England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM READING COUNTY COURT
(HIS HONOUR JUDGE ELLY)

		Royal Courts of Justice Strand London WC2 Wednesday 16th January 2002

Wednesday 16th January 2002

1. LORD JUSTICE WALLER: I will ask Mr Justice Wilson to deliver the first judgment.
2. MR JUSTICE WILSON: This is an appeal brought with leave of the single Lord Justice from the county court in relation to costs. As such, it is overcast, from start to finish, by the heavy burden faced by any appellant in establishing that the judge's decision falls outside the discretion in relation to costs conferred upon him under rule 44.3(1) of the Civil Procedure Rules 1998. For reasons of general policy, namely that it is undesirable for further costs to be incurred in arguing about costs, this court discourages such appeals by interpreting such discretion very widely.
3. The appeal is brought by SCT Finance Ltd ("the hire purchase company") from the order of his Honour Judge Elly in the Reading County Court on 9 March 2001. Before the judge were proceedings brought by the hire purchase company against Mr Bolton, who, in April 1995, had bought from it a car on terms as to hire purchase. As a result of a counterclaim made by Mr Bolton, the hire purchase company issued a Part 20 claim against WR Hammant Ltd ("the dealers") through whom Mr Bolton had bought the car. As a result of the Part 20 claim against them, the dealers in turn issued a Part 20 claim against Volkswagen Group UK Ltd ("the distributors") who had sold the car to them.
4. The substantive result of the proceedings, against which there is no appeal, was that judgment be given on the claim by the hire purchase company against Mr Bolton in the sum of £351; and that the counterclaim and the two successive claims under Part 20 be dismissed. Then came the orders for costs. They were:

(a) that the distributors' costs be paid by the dealers, subject to detailed assessment on the standard basis;

(b) that the dealers' costs be paid by the hire purchase company, subject to detailed assessment on the standard basis and so as to include the costs payable by the dealers pursuant to (a); and

(c) that the hire purchase company's costs be paid by Mr Bolton, subject to detailed assessment on the standard basis and so as to include the costs payable by the hire purchase company pursuant to (b) but subject also to

(i) postponement referable to costs incurred while Mr Bolton was in receipt of public funds for the prosecution of his counterclaim; and

(ii) an overall ceiling of £15,000.

5. The hire purchase company accepts the validity of the limitation at (i), made pursuant to what is now s.11 Access to Justice Act 1999. Mr Bolton appears to have been publicly funded for the prosecution of his counterclaim between about November 1999 and February 2000, namely before the vast bulk of the costs had been incurred by any of the other parties. So the hire purchase company does not expect that the effect of that limitation will be to postpone recovery of any significant amount of its costs. Its appeal is against the limitation at (ii), namely the overall ceiling of £15,000. In circumstances in which the estimates placed before the judge of the costs of the distributors were about £18,000, of the dealers were about £24,000 and of the hire purchase company itself referable to the counterclaim were about £9,000, the hire purchase company alleges that, in imposing a ceiling of £15,000 upon its recovery against Mr Bolton, the judge exceeded the generous ambit of his discretion.
6. The story begins in April 1995 when Mr Bolton informed the dealers that he wanted to buy a new Seat Cordoba 1.6 CLX motor car on hire purchase. Seat cars are manufactured in Spain, in effect by Volkswagen. The dealers arranged the purchase through the hire purchase company. So the dealers bought the car from the distributors and sold it to the hire purchase company, who leased it to Mr Bolton; and in May 1995 Mr Bolton took delivery of it. It had then travelled 30 miles.
7. Mr Bolton, including his family, used the car extensively. By May 1996 he had travelled over 21,000 miles in it; and by May 2000 he had travelled 110,000 miles in it.
8. In the years following his acquisition of the car, Mr Bolton had a number of problems with its brakes. Inspections and repairs were undertaken. Late in 1996 he complained to the dealers about an alleged design fault in the brakes. The dealers caused an officer of the distributors' technical division to inspect it. There the matter seemed to rest.
9. In January 1998 Mr Bolton ceased to make his monthly payments to the hire purchase company. He had come to the view that the new car which he had contracted to buy in April 1995 on hire purchase should have been fitted with an air bag and an air conditioning unit. By letter dated 14 May 1998, Seat UK disabused him of the validity of that view. But, erroneously (as it was later to transpire), it added that, though bought in April 1995, the car that was sold to him would have been built to the specification set in June 1994. Mr Bolton later discovered that under such specification the car should have been fitted with a sun roof and with a driver's seat the height of which was adjustable. In the interim, however, namely with effect from July 1998, he resumed payments to the hire purchase company. He again stopped making such payments in January 1999.
10. In July 1999 the hire purchase company issued the proceedings against Mr Bolton in the Reading County Court in respect of arrears of instalments. The claim was for £917. By his defence in August 1999, Mr Bolton correctly pointed out that there had been a duplication in the calculation of the claim amounting to £266, which reduced it to £651. Indeed, following the issue of the proceedings, he paid a further £300 against what was owed, thereby reducing it to £351. More importantly Mr Bolton filed a counterclaim for damages not exceeding £10,000, by which he claimed that:

