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England and Wales High Court (Senior Courts Costs Office) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Senior Courts Costs Office) Decisions >> Tee-Hillman v Heppenstalls (A Firm) [2004] EWHC 90024 (Costs) (23 March 2004)
URL: http://www.bailii.org/ew/cases/EWHC/Costs/2004/90024.html
Cite as: [2004] EWHC 90024 (Costs)
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This summary of a judgment has been obtained from the Supreme Court Costs Office pages on the HM Courts Service web site. The citation used by BAILII is not an officially approved citation. The full text of the judgment may have an official Neutral Citation issued by the court, and may be available elsewhere on BAILII.
No.7 of 2004
Tee-Hillman v Heppenstalls (A Firm)
23 March 2004
Mr Justice Newman (Sitting with Assessors)
The Claimant and her then partner Mr Tee had instructed the Defendant firm to act for them in the purchase of a property known as Bison Lodge. The purchase (and mortgage) of Bison Lodge was completed in about 1972 in the sole name of the Claimant.
In 1986 the Claimant and Mr Tee (to whom she was by then married) instructed the Defendant firm to act in connection with the purchase in their joint names of a property known as Gorse Meadow.
The Claimant contended that she instructed the Defendants at the same time to act for her in the sale of Bison Lodge. The net proceeds of sale were used to buy Gorse Meadow and the balance of the money needed to make up the purchase price (and improvements to the property) was provided by Mr Tee from a lump sum which he received on the commutation of his pension.
The partner in the Defendant firm who had acted in the transactions died in 1993 and it appeared that the file and ledger card had been destroyed.
Some time after the purchase of Gorse Meadow the Claimant and Mr Tee were divorced and the Claimant remarried. She alleged that the Defendants had been negligent in failing to advise her of a potential conflict of interest between herself and Mr Tee which had resulted in his acquiring a greater share in Gorse Meadow than he should have had.
The Claimant issued proceedings for negligence against the Defendants in the Southampton District Registry of the High Court on 31 August 1999.
On 9 March 2000 the Defendants gave an estimate of their costs incurred and to be incurred which was included with their Allocation Questionnaire. The estimate totalled £24,622.08. On 30 June 2000 the Defendants served their Listing Questionnaire but they did not provide a further estimate of costs.
On 5 July 2000 the Claimant served an application asking for permission to amend her Particulars of Claim. On 18 August 2000 there was an order granting her permission to amend with consequential directions orders.
On 16 December 2000 the matter was, on the joint application of the parties, transferred to the Royal Courts of Justice in London.
On 26 June 2001, following a six day trial, His Honour Judge Bradbury (sitting as a Judge of the High Court) handed down his judgment finding that the Defendants had not been negligent and that the claim was in any event statute barred. He ordered the Claimant to pay the Defendant’s costs and he ordered her to pay £25,000 on account of those costs.
The Claimant then applied to the trial Judge for a review of his judgment. The Claimant withdrew that application and was ordered to pay the Defendant’s costs by a further order dated 23 July 2001.
The Defendant’s bill claimed a total of £87,650.26 inclusive of disbursements and VAT. The bill was assessed by the Deputy Costs Judge on 22 May 2003 in the sum of £79,143.32.
The Claimant sought permission to appeal. Permission to appeal was refused on the papers by Mr Justice MacKay on 21 August 2003. However permission to appeal was given on 21 October 2003 by Mr Justice Poole following an oral hearing.
Permission to appeal was given on two grounds. The first was that the Defendants had estimated their costs at £24,622.08 on 9 March 2000 and that, contrary to the Costs Practice Directions, the Defendants did not file or serve any other estimate of base costs with the Listing Questionnaire on 3 July 2000 or later.
