England and Wales High Court (Senior Courts Costs Office) Decisions

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Cite as: [2004] EWHC 90017 (Costs)

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		BAILII Citation Number: [2004] EWHC 90017 (Costs)
		SCCO Ref: 0400230

IN THE HIGH COURT OF JUSTICE
SUPREME COURT COSTS OFFICE

Clifford's Inn, Fetter Lane
London, EC4A 1DQ

19 July 2004

B e f o r e :

MASTER O'HARE, COSTS JUDGE
____________________

Between:

	Kareem Abu
	- and -
	Mgn Limited

____________________

Alexander Hutton (instructed by M Law) for the Claimant
Simon P. Browne (instructed by Davenport Lyons) for the Defendant
Hearing date : 28 April 2004
____________________

HTML VERSION OF JUDGMENT
____________________

Master O'Hare

The bill now before me sets out the Claimant's costs of the libel claim he brought against the Defendant. The claim related to an article published in the Sunday People on 1 April 2001 which was entitled "Lennox Lewis girl is 'beaten up by his minder'". The article stated that the Claimant had been arrested in connection with allegations that he had assaulted a female whom he had arranged to meet in a restaurant. Although the Claimant had been arrested and interviewed by the police, the police did not later bring charges against him. Although I must set out many details of the progress of this claim, it is appropriate to state at this point that, ultimately, the Defendant accepted that the Claimant had not assaulted the woman in question, and it apologised for any suggestion to the contrary and agreed to pay damages of £5,000 plus costs.

Although the article was published on 1 April 2001 it referred to events which had occurred many days previously. Indeed, on 23 March 2001 the Claimant's solicitors wrote to the legal department of the newspaper stating that aspects of an article their journalist had discussed with them were untrue. On 2 April 2001, immediately after an article had been published, the solicitors wrote again, this time demanding a correction, an apology, an undertaking not to republish and payment of the Claimant's costs. That letter did not claim damages. In his reply to that letter dated 5 April 2001, a solicitor acting for the newspaper refused to publish any correction or apology, or to give any undertaking or to pay costs. Instead, the solicitor stated a willingness to accept service should proceedings be commenced.

Proceedings did not immediately commence because of continuing police investigations. The Claimant's solicitors allege that those investigations were caused as a result of the publicity given to the matter by the newspaper article. On 31 October 2001, after the police investigations had been resolved, the Claimant's solicitors issued a claim form seeking damages ("more than £15,000") plus an injunction to restrain republication. Although the time for service of a defence was extended by agreement, the Defendant did not ultimately serve a defence. Instead, on 8 January 2002, the Defendant offered to deal with the matter by way of an unqualified "offer of amends" pursuant to Section 2 of the Defamation Act 1996. The Defendant also supplied details of the offer of amends which were set out in a separate letter of the same date. Those terms indicated that the Defendant was willing to publish a correction only, together with an undertaking not to republish. Although the Defendant accepted that the allegation of assault was wrong it still felt that the Claimant had some culpability in the matter and therefore did not offer an apology and refused to offer damages or costs.

By letters dated 1 February 2002 the Claimant's solicitors proposed terms of settlement including an apology (the text of which was enclosed) plus the payment of £20,000 plus costs. The open letter sent that day (which did not specify the amount of compensation sought) stated as follows:

"We enclose an Apology which our client would be prepared to see published, albeit that we assert that this will have very limited if any value given the time which has elapsed and ask your client to make proper proposals to compensate our client for the very serious libel which your client published last year."

The Defendant's solicitor's reply (dated 26 February 2002) conceded the Claimant's entitlement to "some costs in relation to this complaint although our clients reserve their position on the quantum thereof" but challenged the wording of the apology proposed and stated:

"We appear to be so far apart on the actual term that it would be sensible to have the matter listed for hearing – we estimate that it will take about 1½ days."

On 28 February 2002, two days after that response, the Defendant's solicitors gave notice of a payment into court of £5,000 in settlement of the whole of the claim.