(a) in lacking a sun roof and an adjustable driver's seat, the car was not in accordance with the specification for which he had contracted; and

(b) in relation to problems with the brakes, rear wheel bearings and wiring faults in the boot, the car had been neither of merchantable quality nor fit for its purpose at the time of its acquisition in 1995.

11. The hire purchase company filed a defence to the counterclaim. For obvious reasons it had no internal knowledge of the matters raised in the counterclaim. Before, however, issuing proceedings under Part 20 against the dealers, it sought to compromise the litigation with Mr Bolton. By letters in January 2000, expressly made under Part 36 of the Rules of 1998, Mr Bolton, through his then solicitors, offered to settle the litigation for a net payment to him of £3,000 and, by contrast, the hire purchase company offered to settle it on the basis that neither party should make any payment to the other. Neither offer was acceptable to the other. Thereupon, namely in April 2000, the hire purchase company issued Part 20 proceedings against the dealers. This move prompted the proceedings issued in July 2000 by the dealers, again under Part 20, against the distributors. By these successive proceedings, Mr Bolton's complaints about the nature and quality of the car which he had acquired over four years earlier were passed down the contractual line for the distributors to answer.
12. Following issue of its proceedings, the hire purchase company's claim had been allocated to the fast track. In July 2000, however, that company, apparently worried by the escalation of costs, issued an application for the proceedings to be re-allocated to the small claims track. It argued that, even on Mr Bolton's case, his counterclaim had a value of not more than £5,000. It seems that it was the dealers who opposed re-allocation to the small claims track. At all events the district judge directed that the proceedings should remain in the fast track and indeed that, in the event of failure to reach agreement, whether between the experts who had by then been consulted on behalf of Mr Bolton and of the two Part 20 defendants referable to the matters raised by the counterclaim or between Mr Bolton and the hire purchase company referable to the amount of the claim, the proceedings should be re-allocated to the multi-track.
13. In November 2000 Mr Bolton wrote to the effect that he refused to agree the amount of the claim against him and that he had instructed his expert not to consider material produced (as he said, late) by the expert for the Part 20 defendants. The result was that the proceedings were indeed re-allocated to the multi-track, down which they travelled to hearing and judgment on 7, 8 and 9 March 2001. Separate counsel appeared for the hire purchase company, the dealers and the distributors. Mr Bolton, by then without public funding, appeared in person.
14. By his substantive judgment dated 8 March, the judge, without difficulty, computed the value of the claim at £351. The difficulties for Mr Bolton in advancing a counterclaim about the nature or quality of a car purchased over four years earlier and after he had travelled over 100,000 miles in it were obvious. In fact when, outside court, the two experts were at last in a position to discuss matters, they agreed that in 1995 the car had been fit for its purpose and of merchantable quality. Further evidence from the distributors led them and the judge to accept that, contrary to the letter from Seat UK dated 14 May 1998, neither a sun roof nor an adjustable driver's seat was within the specification of the model offered for sale to the public and sold to Mr Bolton in April 1995. So, at the end of the second day of the hearing, for those reasons alone, the judge dismissed the counterclaim.
15. On the third day the judge addressed the issues of costs. Before him had been placed the three estimates of costs referable to the counterclaim and to its consequential proceedings under Part 20, to which I have already referred and which amounted in all to about £51,000.
16. Early in his substantive judgment at the end of the second day, the judge had, reasonably, used strong language by which to draw attention to the disparity between the costs incurred and the sums at stake in the proceedings. He said:

"Unfortunately, because there was a counterclaim made, which was limited in its amount to £10,000 in total, the finance company joined in the garage, the garage have joined in the manufacturers and, on the basis of what has been put before me up to now in respect of costs, we have a situation where we have costs claims before me of something of the order of over £50,000. On top of that there is whatever Mr Bolton may have personally expended on his solicitors and, on top of that, whatever has been paid under the legal aid scheme, as it then was, to those solicitors. I have to say that it is a very unattractive situation in which we find ourselves, where somebody is going to pick up bills for something of the order of £50,000 in costs -- whether that turns out to be Mr Bolton or whether it turns out to be to be one of the other parties to the proceedings, but however the cake is cut, there is still that amount of money which has been spent on a debt which started on a claim of just under £1,000. It has been accepted it was overcalculated because of a double charge for fees, and should have been started at £651, in respect of which £300 has since been paid. I do not know what anybody who is not a lawyer sitting in this court could be thinking about when they hear that, for sake of £350 outstanding, somebody is picking up bills totalling over £50,000. It is a monstrous situation. But that is the position in which I am told we find ourselves here."

17. In his judgment on costs the judge first addressed the distributors' claim for costs and decided that, notwithstanding that the letter dated 14 May 1998, for which they had in effect been responsible, had been the source of protracted confusion, they should be paid their costs. He also decided that the dealers should be paid their costs. But by whom should the costs of the distributors and the dealers be paid? The hire purchase company argued that in each case any order for such costs should be made directly against Mr Bolton. But the distributors and the dealers each argued that any such order should go up the line, i.e. that the costs of the distributors be paid by the dealers and that the costs of the latter be paid by the hire purchase company.
18. Accepting that he had a discretion to favour either route, the judge chose the latter. He held that, in that it had been reasonable for the dealers to join the distributors, the costs awarded to them against the hire purchase company should include the costs payable by them to the distributors. Of the costs payable under each of these two orders, he directed detailed assessment on the standard basis. He added:

"I have remarked on the size of the bills. As I have said already, and I repeat for the sake of clarity, they do look high. They certainly look high against the amounts which are at stake. But that does not mean to say that they are not justifiable. That is a matter which the District Judge will have to determine. I leave to the District Judge the determination of the question of whether or not they should be reduced having regard to the overall requirement that costs should bear some relative resemblance to the claim which they are being incurred to meet."

19. Then the judge addressed the claim for costs made by the hire purchase company against Mr Bolton referable to the counterclaim, it being in effect agreed that it should receive only fixed costs referable to the claim. The judge concluded that, in that Mr Bolton had lost the counterclaim, it was clearly right in principle that he should pay the hire purchase company its costs thereof on the standard basis. He reminded himself of the statutory protection for Mr Bolton referable to costs incurred while he was publicly funded. He concluded that it had been reasonable for the hire purchase company to issue proceedings under Part 20 against the dealers, with the result that such costs as were awarded to the hire purchase company should include such costs as it was required to pay to the dealers. He continued as follows:

"The only remaining question is whether or not I should have regard to any sort of limit on the costs, because I do have to take into account the various circumstances which are set out in CPR 44.3 with regard to costs. For example, conduct of the parties, whether a party has succeeded in part of his case, and so forth. I also can, under CPR 44.3(6), make an order which is a power of limiting the costs in some way. It does seem to me that it is right that I should do that in this case. I am concerned about the fact that all this expense has been incurred. Whilst I have to acknowledge that I cannot say that Hammants, nor Volkswagen, or either of them, should not have been joined into the proceedings, it does seem to me that, in doing so, and in the general conduct of these proceedings, the costs have been allowed to escalate out of proportion to the amounts at stake. It seems to me that it is right, in dealing with a litigant -- and this is not just a case of because Mr Bolton is in person and is clearly not a man of means -- that I make this decision. But it does seem to me that there ought to be an overall limit on his liability. I would put that at the sum of £15,000. In doing that, I have related that to the amounts which are said to have been at stake on the counterclaim and also the fact of the number of parties involved."

