BAILII [Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]

England and Wales Court of Appeal (Civil Division) Decisions


You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Drew v Whitbread [2010] EWCA Civ 53 (09 February 2010)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2010/53.html
Cite as: [2010] 2 Costs LR 213, [2010] WLR 1725, [2010] PIQR P11, [2010] EWCA Civ 53, [2010] 1 WLR 1725, [2010] CP Rep 22

[New search] [Context] [View without highlighting] [Printable RTF version] [Buy ICLR report: [2010] 1 WLR 1725] [Help]


Neutral Citation Number: [2010] EWCA Civ 53
Case No: A2/2009/0507

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM EXETER COUNTY COURT
His Honour Judge Leeming
District Judge Wainright
5TA01844

Royal Courts of Justice
Strand, London, WC2A 2LL
09/02/2010

B e f o r e :

LORD JUSTICE WALLER
Vice-President of the Court of Appeal, Civil Division
LORD JUSTICE HOOPER
and
LORD JUSTICE ETHERTON
Assisted by SENIOR COSTS JUDGE HURST

____________________

Between:
Drew
Appellant
- and -

Whitbread
Respondent

____________________

(Transcript of the Handed Down Judgment of
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No: 020 7404 1400, Fax No: 020 7404 1424
Official Shorthand Writers to the Court)

____________________

Dr Mark Friston and Craig Ralph (instructed by Messrs Harris Fowler) for the Appellant
Andrew Hogarth QC and Benjamin Williams (instructed by Wansboroughs Solicitors) for the Respondent
Hearing date : 1st December 2009

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    Lord Justice Waller :

  1. This is an appeal from a decision of His Honour Judge Leeming QC dated 27th January 2009 by which he upheld the decision of the regional costs judge, District Judge Wainwright, dated 8th January 2008. The point raised on the appeal is not dissimilar from the point raised in O'Beirne v Hudson, an appeal we heard argued immediately prior to this appeal and in which judgment is being handed down at the same time as this judgment. In both appeals we have sat with Senior Costs Judge Peter Hurst and we can say at the outset how grateful we are for his guidance on these appeals.
  2. In this case the judge, at the conclusion of the trial, ordered costs to be assessed on the standard basis. The District Judge ruled at the commencement of the assessment that she would be assessing the costs as if it had been allocated to the fast track. This gives rise to the main question raised on the appeal. An ancillary point relates to the fact that in ruling as she did she relied on a note of a ruling by the trial judge that recorded the trial judge as holding that the claimant had exaggerated his claim. A transcript obtained for the appeal to Judge Leeming showed that that was not an accurate record of what the trial judge had said.
  3. On the appeal to Judge Leeming it was argued first that the District Judge had no jurisdiction to rule that costs should be assessed as a fast track case; alternatively second that, if a party was to contend, in a case allocated to the multi-track, the case should in fact have been allocated to the fast track and contend that that fact was relevant to the assessment of costs, that point should be taken before the trial judge and, if not taken, the point was no longer open to be taken before the District Judge assessing costs. It was thirdly contended that the District Judge was misled by the inaccurate note of the trial Judge's ruling as to exaggeration. Judge Leeming upheld the ruling of the District Judge; ruled there was nothing preventing the point being taken before the District Judge assessing the costs, even though it had not been raised before the trial judge; and held that the inaccuracy of the note made no difference.
  4. The same points taken before Judge Leeming are now taken on this appeal.
  5. The facts in more detail