The Claimant did not accept the payment into court. Instead, on 19 March 2002 the Claimant's solicitors sent two further letters to the Defendant's solicitors. The first was an open letter, in reply to the Defendant's letter of 26 February 2002. It demanded an apology (in respect of which an amended form of words was enclosed) payment of £15,000 by way of compensation and payment of costs. The second letter, sent without prejudice save as to costs, was in the same terms save the compensation sought was reduced to £10,000. As the Defendant did not accept either offer the matter proceeded to a hearing at which the court would determine whether an apology was appropriate, and what if any order for compensation and/or costs should be made. Section 3 of the Defamation Act 1996 provides that the sufficiency of an apology may reduce or increase the amount of compensation payable.

On 1 May 2002 the Claimants took out an application for an order "that the Defendant be ordered to pay damages and costs to be determined by the court" which was listed for hearing before Mr Justice Eady in October 2002. Although that hearing was to be for directions only it was nevertheless treated with great importance by both sides. Provision was made as to the service of the evidence which would be relied on at the final hearing and each side instructed leading counsel (no doubt the same counsel they intended to instruct at the final hearing). The final hearing was intended to take place only a few weeks after the directions hearing. At the directions hearing both sides invited the court to give guidance about the offer of amends procedure generally, and to give directions as to the admissibility of certain parts of the evidence which each side wanted to rely on.

In early October 2002 the Defendant offered (for the first time) an apology together with damages of £2,500. Both the wording of the apology and the amount offered were unacceptable to the Claimant. On 25 October 2002, just a few days before the directions hearing, the Defendant made a Part 36 offer based upon an amended form of apology and an offer of £5,000 plus costs. The matter remained contested. In the Defendant's skeleton argument for the directions hearing the Defendant finally conceded that certain passages in witness statements it had previously relied on as showing the Claimant's involvement in the assault would not now be relied upon.

In his judgment, which was later reported, Eady J ruled in favour of the Defendant on two matters which they wished to rely on in mitigation of damages but also stated that: "those factors are not going to loom large". The learned Judge also ruled in favour of the Defendant on evidence the Claimant wished to raise concerning the impact the libel had had upon the feelings of members of his family. As the final paragraph of the judgment records, the learned Judge also indicated his then thoughts as to the appropriate range of damages. Although the judgment does not mention the figures suggested, it was accepted before me that the figure Eady J had in mind fell between the open offers the parties had made; £2,500 and £15,000. Some days after the judgment was given the Claimant's solicitors wrote to accept the Part 36 offer made on 25 October and, after a few more days those terms were agreed by both sides.

The agreed apology was published in the Sunday People on 1 December 2002. However, the parties have not been able to agree the Claimant's costs.

PROCEEDINGS IN THE SCCO

The Claimant's Notice of Commencement was served in August 2003. A file was opened in this office in January 2004 and assigned to Mr Lambert, the Principal Costs Officer. Because of the complexity and length of the arguments set out in the Points of Dispute and Replies thereto Mr Lambert reassigned the case to me and it was listed for hearing in March 2004. On the application of the Claimant, which was not objected to by the Defendant, the matter was re-listed for 28 April 2004, on that day both parties appeared by counsel. In the first hour I heard argument upon and gave a ruling rejecting the Defendant's first point of dispute which concerned an alleged breach of the indemnity principle. Over the rest of the day, ie just under four hours, I heard argument on the issue of proportionality. The costs claimed in the bill amount to £57,651.50 profit costs and £21,312.50 counsel's fees and other disbursements. The total sum is £78,964; there is no claim for VAT.