This ground of appeal goes on to say:
"The costs subsequently claimed were £87,650.26. Accepting the costs estimate of 9 March 2000 related to a three day trial against the six days actually spent and did not include the cost of preparing the brief to counsel the Claimant contended the considerable discrepancy between the costs estimate available and the final costs were disproportionate and unreasonable and account should be taken of the overriding objectives and Section 6.6 of the supplemental costs practice directions and the decision in Anthony v Ellis & Fairburn heard before Sir Oliver Popplewell sitting with assessors on 12 May 2000. It is submitted the learned Deputy Costs Master erred in concluding that the decision of Anthony v Ellis & Fairburn did not apply as it related to a solicitor and client costs not inter party costs. Further it is respectfully submitted the learned Deputy Costs Master erred in not taking sufficient account of the overriding objectives and the said Section 6.6 in deciding not to accept the Claimant’s submissions."
At the hearing of the appeal the Claimant was represented by counsel Mr Mallalieu. He said that the main ground for the appeal was in respect of the Defendants’ failure to provide a proper estimate of their costs and that only if that ground for appeal were found to be successful would the second ground (which relates to the consequences of that failure) become relevant.
Mr Mallalieu submitted that the Costs Judge had not given sufficient consideration to the reliance which the Claimant put upon the costs estimate which had been given in March 2000 and had not given sufficient consideration to the disparity between that estimate and the bill which was ultimately served. He accepted that the Claimant had substantially changed her case but nevertheless the Costs Judge had not, he submitted, borne the estimate which had been given in mind when assessing the reasonableness of the individual items in the bill.
Mr Mallalieu referred to the judgment of the Court of Appeal in Leigh v Michelin Tyre Plc [2003] EWCA Civ 1766 which had been handed down on 17 November 2003. He accepted that the court had not made any management decisions in reliance on the costs estimate given in March 2000. However he contended that the Costs Judge should have taken the discrepancy into account when carrying out his detailed assessment. He submitted that there had been an obligation on the Defendants to provide a further costs estimate when filing their Listing Questionnaire on 3 July 2000 because Section 6 of the Costs Practice Direction required them to do so. He pointed out that the requirements of Section 6 coincidentally came into force on 3 July 2000.
Mr Mallalieu accepted in broad terms the figures which the Defendants’ counsel Mr Bacon had put forward in his skeleton argument to demonstrate the extra costs which the Defendants had incurred as a result of the amendments made to the Particulars of Claim. These (which included the fact that the trial took six days as opposed to the three days which was anticipated when the estimate was given and the instruction of a junior counsel in addition to leading counsel) had, according to Mr Bacon’s calculations, amounted to some £48,000.
He also accepted that it would be reasonable, when considering the estimate, to allow for a 15% variation either way to reflect the fact that it is only an estimate.
Mr Mallalieu submitted that nevertheless (even if the extra £48,000 is to be taken out of account) there was a discrepancy between the estimate (give or take 15%) and the figure of £40,000 (which is the bill of £88,000 less the extra £48,000). He submitted that the Costs Judge should have given consideration to that discrepancy.
Finally Mr Mallalieu submitted that the Defendants estimate was too low in any event because the contract for the purchase of Gorse Meadow which had been produced by them on 12 February 2000 had led to the amendment of the Particulars of Claim which had increased the costs. He submitted that the Defendants, when preparing their estimate in March 2000, should have anticipated this and included those extra costs. Alternatively he submitted that when the Particulars of Claim were amended, the Defendants should have updated their costs estimate.
Mr Bacon submitted in reply that (as disclosed in the transcript of the hearing before the Costs Judge on 22 May 2003) the Costs Judge had been addressed on the subject of the estimate and the dramatic increase in costs which resulted from the subsequent change in the Claimant’s case. He submitted that the estimate (when increased by 15%) amounted to some £28,000 and that the eventual costs (as claimed in the bill discounted by the £48,000 of additional costs brought about by the amendment in the claim) amounted to £40,000. This was a discrepancy of £12,000. This, he submitted, was a reasonable discrepancy which could be regarded as having been reduced further by the disallowances made by the Costs Judge in the course of the assessment.
Mr Bacon said that there had been no obligation on the Defendant to revise their costs estimate after the Claimant had amended her claim. The court could have required the Defendant to update the costs estimate but it did not do so.