  6. On 1st September 2002 the claimant fell off a ladder in the course of his employment and was injured. In December 2005 he brought a claim for personal injury alleging negligence and breach of statutory duty. He pleaded that he had suffered injuries to the lower spine with on-going symptoms, and he pleaded that the financial value of his claim exceeded 15,000 and included a claim for personal injury in excess of 1000. He ultimately replaced his first schedule of special damages with a schedule delivered in July 2006 claiming past losses of 3,677.84 and future losses of 18,325, on the basis that he would need a cleaner to help as a result of his injuries, and he claimed a Smith v Manchester award.
  7. The defendants denied liability and alleged the claimant was negligent. They also delivered a counter schedule to the special damage claim asserting that the joint statement of medical experts agreed that the claimant would not have required any care and assistance as a result of the accident after three months and that thus that there was no claim for future losses.
  8. As between solicitors some thought was given to the question whether the claim should be allocated to the fast track or the multi-track. The defendants' solicitors were suggesting that the value of the claim was fast track but recognised that the claimant's schedule of special damage alone totalled 30,309.41. They, on that basis, consented to the claim being multi-track. [See allocation questionnaire page 3]. In October 2006 the District Judge, it seems, withdrew permission for the attendance of medical experts to give evidence at the trial and, by letter dated 16th October 2006 to the claimant's solicitors, the defendants' solicitors suggested that this might mean the trial could be completed in a day, (i.e. within the timescale for a fast track case), but the claimant's solicitors responded that their counsel still thought the case might well go into a second day. Liability, as well as damages, was of course very much in issue.
  9. The trial came on before Mr Recorder Hill-Smith and went into the second day. By his judgment the Recorder found that the defendants were liable but that the claimant was 25% responsible for his own injuries. On damages he found on the basis of the joint experts' report that the claimant's entitlement to help was for the period of three months and thus he recovered nothing for future losses put at 18,325 in his schedule. He did recover a Smith v Manchester award assessed at 5,000 prior to the deduction of 25%. The total damages, taking into account the 25% contributory negligence, were 9,291.56.
  10. The defendants had paid 6,000 into court under Part 36 and thus that payment in was exceeded by the award.
  11. Counsel for the defendant at that time, Miss Brown, first applied for permission to appeal the Smith v Manchester award and that was refused. She then raised points as to costs. She clearly had in mind the decision of Jack J in Aaron v Shelton [2004] EWHC 1162 [2004] 3 All E R 561, as can be seen from the fact that her first point was to rely on a failure on the part of the claimant to negotiate, despite increased offers by the defendant. The Recorder commented that it seemed to him that was a matter for assessment but Miss Brown's response was to assert "I have to raise these points in front of your honour; there is clear authority to that effect now." Aaron v Shelton would on one reading so suggest.
  12. Miss Brown identified three points she wished the Recorder to take into account in making his costs order referring to CPR 44.3 first a failure to negotiate; second that there was an exaggeration by the claimant of his claim; and third unreasonable conduct in relation to the agreement of the joint experts. It is unnecessary to spell out the argument which took place on these points. The Recorder ruled that he was not going to make any special order for costs. He ruled so far as failure to negotiate was concerned that it was up to the defendants to make their own assessment and make any Part 36 offer. He left the point on experts to the costs judge. He said this about exaggeration:-
  13. "Secondly, it is said that I should make a special order because Mr Drew exaggerated his claim in a number of respects. I am not going to make a special order in this respect. It is a fact that liability was strongly contested here throughout. Nevertheless, the defendants could have protected their position by conceding liability and making a written offer to concede contributory negligence, saying that there should be contributory negligence in X% they could have done that and protected their liability position. They did not do so. They contested liability throughout and that was the prime cost entailed in this litigation. Mr Drew did not succeed in the entirety of his care claim, that is completely true. He exceeded somewhat more than what was conceded by the defendants, but I really do not think it took much court time or cost to argue the point as to whether or not he should get it for three months or for some longer period. I really do not think any costs were associated with that. It is said that I accepted the defendants' figure for general damages, the range that I did. Well, so I did, but, nevertheless, that is just the cut and thrust of litigation, and the fact that the parties put forward different figures and I happened to select the defendants' figure, I think is no reason for me to make any special order as to costs. So, I do not find that Mr Drew's conduct of the case or the fact that he chose to fight certain issues is a reason for making other than the normal costs order."
  14. The order ultimately made was in the following form:-
  15. "1. There be judgment for the claimant in the sum of 9291.56.
    2. There be payment out forthwith to the Claimants solicitors of the monies in court in the sum of 6,000 Interest on the said sum in court to the 19 October 2006 be paid to the Defendants solicitors. Interest thereafter to the date of payment out be paid to the Claimants solicitors.