20. From that passage I collect two reasons for the judge's imposition of the ceiling of £15,000. The main reason was that "the costs have been allowed to escalate out of proportion to the amounts at stake". But the judge added:

"... this is not just a case of because Mr Bolton is in person and is clearly not a man of means..."

21. The use of the word "just" suggests to me that Mr Bolton's perceived lack of means was a subsidiary reason for the decision.
22. One of the major points made on behalf of the hire purchase company in this appeal is that there is an anomaly written across this part of the judge's order. He was, in reality, addressing three sets of costs for which ultimately Mr Bolton was to be liable; and his concern was that they had escalated out of proportion to the amounts at stake. Yet, if it was appropriate for him so to do, the judge allowed for this factor against only one of the successful parties, being, I might add, that party whose estimate of costs was lowest. The costs payable to the distributors and to the dealers, both in effect by the hire purchase company, were not the subject of a ceiling; but those payable to the hire purchase company were the subject of a ceiling and at first sight a very low one. If, for the sake of argument, this was the appropriate mechanism by which the judge would cut out such costs as were out of proportion to the amounts at stake, the effect was that the costs of the distributors and of the dealers escaped his knife and that the consequence of any lack of proportionality in the amount of their costs was visited upon the hire purchase company.
23. The judge was right to conclude that the normal principle is that the costs of successful defendants brought in under what is now Part 20 of the rules of 1998 pass up the line to the principal defendant: Johnson v. Ribbins [1977] 1 WLR 1458. Indeed in the present type of case it can be argued that, in the configuration of contracts entered into in April 1995, it was the hire purchase company who chose to enter into a contract with the private individual with all the attendant risks of irrecoverability of the costs of any forensic conflict with him. Nevertheless, had it been appropriate for the judge to have placed some ceiling on Mr Bolton's liability for the three sets of costs, there was a strong argument that his discretion should be so exercised as to make the three orders for costs directly against him, each the subject of a ceiling in terms of a figure or a percentage.
24. The bigger question, however, is whether any ceiling was appropriate at all.
25. In this regard it is necessary to address certain of the provisions in rule 44.3 of the rules of 1998, as indeed the judge purported to do. As he rightly observed, the general discretion to make an order for costs under paragraph (1) includes, by virtue of paragraph 6(b), an order for "a stated amount in respect of another party's costs". There has been discussion this morning as to whether those words are apt to cover an order for detailed assessment subject to the ceiling of a stated amount. It may be that, on a strict view, they are not thus apt. But paragraph (6) identifies seven types of order which the general discretion under paragraph (1), derived from section 51(1) of the Supreme Court Act 1981, is said only to "include". Paragraph 1(b) provides that the court has discretion as to the amount of costs payable by one party to another; and I have no doubt that a court can properly identify the amount thus payable as being such costs as are calculated by detailed assessment but subject to a quantified ceiling. So in my view the judge had ample discretion to make the order which he did.
26. But the manner by which such discretion should be exercised is subject to other paragraphs of the rule. The starting point is to be collected from paragraph (2):

"If the court decides to make an order about costs -

(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but

(b) the court may make a different order."

27. Paragraph (4) provides:

"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)."

28. The reference to the conduct of the parties in paragraph (4)(a) is amplified in paragraph (5) in terms which it is unnecessary to set out.
29. One of Miss Bailey's complaints on behalf of the hire purchase company is that the judge failed to discharge his duty under paragraph (4). She says in particular that he failed to advert to the fact, which was clearly brought to his attention, that in January 2000, before the significant costs had been incurred, Mr Bolton had refused to accept the Part 36 offer of her client, whereunder both claim and counterclaim be discontinued with no order for costs. In my view there is considerable force in that point. Although paragraph (4) does not purport to provide a comprehensive definition of the circumstances relevant to the exercise of the discretion, a proper consideration of all three factors there particularised affords no ammunition whatever for Mr Bolton in opposing full application of the general rule.
30. In my view, however, there is a more fundamental objection to the judge's imposition of the ceiling. The objection is born of the fact that he had already ordered that all three sets of the costs of the successful parties be subject to detailed assessment on the standard basis. What then is the standard basis under the rules of 1998? Rule 44.4 provides as follows:

"(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."