The learned Judge said that the Claimant’s essential submissions were that the Costs Judge had fallen into error in that he had not given sufficient weight to the disparity between the estimate and the final claim for costs; he had not given sufficient weight to the Claimant’s reliance on the estimate; and that he had not given sufficient weight to the estimate when dealing with the individual items in the bill.
He referred to the decision of the Court of Appeal in Leigh and particularly to paragraphs 26-29 of Lord Justice Dyson’s judgment. He pointed particularly to paragraph 29 which says:
"29. In our view, para 6.6 of the Practice Direction gives the court power to take matters such as these into account in deciding whether, and if so how far, to reflect them in determining what costs it is reasonable to order the paying party to pay on an assessment. We do not, however, consider that it would be a correct use of the power conferred by para 6.6 to hold a party to his estimate simply in order to penalise him for providing an inadequate estimate. Thus, if (a) the paying party did not rely on the estimate in any way, (b) the court concludes that, even if the estimate had been close to the figure ultimately claimed, its case management directions would not have been affected, and (c) the costs claimed are otherwise reasonable and proportionate, then in our view it would be wrong to reduce the costs claimed simply because they exceed the amount of the estimate. That would be tantamount to treating a costs estimate as a costs cap, in circumstances where the estimate does not purport to be a cap."
Having referred to the transcript of the hearing before the Costs Judge on 22 May 2003 and to the fact that both parties were there represented and to the acceptance by the parties that some £48,000 of costs had been incurred as a result of the amendment to the claim in July/August 2000, he concluded that the Claimant could not possibly have relied on the estimate. He noted that the Claimant’s husband (who had assisted her substantially in the proceedings) had been a solicitor before his retirement and that the Claimant herself was a businesswoman.
He said that there was an element of unreality about the submission that the Master should nevertheless have had regard to the discrepancy between the estimate of £25,000 (which, as an estimate, could be uplifted by 15%) and £40,000 (the costs as claimed after deduction of the extra costs of £48,000 incurred as a result of the amendment). The resultant figure was £12,000. The Costs Judge had not been asked to consider that submission at all. The Costs Judge had been asked to consider the disparity between £25,000 (the estimate) and £88,000 (the final bill). It was impossible for the court now to deal with the disparity between the estimate and the £40,000. But the learned Judge did not in any case consider that that disparity called for any explanation.
With regard to the submission that the Costs Judge had failed to relate the estimate to the individual items, the learned Judge concluded that the Costs Judge had been asked to consider whether the items were proportionate and reasonable and that he had been correct to approach the items in that way.
With regard to the submission that the Costs Judge should have had regard to the disclosure in February 2000 of the contract for the purchase of Gorse Meadow and should have taken into account the changes in the claim which would be made by the Claimant as a result, the learned Judge concluded that it could not be right that the Defendants were under an obligation to prepare their estimate on the assumption that the Claimant would amend her claim to take points about that contract. This was particularly so where those points ultimately failed.
With regard to the submission that paragraph 6 of the Costs Practice Direction imposed a liability upon the Defendant to provide a costs estimate with the Listing Questionnaire and a general obligation to provide further costs estimates when costs increased, the learned Judge referred to paragraph 6.
He said that neither party had provided a costs estimate with the Listing Questionnaire but that was before the Claimant had made her application to amend her case when the whole case changed. He said that there was no obligation in the Rules and Practice Directions requiring the parties to provide costs estimates at times other than those described in paragraph 6 of the Costs Practice Direction.
Paragraph 6.3 provided that the court could at any stage order any party (other than a litigant in person) to file and serve an estimate of base costs. The court had not done so in this case.
Paragraph 6.4 further required parties (other than litigants in person) to file and serve an estimate of base costs when filing an allocation questionnaire and when filing a listing questionnaire.
Accordingly the Defendants had not committed a breach of the Costs Practice Direction by failing to file an updated costs estimate after the change in the Claimant’s claim and any updated costs estimate before that time would not have been of any relevance.
For those reasons he dismissed the appeal and ordered the Claimant to pay the Defendant’s costs which he summarily assessed.