    3. Balance of 3291.56 to be paid within 21 days.
    4(a) The Defendant to pay the Claimants costs of the action to be assessed on the standard basis if not agreed.
    4(b) The Defendant has permission to raise on detailed assessment all issues relating to costs incurred in relation to the issue of quantum including in particular all costs relating to correspondence with and of the medical experts since the 4 August 2006.
    5. Permission to the Defendant to appeal on the issues of Smith v Manchester and costs refused."
  16. The bill of costs lodged by solicitors for the claimant was 78,458.65 including a 100% uplift reflecting a conditional fee arrangement. When the costs came to be assessed the paying party unsurprisingly raised as a first point "general proportionality" in their Points of Dispute. In that context the costs judge looked to see how the case came to be allocated to the multi-track. Submissions from those representing each side then made various points which I need not spell out in detail. In summary Mr Forsyth for the defendants submitted that the claimant had clearly exaggerated his claim and relied on a note of what the Recorder had said which inaccurately gave the impression that the Recorder had held that the claimant had exaggerated his claim. He relied in his submission, by way of example, on the fact that the claimant was claiming to his medical expert that he was off work for several months, when the reason he was off work for at least some of the period was that he had been dismissed. [See transcript page 28]. Ultimately he summarised his submission in this way "in those circumstances I would say the reason why this would have been perceived to be a larger claim is because of the claimant's misrepresentation about evidence about which he was subsequently found out, and I do not think it fair that the defendants should pay for all the increased costs when it is the claimant and his exaggeration that have substantially contributed to that".
  17. The response of Mr Allen for the claimant was to emphasise that the defendants fought liability, indeed "threw the book at liability" and to submit that it was not a case of dishonesty such as a video demonstrating a man doing things which he has said he cannot do, but more a case of a layman not fully understanding the procedures. He could not provide an accurate record of what the Recorder had found on exaggeration because before the District Judge all that was available was the inaccurate note of the Recorder's ruling.
  18. The District Judge's ruling was then as follows:-
  19. "It seems to me from those dates the allocation being dealt with on paper on 29th December and the defendants having to make an application on 10th March 2006 to see the claimant's medical reports that it should have been apparent by that stage, namely 10th March 2006, that this was a case that should have been pursued as a fast tracked case and, from that date, namely 10th March 2006, I will allow costs on the basis as if this matter were so pursued as a fast track trial."
  20. Mr Allen protested that the District Judge was actually reallocating a multi-track case to the fast track. The District Judge denied she was doing that but made clear that she was going to assess the costs of the trial as if the case had proceeded on the fast track and that was what she did, limiting counsel's fee to 500 and 250 for the attendance of a solicitor plus 46.03 for travel expenses those being the maximum for such trial costs assessed for a fast track case. [It was accepted that the 500 should have been 750 and nothing turns on that error]. The critical point made by Dr Friston, both before Judge Leeming and before us, is that the effect of the District Judge's order was to disallow lawyers' costs for the second day fast track trial costs being fixed on the basis that the trial would be a one-day trial. The District Judge assessed the costs prior to trial and ultimately the effect of her ruling was to award costs at 41,844.72 plus interest, that figure also containing a 100% uplift.
  21. Her ruling in relation to treating the trial costs as fast track was appealed with her permission to Judge Leeming. Before the judge the first submission was that the District Judge had, in effect, rescinded or overruled the order of the trial judge ordering costs to be assessed on the standard basis which she had no power to do. The judge recognised that the District Judge had no power to rescind the order of the trial judge but held that she had not done so, ruling as follows:-
  22. "In my judgment, the decision of the Cost Judge in this case, that she would proceed with the assessment as if the trial were on the fast track, does not amount to a purported abrogation of the award of costs by the trial judge; neither is it wholly inimical to it, although it may at first sight be somewhat surprising. In my judgment what the costs judge has professedly done was done by way of assessment, rather than any purported revision of the trial award and it was within the Costs Judge's powers. Accordingly I respectfully reject this first submission for the claimant appellant."
  23. The second point taken before the judge was that it was not open to the defendant to take the point that costs should be assessed by reference to the fast track and thus deny the claimant any costs for the second day of the trial, because counsel had not raised that point before the Recorder at the end of the trial. Reliance was placed on Jack J's decision in Aaron v Shelton. It is convenient to set out at this stage the particular paragraphs of that decision relied on:-
  24. "18. Mr Aaron submitted that, where a paying party wished to say that the conduct of his opponent was such that he should not receive all the costs he might otherwise be entitled to, the paying party had the opportunity to raise the matter of conduct either at the time when the order for costs was made or at the stage of assessment. He accepted that, if the paying party did raise it before the court making the order, for example, before a trial judge, and the judge decided not to make any special order on account of it, that was conclusive: but, he said, the paying party need not do so, he may keep silent and make his point on the assessment.