Both parties relied upon the well known decision of the Court of Appeal in Home Office v Lownds [2002] 1 WLR 2450; in a case where proportionality is likely to be an issue, the court assessing costs must undertake a two stage approach. First, it must consider the totality of the costs claimed in comparison with the benefit gained by the proceedings. If the costs as a whole are not disproportionate according to that test then the assessment should proceed in the usual way, ie a consideration of the reasonableness of each item. If, on the other hand, the total costs appear disproportionate, the court must then proceed to assess them, item by item, applying a dual test of both necessity and reasonableness. In considering the question of proportionality the Costs Judge should have regard to whether the appropriate level of fee earner or counsel has been deployed, whether offers to settle have been made, whether unnecessary experts have been instructed and the other matters set out in CPR 44.5(3) which are as follows:

"(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 the work or any part of it was done."

The Defendant's main complaint on proportionality is that the Claimant never made clear to them the importance of an apology until October 2002 (see the Defendant's solicitor's letter dated 25 October 2002). The Defendant places reliance on the Claimant's solicitor's letter dated 1 February 2002 which stated that an apology "will have very limited, if any, value". The Defendant says that the only substantial difference between the offer of compromise available on or after 28 February 2002 and the compromise terms actually agreed are the words of apology included in the correction. In its submission the true cause of continued litigation for a further nine months was the Claimant's ultimately unsuccessful claim for a larger award of damages. Had he accepted the £5,000 paid into court he would have been entitled to make a statement in open court in order to vindicate his reputation. Continuing to run this action in pursuance of a larger sum of damages was disproportionate to the value of the subject matter involved.

Mr Browne, Counsel for the Defendant, also submitted that the real reason the Claimant accepted the October 2002 offer was the realisation that Mr Justice Eady was unlikely to award the amount of damages the Claimant was unreasonably seeking.

Mr Hutton, Counsel for the Claimant, submitted that, at all times the giving of an apology was important. In the letter before claim the Claimant had sought only an apology and costs, not damages. The action proceeded as long as it did because the Defendant never offered an apology on any terms until early October 2002 and did not offer an apology in acceptable terms until just before the directions hearing.

Although, for the purposes of argument, Mr Hutton conceded that the total costs claimed seemed high, he submitted that the reason why it is so high relates directly to the conduct of the Defendant. In his submission the Claimant acted reasonably throughout. He had settled the action within one month of the Defendant offering an acceptable apology. The Claimant does not accept that the making of a statement in open court would have given him the clear vindication he was entitled to.

Mr Hutton challenged the assertion that the Claimant accepted the Part 36 offer made before the directions hearing only because Mr Justice Eady had given an adverse indication of the damages likely to be awarded. In his submission the Claimant had been entitled to postpone consideration of the offer made on 25 October until after the directions hearing on 31 October. That offer was accepted within 21 days of its being made. The true cause of the large costs now complained of was therefore the conduct of the Defendant. It had been warned not to publish untrue accounts. It refused to admit error until January 2002. Although pressed to make an apology it refused to do so until October 2002, Although, from January 2002, the Defendant conceded that the article was incorrect, it continued to maintain that the Claimant was in some way culpable or at the very least had condoned the incident from which the libel arose. Even after the final version of the apology was offered on 25 October 2002 the Defendant did not withdraw some allegations of culpability against the Claimant until the service of the skeleton argument dated 29 October 2002.

MY DECISION

I find no merit at all in the Defendant's submission that, had the payment into court been accepted, the making of a statement in open court would have provided a sufficient vindication of the Claimant's reputation. The offer of amends procedure entitles a claimant to receive either a sufficient apology or increased compensation. Assuming, for the purposes of argument, that the terms ultimately agreed accurately represent the value of this claim (apology plus £5,000) the Claimant has substantially beaten the terms offered to him in February 2002.