31. Therefore, under the standard basis, costs can be allowed only if they are proportionate to the matters in issue. That means, as is made clear by rule 44.5(1)(a), that both the nature of the work in respect of which the costs were incurred and the amount of such costs must be proportionate.
32. Section 11.1 of the practice direction supplementary to Part 44 explains the operation in this respect of rules 44.4 and 5:

"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."

33. Rule 1.1(2)(c) provides that dealing with a case justly, in accordance with the overriding objective of the rules, includes, so far as is practicable -

"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;"

34. Thus the principal effect of the judge's decision, clearly correct, to direct assessments of costs on the standard, rather than the indemnity, basis was to require the costs assessor to disallow costs which, on an overall rather than mechanical view, were disproportionate to the matters in issue and indeed to disallow them if he remained in doubt on the point. Interestingly, even the financial position of Mr Bolton was, to some extent, to figure in that enquiry by virtue of rule 1.1(2)(c)(iv).
35. In the course of argument my Lord, Lord Justice Waller, canvassed with Miss Bailey whether it could be considered proportionate to the matters in issue for her client and both the Part 20 defendants all to have briefed separate counsel for the hearing. Miss Bailey indicated that there were, or may have been, conflicts which required the three parties to have separate representation. Nevertheless that is the sort of feature to which I would expect any enquiry into proportionality to pay close regard.
36. It follows, in my view, that the ceiling of £15,000 imposed by the judge was, with respect, unprincipled. It purported to make allowance for perceived lack of proportion in the amount of the costs in circumstances where his directions for standard assessments had already made full allowance for any such lack of proportion. The ceiling would have effect only to the extent that the costs assessor had been satisfied that costs which were proportionate to the matters in issue had been incurred in a sum exceeding £15,000. The effect of the ceiling would in that event be to excise from Mr Bolton's liability the excess element of the proportionate costs and would thus be contrary to the judge's primary reason for imposing it. Furthermore, to the limited, and in my view controversial, extent to which it was proper for the judge also to have regard to Mr Bolton's perceived lack of means, that factor would also figure in the assessor's appraisal of proportionality.
37. Mr Bolton has filed a respondent's notice by which he seeks to uphold the judge's ceiling by reference to arguments not referred to by the judge.
38. Mr Bolton, who has appeared, as he did before the judge, in person before us and who has addressed us with great clarity and civility, complains, first of all, that the hire purchase company failed to comply with the majority of the interlocutory directions which had been made in the proceedings. The only clear example of this alleged default is its failure to serve its expert's report and statements from its witnesses of fact and to give disclosure within various dates prior to 22 December 1999 which had been set in an order dated 14 October 1999. That related to the period prior to the issue of the Part 20 proceedings; and it must not be forgotten that the hire purchase company had no internal knowledge of the matters raised in the counterclaim. Indeed it is clear that during the period of that delay it was making what may now be seen to have been a very reasonable offer to settle the proceedings prior to any significant proliferation of costs. In my view it cannot be said that its failure to meet those deadlines had any significant impact on the development of the litigation.
39. Mr Bolton's other arguments are that, in seeking at a hearing in February 2000 to obtain permission to issue its Part 20 proceedings against the dealers, the hire purchase company misrepresented part of the procedural history to the district judge and that, having secured such permission, it failed by some three weeks to issue the proceedings within the time which he set. These might have been regarded as insubstantial points, not related to the proliferation of costs, had it not been for a suggestion by Mr Bolton, hotly disputed by the hire purchase company, that the misrepresentation, if such it was, was deliberate and that its failure to issue within the time set, which is far from established to my satisfaction, was sought to be masked by a fax document which the hire purchase company forged. These two suggestions of serious forensic misconduct were articulated by Mr Bolton before the judge. Had they been established to his satisfaction, they would, I have no doubt, have figured in his judgment and probably have been reflected to some extent in his award. In my view it is impossible for this court to proceed on the footing of the accuracy of those suggestions.
40. I therefore propose that this appeal be allowed and that the provision which imposed the ceiling of £15,000 upon Mr Bolton's liability for costs be set aside.
41. It remains for me only to add a footnote arising from the fact, of which Miss Bailey told us this morning, that a detailed assessment of the costs of the dealers was purported to be conducted by a district judge on 2 November 2001. The purported assessment has resulted in a certificate that the hire purchase company is obliged to pay the dealers' costs in a sum of about £17,000.
42. The assessment seems to me to be both curious and unfortunate.
43. It is curious because, as Miss Bailey assures us, it does not purport to include the liability of the dealers for the costs of the distributors, which of course fall, under the order of the circuit judge, to be included in the sum payable to the dealers by the hire purchase company. In other words the district judge was presumably addressing a bill in a total analogous to the estimate of £24,000 placed by the dealers before the circuit judge; and the effect of his assessment was apparently to reduce that bill by about £7,000. This court is not in a position to comment upon whether such a reduction properly reflects the exercise which fell to be undertaken by the district judge, particularly with regard to proportionality.
44. The assessment is also unfortunate because Mr Bolton tells us that he was given no notice of it; and that the bill of costs which was the foundation of it was never served upon him. It would have been clear to the district judge, from perusal of the circuit judge's order, that in principle the ultimate payer of all the costs was Mr Bolton. So, whether or not he was aware that the ceiling imposed by the circuit judge was under appeal, the district judge should, in my view, have ordered that Mr Bolton be treated as a "relevant person" within rule 47.6(2) and section 32.10(1)(c) of the practice direction supplementary to it. As such a person, he should have been served by the dealers with notice of commencement and with their bill and, in the event of his serving points of dispute, he should have been given notice of the assessment hearing.
45. I also consider that it would have been far preferable for the district judge to consider the matters of proportionality and of reasonableness in a contemporaneous assessment of all sets of costs of the three successful parties. It is unclear why, for example, the costs of the distributors have not been the subject of assessment. It goes without saying that, if such is to be explained by reference to some agreement as to the amount of their costs reached with the dealers and with the hire purchase company, Mr Bolton, who has not been party to it, would still in any event be entitled to the protection of a detailed assessment.
46. In the above circumstances, and on the basis that the asserted absence of service on Mr Bolton is true, I would expect the circuit judge to be receptive to an application by Mr Bolton for permission to appeal against the assessment and for an extension of time for doing so.
47. LORD JUSTICE RIX: I agree. The judge, by his order for costs, in the knowledge that some £50,000 had been estimated as incurred in costs by the hire purchase company, the dealer and the distributor, permitted full recovery by the dealer and the distributor, for whose costs the hire purchase company would become liable, but prevented the hire purchase company from recovering any more than a maximum of £15,000 against Mr Bolton.
48. Whatever justice this may have done to Mr Bolton, it was a prima facie injustice to the hire purchase company as between it and the dealer and the distributor, unless perchance the judge had been able to conclude that, and had articulated reasons why, the litigation had been conducted in such a way as to justify such a prima facie anomaly. But he articulated no reasons to explain this anomaly.
49. In making such an order for costs, CPR Part 44.3(4) requires the judge ("must have regard to") all circumstances, including the conduct of all the parties and any admissible offer to settle made by a party which is drawn to the court's attention.
50. However, the judge, in that part at the end of his judgment on costs in which he imposed the £15,000 ceiling, made no criticism of the hire purchase company's conduct, nor did he take into account Mr Bolton's threefold refusal to accept a drop hands offer made to him at an early stage by the hire purchase company. Nor did the judge have regard to the facts (a) that the hire purchase company's estimate of costs was substantially less than the estimate of either the dealer or the distributor, and (b) that, on the merits of Mr Bolton's counterclaim, the hire purchase company was merely piggy in the middle and that the real dispute involved the dealer and the distributor.
51. In these circumstances the judge failed, in my judgment, to take into account all that he was required to take into account, and arrived at an order for costs which was wholly unreasonable and unjust as against the hire purchase company.
52. For these reasons, in addition to those given by my Lord, I would allow this appeal and remove the £15,000 ceiling contained in the judge's order.
53. The question of proportionality, as well as that of the reasonableness of the costs claimed, all rolled up as they are into the hire purchase company's costs, must, in the event, be resolved at the assessment stage. In that connection I hope that the assessment of the dealer's costs will prove to be no ultimate impediment to a fair and just resolution of the ultimate assessment of all the parties' costs which Mr Bolton will have to pay.
54. LORD JUSTICE WALLER: I also agree that, having allowed for the recovery of costs up the chain, as the judge had done, without any cap on any individual claim, it was wholly wrong to cap the recovery of the hire purchase company so far as Mr Bolton was concerned, and I agree with the reasons given by both my Lords for that result.
55. I would just add, however, a word on an aspect which has concerned me and which relates to the footnote to the judgment of my Lord, Mr Justice Wilson.
56. Where litigation has involved a chain of Part 20 parties, and where costs orders are made up a chain, with a final order being made incorporating all those costs against one party, two things seem to me to be obvious. First, when making an assessment of those costs, where questions of proportionality and reasonableness will arise, all such costs should be assessed together. Second, it seems to me to be obvious that the ultimate payer has the most interest in arguing questions of reasonableness or questions of proportionality.
57. Now, without the final costs certificate that we were shown this morning in relation to the dealer's costs, there would be no difficulty now in dealing with these costs in accordance with those obvious points. But what of this final cost certificate? Does it place any impediment? It seems to me that one might rely on Rule 3.1(7). That is a provision which says:

"A power of the court under these Rules to make an order includes a power to vary or revoke the order."

58. I cannot find referred to in the notes to the Civil Procedure Rules, a decision which I understand to exist of Mr Justice Neuberger's, which essentially says that you cannot construe that power as allowing any court at any time simply to reverse itself if it happens to change its mind. With respect I follow the logic of that decision, and I am not seeking to suggest that there is anything wrong with Mr Justice Neuberger's view.
59. But where, as in this case, one has a situation where one party was not present when the assessment took place, and was indeed, as I have sought to suggest, the party with the most interest in being entitled to argue about proportionality and reasonableness, it seems to me possible that Rule 3.1(7) could be invoked. I would suggest indeed that the parties should be sensible, and see the logic that Mr Bolton should have been present, and should go, by agreement, before the District Judge to set aside that final certificate.
60. If the parties cannot agree, or if the District Judge cannot be persuaded to use that power, then I agree with my Lord, Mr Justice Wilson, that the only other course is for there to be an appeal from that Order. Again I would hope that a Circuit Judge would give permission to appeal, even if it is out of time, having regard to the fact that Mr Bolton only heard of the existence of that final costs order today when the matter was produced before us.
61. The position then should be that the costs judge should be able to consider all the bills of the distributor, the dealer and the hire purchase company together, and should be able to consider questions of proportionality and reasonableness, and should, in particular, be able to consider whether it was really right that three lots of lawyers were necessary to be present to fight this case against Mr Bolton.
62. I perhaps I should add one footnote to this footnote, which is that, of course, as the judge was concerned about the enormity of costs that were incurred in relation to a very small claim, I, too, am concerned that by inviting a further process of assessment of costs, one is inviting a further incurring of costs in relation to the assessment of costs in relation to the fighting of a very small claim. Maybe the only answer to that is for the parties to consider the questions of proportionality and reasonableness for themselves, and consider whether it is not possible to reach some form of agreement in relation to costs so that those further costs are not incurred.
63. That, I should say, would only be possible if Mr Bolton sees, as I suggest he should see, that if he had accepted a Part 36 offer now many months ago, all these costs could have been saved, and we would not be here today. Thus he would have to accept that a considerable proportion of the costs must be borne by him.
ORDER: Appeal allowed with costs assessed in the sum of £3,000.