    19. If Mr Aaron's submission was correct, it would mean that, if a party who had lost an action wished to say, for example, that his opponent had wasted a day of the trial by an unnecessarily prolonged cross-examination of a witness, or has contested an issue unsuccessfully, he need not raise it before the trial judge as a matter to be reflected in the order for costs, but could do so before the costs judge on the assessment. The trial judge would, of course, have heard the cross-examination, or would have considered the issue, and would be able to decide the point quickly. In contrast the costs judge would have to instruct himself as to the relevant issues in the action and would then have to read the transcript. He would still not be in the same advantageous position as the trial judge. There is also the possibility that an unscrupulous litigant, knowing that the trial judge would give his point short shrift, might obtain a more favourable hearing from the less-informed costs judge. That might be the case here.
    20. In my judgment, where a party wishes to raise in relation to costs a matter concerning the conduct of his opposing party (either before the litigation or during it), it is his duty to raise it before the judge making the costs order where it is appropriate to do so. One situation where it will be appropriate is where the judge making the costs order is in a position to deal with the matter by reason of his involvement in the case. So I would hold that, where a party faces the making of an order that he pay the costs of an action because he is the 'unsuccessful party' as referred to in CPR 44.3(2), but he considers that he should not be liable to pay the whole of those costs and an order should be made exercising one or more of the court's powers in relation to costs set out in CPR 44.3(6), he should make an application to that effect to the judge who is considering what orders as to costs should be made, that is, the trial judge in the case of a trial. If he does not do so, it is not open to him when the costs come to be assessed to raise the same matter under CPR 44.5(3) as a ground for the reduction of the costs which he would otherwise have to pay. If he is uncertain whether a matter he wishes to raise fails within that category, he should raise the matter before the judge. The judge can then consider whether he should deal with it or specifically direct that it should be considered by the costs judge on assessment. Where a costs order is made by consent, the paying party can seek to include in the consent order a provision which takes account of the matter he wishes to raise by providing that he is not to pay the whole of the costs or which specifically refers the matter in question to the costs judge for determination. Otherwise a party who thinks he has achieved an order which will get him his costs subject to the reasonableness of the amount, may on the assessment face an argument intended to deprive him of what he justifiably thought he had obtained. Where the consent order is made during a trial and by it the paying party, if claimant, abandons his claim, or, if defendant, concedes the claim, the position is particularly clear. A paying party who does not protect himself in these ways, runs the risk that the costs judge will decide that the matter in question was one which it was appropriate to raise before the judge making the costs order, and which should not be raised before him, as happened here.
    21. The rationale is that it is an abuse of the court's process to raise an issue before the costs judge which was not but should have been raised before the judge making the order for payment of costs . . ."
  25. There were two parts to this second point. First the submission was that counsel for the defendants was bound to raise before the trial judge that the case should in fact have been allocated to the fast track and should have been completed in a day, if she was ever to be able to rely on the point at all. The point could not be raised before the costs judge for the first time. In the alternative it was asserted that counsel had raised points before the trial judge in order to obtain a special order as to costs and had obtained an order which left only certain points for the costs judge, and that in those circumstances the defendants should not be entitled to take any further point.
  26. Judge Leeming ruled that the costs judge was not precluded on the basis of "Henderson v Henderson or any other basis" from acting as she did "in exercising the powers that I have found she enjoyed. There is nothing in my assessment unjust in the costs judge dealing with the submission on the hearing before her that only fast track costs should be allowed."
  27. The judge also had to deal with the fact that the misleading note had been placed before the costs judge as to the view of the Recorder on exaggeration. His ruling was in the following terms:-
  28. "28. A misleading note (there was no transcript before the Costs Judge) of the trial judge's judgment on costs was unfortunately placed before her by the defendant's advocate at that hearing. The passage in the note reads "The claimant exaggerated his claim principally in seeking a substantial claim for domestic attendances which should probably have been limited to three months." That was wrong, but it was an innocent mistake. The claimant's claim was in truth considerably exaggerated in the sense that the amount claimed"
