COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MR JUSTICE FIELD
Strand, London, WC2A 2LL
B e f o r e :
Lady Justice Smith
Lord Justice Wilson
| BRENDA WILLIS
|- and -
|NEIL ALICK NICOLSON
(By his mother and litigation friend Betty Nicolson)
WordWave International Ltd
A Merrill Communications Company
190 Fleet Street, London EC4A 2AG
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Official Shorthand Writers to the Court)
Mr Nicholas Bacon (instructed by Harris Cartier LLP) for the Respondent
Hearing date : 23 January 2007
Crown Copyright ©
Lord Justice Buxton :
This is the judgment of the court.
The facts and the course of the litigation
19 October 2005
Costs to date £75,000 to £80,000
Further costs to conclude £125,000 to £170,000
Total costs for the whole action £200,000 to £250,000
19 June 2006
Costs to date £417,252
Further costs to end of liability trial £146,937
Thus, total costs to end of liability trial £564,189
31 July 2006
Costs to date £499,846
Further costs on quantum £459,496
Total costs for whole action £959,342
The costs estimated for the Defendant were very significantly smaller than those of the Claimant but, as has often been observed, that discrepancy is characteristic of heavy actions of this type.
the court should only consider making a costs cap order in [single] cases where the applicant shows by evidence that there is a real and substantial risk that without such an order costs will be disproportionately or unreasonably incurred; and that this risk may not be managed by conventional case management and a detailed assessment of costs after a trial.
By contrast, there have been various indications in this court encouraging the use of costs capping. Those indications include the observations of Sir Christopher Staughton in Solutia UK Ltd v Griffiths  PIQR P176 -30]; Dyson LJ in Leigh v Michelin Tyre plc  1 WLR 846; and in particular Brooke LJ in King v Telegraph Group Ltd  1 WLR 2282:
it would be very much better for the court to exercise control over costs in advance, rather than to wait reactively until after the case is over and the costs are being assessed.
This difference of opinion is in need of resolution, but for the reason given in §24 it is not resolved in this judgment.
The decision of Field J
- 182 hours for attending on the client and his immediate carers, at a cost of some £50,000.
- 80 hours attending on other lay witnesses, at a cost of some £20,000
- 87 hours working with counsel, at a cost of some £30,000
- 260 hours working on documents, at a cost of some £51,000.
He concluded, at his §15:
Although I am uneasy about the remarkably high level of costs incurred to date I feel unable to reach the conclusion, having regard to all the material before me, including the future estimate, that there is a real risk that the future costs incurred from 31 July will be unreasonable and disproportionate.
But, as we have seen, he made an order limiting future costs to the amount of the estimate.
Having rightly found that the claimant's estimated costs in this case were 'remarkable' such that the defendant 'merited some protection', the learned judge was wrong, in the exercise of his discretion, to cap the claimant's costs at the very level of the estimate which engaged his concern. The learned judge should either have imposed a cap in a substantially lower sum, or have remitted the case to a costs judge for the setting of such a cap.
One of the reasons for disposing of the application in this way [that is, by limiting the Claimant to his latest estimate, rather than by a costs capping order] is my concern as to the time and costs that would be involved in having a costs judge decide what the costs cap should be.
And the judge might have added that three of the (as it was then supposed to be) eight months of preparation to which the estimates applied had already expired, making any intervention on his part, and even more so a later intervention by a costs judge, very difficult to apply in practice. That is plainly even more of a difficulty when, at an even later date, this court is asked to adjust the Claimant's costs and, in so doing, adjust the Claimant's preparation of the case very close to trial.
Some general observations
Proportionality played no part in the taxation of costs under the Rules of the Supreme Court. The only test was that of reasonableness. The problem with that test, standing on its own, was that it institutionalised, as reasonable, the level of costs which were generally charged by the profession at the time when professional services were rendered. If a rate of charges was commonly adopted it was taken to be reasonable and so allowed on taxation even though the result was far from reasonable.
If there is to be a cap in any case, the party capped is likely to be required to alter its conduct in relation to costs, if that were not part of the intent behind the cap then there would probably be no point in having a cap.
The court will be careful before imposing such a restriction, particularly when those restricted are, as in the present case, acting for a claimant who has suffered catastrophic injuries. To conduct the exercise properly the court will need reliable information about, and understanding of, the nature of the particular case and the general demands of that type of litigation. And both for reasons of fairness and for reasons of practicality a cap cannot be imposed retrospectively, so the enquiry must take place at a sufficiently early stage to have a real effect on expenditure: the present case demonstrates the hopelessness of leaving an application until close to the date of trial. As Gray J said in Henry v BBC  1 All ER 154:
the purpose of a capping order is to enable the capped party to plan ahead the appropriate level of expenditure to bring the case to trial at a cost which is in line with the amount of the cap.
There has, accordingly, to be careful selection of the right moment in the litigation process for the consideration of a costs cap.
Lady Justice Smith:
Lord Justice Wilson: