COURT OF APPEAL (CIVIL COURT)
ON APPEAL FROM LEEDS COUNTY COURT
(HIS HON. JUDGE LIGHTFOOT)
London, WC2A 2LL
B e f o r e :
LORD JUSTICE LAWS
LORD JUSTICE DYSON
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Smith Bernal Reporting Limited, 190 Fleet Street
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appeared for the Appellant
Mr Graham Robinson (instructed by Lester Morrill, Leeds)
appeared for the Respondent
AS APPROVED BY THE COURT
Crown Copyright ©
Lord Woolf CJ: This is the judgment of the Court
“(1) These Rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly.
(2) Dealing with a case justly includes, so far as is practicable-
(c) Dealing with the case in ways which are proportionate
(i) to the amount of money involved;
(ii) to the importance of the case;
(iii) to the complexity of the issues; and
(iv) to the financial position of each party;”
“(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 the parties;
(b) whether a party has succeeded on part of this 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).
(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;
(d) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim.”
“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 unreasonably 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)”
“44.5-(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
(b) if it is assessing costs on the indemnity basis –
(i) unreasonably incurred; or
(ii) unreasonable in amount.
(2) In particular the court must give effect to any orders which have already been made.
(3) The court must also have regard to –
(a) the conduct of all 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.
(Rule 35.4(4) gives the court power to limit the amount that a party may recover with regard to the fees and expenses of an expert.)
THE FACTUAL BACKGROUND OF THIS APPEAL
(a) whether the costs to be awarded to a successful litigant may or should be reduced if they are disproportionate to the amount claimed in the action;
(b) whether such costs may or should be reduced if they are disproportionate to the amount recovered in the action;
taking into account other relevant considerations”
(1) any assessment of costs that takes place on or after 26 April 1999 will be in accordance with CPR Parts 43 to 48.
(2) The general presumption is that no costs for work undertaken before 26 April 1999 will be disallowed if those costs would have been allowed in a costs taxation before 26 April 1999.
“That must mean that any issue of proportionality must give way to the approach the court would have taken to such an assessment prior to 26 April 1999”.
“I don’t consider that that is an appropriate view to take today and even if it were I do not consider it to be self-evident that the £17,000 in costs claimed in this bill was disproportionate to the complex issues that are litigated in this case and for all those reasons I do not propose to take a global approach to proportionality but I will take the approach that I would have done before 26 April 1999 and go through the bill item by item and listen to individual objections to particular items that are chargeable against the paying party.”
The Approach Required by the CPR
“In modern litigation, with the emphasis on proportionality, there is a requirement for parties to make an assessment at the outset of the likely value of the claim and its importance and complexity, and then to plan in advance the necessary work, the appropriate level of person to carry out the work, the overall time which would be necessary and appropriate spend on the various stages in bringing the action to trial and the likely overall cost. While it was not unusual for costs to exceed the amount in issue, it was, in the context of modest litigation such as the present case, one reason for seeking to curb the amount of work done, and the cost by reference to the need for proportionality.”
“11.1 In applying the test of proportionality the court will have regard to rule 1.1(2)(c). The relationship between the total of the costs incurred and the financial value of the claim may not be a reliable guide. A fixed percentage cannot be applied in all cases to the value of the claim in order to ascertain whether or not the costs are proportionate.
11.2 In any proceedings there will be costs which will inevitably be incurred and which are necessary for the successful conduct of the case. Solicitors are not required to conduct litigation at rates which are uneconomic. Thus in a modest claim the proportion of costs is likely to be higher than in a large claim, and may even equal or possibly exceed the amount in dispute.”
“........ there shall be allowed all such costs as were necessary or proper for the attainment of justice...”
“114. In my judgment, it is of the essence of a summary assessment of costs that the court should focus on the detailed breakdown of costs actually incurred by the party in question, as shown in its statement of costs; and that it should carry out the assessment by reference to the items appearing in that statement. In so doing, the court may find it helpful to draw to a greater or lesser extent on its own experience of summary assessments of costs in what it considers to be comparable cases. Equally, having dealt with the costs by reference to the detailed items in the statement of costs which is before it, the court may find it helpful to look at the total sum at which it has arrived in order to see whether that sum falls within the bounds of what it considers reasonable and proportionate. If the court considers the total sum to be unreasonable or disproportionate, it may wish to look again at the various detailed items in order to see what further reductions should be made. Such an approach is wholly unobjectionable. It is, however, to be contrasted with the approach adopted by the judge in the instant case.
115. In the instant case, the judge does not appear to have focused at all on the detailed items in the opponent’s statement of costs. Rather, having concluded that the total of the detailed items was unreasonably high he then proceeded to apply his own tariff – a tariff, moreover, which appears to have been derived primarily from a case in which the opponent had not been involved and about which it and its advisers knew nothing. In my judgment the jurisdiction to assess costs summarily is not to be used as a vehicle for the introduction of a scale of judicial tariffs for different categories of case.”
Whether the costs incurred were proportionate should be decided having regard to what it was reasonable for the party in question to believe might be recovered. Thus
(i) The proportionality of the costs incurred by the claimant should be determined having regard to the sum that it was reasonable for him to believe that he might recover at the time he made his claim.
(ii) The proportionality of the costs incurred by the defendant should be determined having regard to the sum that it was reasonable for him to believe that the claimant might recover, should his claim succeed. This is likely to be the amount that the claimant has claimed, for a defendant will normally be entitled to take a claim at its face value.