  29. I suspect there is nothing uncommon about the circumstances of this case, and in the result it raises points of some general interest. Where the trial judge has in a multi track case ordered costs to be paid on the standard basis, to what extent is a costs judge free to rule that the case was in reality a fast track case and assess trial costs on a fast track basis? Is this a matter which a paying party has to raise before the trial judge or be precluded from raising the point thereafter? In particular should a party obtain a ruling from the trial judge as to whether a case should have been disposed of within a day when in fact it was not? If the costs judge is free to consider whether a case should have been allocated to the fast track, how should he or she approach assessment thereafter; can he or she simply say I am going to assess the costs of trial as if it was a fast track case or is it simply something to be taken into account when assessing the costs?
  30. The starting point is the relevant provisions of the CPR Parts 26.5 and 26.6. Part 26.5 deals with allocation and 26.6 deals with the scope of the different tracks. Small claims are dealt with by CPR 26.6(1) to (3) and in essence relate to claims for less than 5,000. 26.6(4) (5) and (6) then provide for the fast track and multi track. Thus, CPR 26.5 and 26.6 are in the following terms:-
  31. Stay to allow for settlement of the case
    Allocation
    26.5
    (1) The court will allocate the claim to a track
    (a) when every defendant has filed an allocation questionnaire, or
    (b) when the period for filing the allocation questionnaires has expired,
    whichever is the sooner, unless it has
    (i) stayed the proceedings under rule 26.4; or
    (ii) dispensed with the need for allocation questionnaires.
    (Rules 12.7 and 14.8 provide for the court to allocate a claim to a track where the claimant obtains default judgment on request or judgment on admission for an amount to be decided by the court)
    (2) If the court has stayed the proceedings under rule 26.4, it will allocate the claim to a track at the end of the period of the stay.
    (3) Before deciding the track to which to allocate proceedings or deciding whether to give directions for an allocation hearing to be fixed, the court may order a party to provide further information about his case.
    (4) The court may hold an allocation hearing if it thinks it is necessary.
    (5) If a party fails to file an allocation questionnaire, the court may give any direction it considers appropriate.
    Scope of each track
    26.6
    (1) The small claims track is the normal track for
    (a) any claim for personal injuries where
    (i) the value of the claim is not more than 5,000; and
    (ii) the value of any claim for damages for personal injuries is not more than 1,000;
    (b) any claim which includes a claim by a tenant of residential premises against a landlord where
    (i) the tenant is seeking an order requiring the landlord to carry out repairs or other work to the premises (whether or not the tenant is also seeking some other remedy);
    (ii) the cost of the repairs or other work to the premises is estimated to be not more than 1,000; and
    (iii) the value of any other claim for damages is not more than 1,000.
    (Rule 2.3 defines 'claim for personal injuries' as proceedings in which there is a claim for damages in respect of personal injuries to the claimant or any other person or in respect of a person's death)
    (2) For the purposes of paragraph (1) 'damages for personal injuries' means damages claimed as compensation for pain, suffering and loss of amenity and does not include any other damages which are claimed.
    (3) Subject to paragraph (1), the small claims track is the normal track for any claim which has a value of not more than 5,000.
    (Rule 26.7(4) provides that the court will not allocate to the small claims track certain claims in respect of harassment or unlawful eviction)
    (4) Subject to paragraph (5), the fast track is the normal track for any claim
    (a) for which the small claims track is not the normal track; and
    (b) which has a value
    (i) for proceedings issued on or after 6th April 2009, of not more than 25,000; and
    (ii) for proceedings issued before 6th April 2009, of not more than 15,000.
    (5) The fast track is the normal track for the claims referred to in paragraph (4) only if the court considers that
    (a) the trial is likely to last for no longer than one day; and
    (b) oral expert evidence at trial will be limited to
    (i) one expert per party in relation to any expert field; and
    (ii) expert evidence in two expert fields.
    (6) The multi-track is the normal track for any claim for which the small claims track or the fast track is not the normal track.
  32. Part 46 deals with fast track trial costs. Part 46.2 identifies by reference to the value of the claim the different sums that may be awarded for a party's advocate. Part 46.3 gives a power to award an additional fixed sum if the court considers that a representative to help the advocate was necessary.
  33. Part 44 is the key provision in relation to costs:-
  34. "Court's discretion and circumstances to be taken into account when exercising its discretion as to costs
    44.3
    (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 be paid.
    (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.
    (3) The general rule does not apply to the following proceedings
    (a) proceedings in the Court of Appeal on an application or appeal made in connection with proceedings in the Family Division; or
    (b) proceedings in the Court of Appeal from a judgment, direction, decision or order given or made in probate proceedings or family proceedings.
    (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, and which is not an offer to which costs consequences under Part 36 apply.
    (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 the Practice Direction (Pre-Action Conduct) or 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
    (g) interest on costs from or until a certain date, including a date before judgment.
    (7) Where the court would otherwise consider making an order under paragraph (6)(f), it must instead, if practicable, make an order under paragraph (6)(a) or (c).
