COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM PRESTON COUNTY COURT
HIS HONOUR JUDGE APPLETON
Strand, London, WC2A 2LL
B e f o r e :
LADY JUSTICE ARDEN
LORD JUSTICE DYSON
| Joseph Lahey
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Jeremy Roussak (instructed by Messrs Hough, Halton & Soal) for the Respondent
Hearing dates: 24 January 2007
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"13. I am satisfied therefore that the regime is clear, namely that if the Defendant elects to make a payment in without any conditions as to costs, and that is accepted by a Claimant within the appropriate timescale, then the Claimant is entitled to his costs, his full costs, subject only to any reduction that will arise during the usual assessment process. In those circumstances, I do not accept that there is any power for the Court, never mind whether it should be done, to order any reduction in the incidence of the costs arising out of the Part 36 payment and its acceptance within time.
14. Having dealt with that, we then have to go on to the next point, which will be addressed by Mr. Vincent, it seems to me, of the general terms, and that is the question of proportionality, because we are now going on with the assessment of the costs as it has now been put to me by the Claimant in the bill."
The relevant rules of the CPR
11. "Court's discretion and circumstances to be taken into account when exercising its discretion as to costs
(1) The court has discretion as to-
(a) whether costs are payable by one party to another;
(b) the amount of those costs; and
(c) when they are to paid
(4) in deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including-
(a) the conduct of all the parties;
(b) whether a party has succeeded on part of his case, even if he has not been wholly successful; and
(c) any payment into court or admissible offer to settle made by a party which is drawn to the court's attention (whether or not made in accordance with Part 36).
(Part 36 contains further provisions about how the court's discretion is to be exercised where a payment into court or an offer to settle is made under that Part.)
(5) The conduct of the parties includes-
(a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed any relevant pre-action protocol;
(b)whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
(c)the manner in which a party has pursued or defended his case or a particular allegation or issue; and
(d) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim.
(6) The orders which the court may make under this rule include an order that a party must pay –
(a) a proportion of another party's costs;
(b) a stated amount in respect of another party's costs;
(c) costs from or until a certain date only;
(d) costs incurred before proceedings have begun;
(e) costs relating to particular steps taken in the proceedings;
(f) costs relating only to a distinct part of the proceedings; and
Basis of assessment
(1) Where the court is to assess the amounts of costs (whether by summary or detailed assessment) it will assess those costs-
(a) on the standard basis; or
(b) on the indemnity basis,
but the court will not in either case allow costs which have been unreasonably incurred or are unreasonable in amount.
(2) Where the amount of costs is to be assessed on the standard basis, the court will-
(a) only allow costs which are proportionate to the matters in issue; and
(b) resolve any doubt which it may have as to whether costs were reasonably incurred or reasonable and proportionate in amount in favour of the paying party.
(Factors which the court may take into account are set out in rule 44.5.)
Factors to be taken into account in deciding the amount of costs
(1) The court is to have regard to all the circumstances in deciding whether costs were –
(a) if it is assessing costs on the standard basis –
(i) proportionately and reasonably incurred; or
(ii) were proportionate and reasonable in amount, or
(3) The court must also have regard to-
(a) the conduct of all the parties, including in particular-
(i) conduct before, as well as during, the proceedings; and
(ii) the efforts made, if any, before and during the proceedings in order to try to resolve the dispute;
(b) the amount or value of any money or property involved;
(c) the importance of the matter to all the parties;
(d) the particular complexity of the matter or the difficulty or novelty of the questions raised;
(e) the skill, effort, specialised knowledge and responsibility involved;
(f) the time spent on the case; and
(g) the place where and the circumstances in which work or any part of it was done.
Court's powers in relation to misconduct
(1) The court may make an order under this rule where-
(a) a party or his legal representative, in connection with a summary or detailed assessment, fails to comply with a rule, practice direction or court order; or
(b) it appears to the court that the conduct of a party or his legal representative, before or during the proceedings which gave rise to the assessment proceedings, was unreasonable or improper.
(2) Where paragraph (1) applies, the court may-
(a) disallow all or part of the costs which are being assessed; or
(b) order the party at fault or his legal representative to pay costs which he has caused any other party to incur.
The defendant's submissions
"In other words what is required is a two-stage approach. There has to be a global approach and an item by item approach. The global approach will indicate whether the total sum claimed is or appears to be disproportionate having particular regard to the considerations which CPR r 44.5(3) states are relevant. If the costs as a whole are not disproportionate according to that test then all that is normally required is that each item should have been reasonably incurred and the cost for that item should be reasonable. If on the other hand the costs as a whole appear disproportionate then the court will want to be satisfied that the work in relation to each item was necessary and, if necessary, that the cost of the item is reasonable. If, because of lack of planning or due to other causes, the global costs are disproportionately high, then the requirement that the costs should be proportionate means that no more should be payable than would have been payable if the litigation had been conducted in a proportionate manner. This in turn means that reasonable costs will only be recovered for the items which were necessary if the litigation had been conducted in a proportionate manner."
"It is, perhaps, pertinent to observe that the relevant question under rules 10(1) and 28(1) of R.S.C., Ord. 62 is whether something has been done, or omitted, "unreasonably or improperly". To label as "misconduct" an act which is unreasonable but not improper - in the sense which those words convey in this context, as explained by this court in Ridehalgh v. Horefield  Ch 205, at page 232D-F- may lead to misunderstanding and should be avoided. But the judge was entitled to take the view – as the district judge had done when making the order which was under appeal - that the conduct which he described was unreasonable."