Nor am I persuaded that the Claimant continued this litigation simply to get more damages. Compensation was not sought initially. The fact that the Claimant sought more compensation than he ultimately accepted is not material. I infer that the various claims made, £20,000, £15,000 and £10,000 were all made for tactical reasons only whilst seeking to negotiate a compromise. Experienced negotiators will often keep some bargaining counters in their hands in order to give themselves something they can concede later. The difference between the damages sought, the damages indicated by the Judge and the damages ultimately agreed are in no way significant. Indeed, both sides knew, when instructing leading counsel for the directions hearing, that the costs of that hearing were likely to outstrip any possible award of damages. Nor do I think the Defendant would have conceded an acceptable apology at an earlier stage had the Claimant not pressed for damages of £10,000 or more. In my judgment the delay in settlement in this case was caused by the persistent reluctance of the Defendant to make any offer of apology until October 2002. Mr Hutton is right to say that when an acceptable apology was offered the case settled swiftly thereafter. I do not accept that the Claimant or his solicitors pursued this litigation solely or primarily to obtain an unreasonable amount of damages or a disproportionate amount of costs.

In all the circumstances, I do not accept that the costs claimed in this case are disproportionate to the benefit gained by the litigation. Despite the making of an offer of amends this case was heavily and aggressively fought by the Defendant throughout. By continuing to advance a case relying upon evidence as to the Claimant's culpability, the offer of amends did not in fact lead to any saving of costs. Instead, it compelled both parties to embark upon a complex and uncertain procedure which has proved to be just as expensive as fully fought libel proceedings. Having regard to the amount of work which had to be done on behalf of this client (taking instructions, instructing junior counsel, advising, negotiating, reporting to client, investigating facts, proofing witnesses and briefing leading and junior counsel) the total costs claimed do not appear disproportionate.

I would like to quote some passages from the judgment of Mr Justice Eady in this case:

"21. What has emerged clearly from this case is that the "offer of amends" procedure is by no means always going to lead to speedy and cheap resolution in an ordinary sense. On the other hand, where it is adopted, it should generally be speedier than the traditional process of jury trial …
22. This form of procedure is not to be confused with summary disposal under ss.8-10 of the 1996 Act. There is no artificial cap on the level of compensation in cases being assessed under s.3 comparable to that provided for s.9 (1)(c). Even very serious allegations may fall to be dealt with under this regime, but the claimant has in practical terms been deprived by the legislature of jury trial, once an offer has been made under s.2 (save where he can prove bad faith). There should thus be nothing in any sense "rough and ready" about the assessment of a claimant's reputation under the offer of amends procedure. It would clearly be inappropriate to deprive either party of a proper analysis of his case. Naturally, due regard to case management considerations will generally ensure that time and money is not wasted, but proportionality does not always mean that corners need to be cut. In the case of grave allegations, where the defendant has recognised that he has made a serious error, it may be that justice requires that significant time and money be spent in arriving at the right answer.

23. I have no reason to suppose, however, that this will be appropriate in the present case to which I now turn …

25. I decided to allow a day for the hearing but the facts fall within a very narrow compass, and I anticipate that it need in fact take no more than 2 hours or so. In a case of this kind, there is no need to spend time editing statements at a pre-trial review or case management conference. A Judge sitting alone can deal with any objection at the hearing and will focus on the essentials, excluding any irrelevant or prejudicial material …"

I respectfully adopt the Judge's comment that proportionality does not always mean that corners need to be cut (para 22). Although the learned Judge had no reason to suppose that significant time and money would have to be spent (paras 22 and 23) my examination of the details of this case indicate that it was reasonable for the Claimant to spend significant time and money. The learned Judge felt that the final hearing would take no more than 2 hours or so (para 25). There is of course no suggestion in that passage or elsewhere that cases which can be quickly dealt with in court can also be quickly or cheaply prepared. Paragraph 11.3 of the Costs Practice Direction states as follows:

"Where a trial takes place, the time taken by the court in dealing with a particular issue may not be an accurate guide to the amount of time properly spent by the legal or other representatives in preparation for the trial of that issue."

My provisional view is that permission to appeal against this decision should not be given and I should hear argument as to the costs of the hearing in April when the detailed assessment is finally concluded. It is open to the parties to make submissions upon these points when this judgment is formally delivered.