    (8) Where the court has ordered a party to pay costs, it may order an amount to be paid on account before the costs are assessed.
    (9) Where a party entitled to costs is also liable to pay costs the court may assess the costs which that party is liable to pay and either
    (a) set off the amount assessed against the amount the party is entitled to be paid and direct him to pay any balance; or
    (b) delay the issue of a certificate for the costs to which the party is entitled until he has paid the amount which he is liable to pay.
    Basis of assessment
    44.4
    (1) Where the court is to assess the amount 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.
    (Rule 48.3 sets out how the court decides the amount of costs payable under a contract)
    (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)
    (3) Where the amount of costs is to be assessed on the indemnity basis, the court will resolve any doubt which it may have as to whether costs were reasonably incurred or were reasonable in amount in favour of the receiving party.
    (4) Where
    (a) the court makes an order about costs without indicating the basis on which the costs are to be assessed; or
    (b) the court makes an order for costs to be assessed on a basis other than the standard basis or the indemnity basis, the costs will be assessed on the standard basis.
    (5) Omitted
    (6) Where the amount of a solicitor's remuneration in respect of non-contentious business is regulated by any general orders made under the Solicitors Act 1974, the amount of the costs to be allowed in respect of any such business which falls to be assessed by the court will be decided in accordance with those general orders rather than this rule and rule 44.5.
    Factors to be taken into account in deciding the amount of costs
    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 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.
    (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)"
  35. It is important to recognise that 44.3 and 44.5 are fulfilling different functions. 44.3 enables the court at the conclusion of a trial or at the conclusion of any hearing to make a special order as to costs. The different forms of order include the types of order set out in 44.3(6). The court could (and this was common ground before us) under 44.3 make an order that trial costs should be restricted to fast track costs in a multi-track case, or it could order that a paying party pay or not pay costs of distinct parts of proceedings, or it could order a party to pay only a proportion of the costs. Once the trial judge has made an order the costs judge cannot vary that order or rescind it.
  36. But when assessing costs under 44.5 the costs judge must also have regard to "all the circumstances" and to the factors set out in 44.5(3) including conduct, efforts made to resolve matters, value of claim, importance to parties etc.
  37. On the face of the two provisions, in fulfilling their different functions, the trial judge under 44.3 and the costs judge under 44.5 are enjoined to take into account many similar factors. That may mean that if a factor has been raised before the trial judge and the trial judge has ruled on that factor, that will bind the costs judge but (and it is important to emphasise this) more often than not the costs judge has material which the trial judge did not have, and thus will not be bound. But the notion that if a party has not raised a matter under 44.3 he should be precluded from raising it under 44.5 does not sit easily with the express provisions.
  38. Dr Friston argues in this case by reference to Aaron v Shelton however that if a party wishes to argue that a case was, in reality, a fast track case, and in particular that it was a case that should only have lasted a day, that must be raised with the trial judge, and if not raised with the trial judge cannot be raised with the costs judge.
  39. In my view Aaron v Shelton and the paragraphs cited above are too prescriptive insofar as they seek to lay down some principle that if a point is not raised before the trial judge a party will be precluded from raising it before the costs judge. I have already expressed views on this aspect in relation to dishonest conduct in North Star Systems Ltd v Fielding [2006] EWCA Civ 1660 where I said this:-
  40. "33. In the case he was dealing with there had been no decision by the court that S had been guilty of misconduct. Indeed by adopting the consent order A accepted the converse. But take a case where dishonesty has been found as in the instant case. Would the fact that the paying party had not sought an order from the judge reflecting that misconduct deprive that party of referring on the assessment to the holding of the judge that a forgery had been committed when considering whether the costs incurred by the dishonest party were reasonable? I cannot think that it should. What then is the position if a paying party has a finding of dishonesty of the winning party in his favour, and raises that factor as a ground for a reduction of the costs at the end of the trial? Clearly there is no problem if the judge's order makes "no order as to costs", but if the judge orders a reduction by say 20% without more, what would be the natural construction of that order? My view is that the natural construction of such an order, unless the contrary is expressly stated, is that the party guilty of dishonesty should not be entitled to say on assessment, "my costs incurred in seeking to make a dishonest case can be taken as reasonably incurred because the judge has made a reduction". If the dishonest party was entitled to succeed on such an argument, he will hardly suffer any penalty at all.
    34. It seems to me that consideration of a party's conduct should normally take place both at the stage when the judge is considering what order for costs he should make, and then during assessment. But the court will want to ensure that dishonesty is penalised but that the party is not placed in double jeopardy. Ultimately, the question is one of the proper construction of the order made by the judge. Thus it will be important for the judge, who is asked to take dishonesty into account at the end of a trial when considering the order as to costs, to consider what is likely to occur on assessment. Where dishonest conduct is being reflected in an order made by the trial judge, it must be wise for the future for judges to make clear whether they are making the order on the basis that, on the assessment, the paying party will still be entitled to raise the dishonesty in arguing that costs incurred in supporting the particular dishonesty were unreasonably incurred. Judges may also want to consider whether to make an order under rule 44.14 and it would be wise to do that before considering precisely what order to make in relation to the costs of a trial generally."
  41. I appreciate that Neuberger LJ in Gray v Going Places Leisure Travel Ltd [2005] EWCA Civ 189 approved paragraphs 20 and 21 of Jack J's judgment but that was in the context of considering the right time to deal with a wasted costs' order. I do not think there was any general argument relevant to the point now being made by Dr Friston. In my view it would not be consistent with the express provisions of 44.3 and 44.5 and with the court's duty to see that costs are proportionate and reasonable to preclude a party raising a point highly material to that question because it had not been raised before the judge under 44.3. Furthermore it seems to me that authorities to which we were referred are inconsistent with any such principle.
  42. In his judgment in Lownds v The Home Office [2002] 1 WLR 2450 Lord Woolf CJ said:-
  43. "29. In assessing costs judges should have no difficulty in deciding whether, in order to conduct the litigation successfully, it was necessary to incur each item of costs. When an item of costs is necessarily incurred then a reasonable amount for the item should normally be allowed. Any item that was not necessary should be disallowed.
    30. In his advice the Senior Costs Judge drew attention to the problems that can arise from "double jeopardy"; in other words from making a deduction when considering the bill item by item and then looking again at the situation as a whole and making a further global deduction. This danger will be avoided if a party receives at least a reasonable sum for the items of costs which were necessarily incurred.
    31. 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 Part 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 is 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.
    32. The fact that the litigation has been conducted in an insufficiently rigorous manner to meet the requirement of proportionality does not mean that no costs are recoverable. It means that only those costs which would have been recoverable if the litigation had been appropriately conducted will be recovered. No greater sum can be recovered than that which would have been recoverable item by item if the litigation had been conducted proportionately.
    . . .
    "39. Turning to the specific points of principle raised by May LJ (paragraph 11 above), where a claimant recovers significantly less than he has claimed, the following approach should be followed:-
    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.
    40. The rationale for this approach is that a claimant should be allowed to incur the cost necessary to pursue a reasonable claim but not allowed to recover costs increased or incurred by putting forward an exaggerated claim and a defendant should not be prejudiced if he assumes the claim which was made was one which was reasonable and incurs costs in contesting the claim on this assumption."
  44. The general approach advocated by Lord Woolf would be curtailed if there was any principle of the kind advocated by Dr Friston.
  45. In Lahey v Pirelli [2007] 1WLR 998 the claimant had made a claim for 150,000 and then accepted a part 36 payment of 4,000 and was thus entitled to his costs on the standard basis by virtue of Part 36.13(1) and (4). The defendant sought to persuade the cost judge to make an award of only 25% of the costs. The costs judge refused and that decision was upheld by the judge and the Court of Appeal. Dyson LJ said this:-
  46. "19. We cannot accept Miss Ayling's submissions largely for the reasons given by Mr Roussak. The effect of rules 36.13(1) and (4) and 44.12(1)(b) was that, upon acceptance of the Part 36 payment, "a costs order [was] deemed to have been made on the standard basis": rule 44.12(1)(b). This meant that the claimant was entitled to 100% of the assessed costs, i e the amount that the costs judge decided was payable at the conclusion of the detailed assessment. The district judge had no power to vary this order and decide that the claimant would only be entitled to 25% of the assessed costs. The ability of the court to vary an existing order is given by CPR r 3.1(7): "A power of the court under these Rules to make an order includes a power to vary or revoke the order." But we agree with what Park J said in Walker Residential Ltd v Davis [2005] EWHC 3483 (Ch) at [49]: the power to vary or revoke an order given by rule 3.1(7) is only exercisable in relation to an order that the court has previously made, and not to an order that is deemed to be made by operation of the rules.
    20. There is a real distinction between (a) carrying out an assessment and deciding as part of the assessment to reduce the bill by a percentage and (b) deciding in advance of the assessment that the receiving party will only receive a percentage of the assessed costs. The figure that results from (a) represents 100% of the assessed costs. In deciding as part of the assessment to reduce the bill by a percentage, the costs judge is giving effect to an order that the successful party is entitled to his costs, to be assessed if not agreed. The figure that results from (b) represents less than 100% of the assessed costs. In deciding in advance of the assessment that the receiving party will only receive a percentage of the assessed costs, the costs judge is not giving effect to an order that the successful party is entitled to his costs, to be assessed if not agreed.
