

---

Citation: Smith v Wigan Borough Council [2026] EWHC 660 (SCCO)

Full judgment available at: BAILII

Related Specialist Support

Costs Budgeting and Detailed Assessment: Precedent H, dispute documents, negotiations and assessment strategy.
Costs Lawyer Support: Direct help with costs procedure, strategy, drafting and advocacy.
Bills of Costs: Clear, defensible traditional and electronic bills prepared for recovery.