    . . .
    24. It is, in fact, quite unnecessary to give the costs judge the jurisdiction for which Miss Ayling contends. The premise on which her argument is based is that, without such a power, the costs judge cannot arrive at a fair result in certain situations. Mr Roussak concedes, rightly, that in an appropriate case the costs judge can disallow entire sections of a bill of costs. If the costs judge considers that the claimant acted unreasonably in refusing an offer to settle made before proceedings were issued, he is entitled to disallow all the costs post-issue on the footing that they were costs "unreasonably incurred": rule 44.4(1). Similarly, where he decides that a party was unreasonable to raise and pursue an issue, the costs judge is entitled to disallow the costs relating to that issue on the grounds that they were unreasonably incurred."
  47. It seems to me that much of what Dyson LJ said about the powers that a costs judge has under 44.5 is inconsistent with the notion that if matters are not raised with the trial judge a party will be precluded from raising the same with the costs judge. For example he emphasised that it is open to the costs judge to disallow costs relating to an issue on the grounds that the costs were unreasonably incurred. A trial judge may be in a good position to help a costs judge on such a point, but the fact that it was not raised with the trial judge should not in my view preclude a party raising the matter with the costs judge.
  48. There may be circumstances in which a costs judge may not be entitled to say, in the interests of keeping the costs of assessment proportionate, that a matter should have been brought up before the trial judge and a special order sought; for example, if it is to be argued that a witness in a long trial should never have been called because the evidence was irrelevant, a costs judge should not be required effectively to retry the case in order to adjudicate on the point; obviously a special order should be sought from the trial judge. But that is different from there being some form of rule founded on Henderson v Henderson, that a failure to raise a matter before the judge for 44.3 purposes precludes the raising of the matter for 44.5 purposes.
  49. In my view 44.3 and 44.5 are intended to work in harmony and it is intended that the parties' conduct (for example) may have to be considered under both. If what is sought is a special order as to costs which a costs judge should follow that obviously should be sought from the trial judge. If it is clear that a costs judge would be assisted in the assessment of costs by some indication from the trial judge about the way in which a trial has been conducted, a request for that indication should be sought. But none of this needs a rule as per Henderson v Henderson that a failure to raise a point before the trial judge will preclude the raising of a point before the costs judge.
  50. In this case the question of exaggeration was raised before the trial judge. He was expressly enjoined to take the possibility of exaggeration into account under 44.3(5)(d). That might have led to a special order for costs, e.g. that the claimant should only get 50% of his costs. But the fact that no special order has been made does not preclude the costs judge in assessing costs considering whether the conduct of a party should preclude an award of costs for some particular item. I can see no reason why the costs judge should not consider the effect of such conduct unless some specific finding of the trial judge binds him. Thus a view expressed that exaggeration was not such as to lead to a special order, ought not it seems to me to prevent a costs judge who must have regard to all the circumstances of the case, being entitled to assess what would have happened if a claimant had instructed his lawyers properly.
  51. So, returning to the circumstances of this case. The paying party did not seek to obtain an order from the Recorder that costs should be limited to those recoverable on a fast track basis, and in particular did not seek a ruling that only one day's costs should be allowed even though the case had gone into a second day. It might have been helpful to the costs judge if some indication had been given by the Recorder on that question. But the fact it was not raised does not prevent "all the circumstances of the case" including the question whether the case was in reality a fast track case from being raised before the costs judge.
  52. The paying party also failed to obtain a special order from the Recorder in relation to exaggeration. The note suggesting that the Recorder nevertheless found exaggeration was not however accurate. From the full transcript it is equally not clear that the Recorder cleared the claimant from any finding of exaggeration. If she had had the full transcript the costs judge would in my view have been entitled to consider how, if lawyers had been properly instructed, the case should have been fought and in particular whether it would have ended up as a fast track case. To some extent this is what she did but it is difficult to think she was not influenced in her conclusions by the inaccurate note.
  53. I say to some extent this is what she did because in my view the costs judge was not entitled simply to rule that she was going to assess the costs of trial as if the case were on the fast track. To so rule does seem to me to rescind the Recorder's order. I cannot accept that in ruling as she did it can be said she was simply "assessing costs on the standard basis taking into account that the case should have been allocated to the fast track" which in my view is the permissible approach. It may in some cases be a distinction without a major difference, i.e. where a case has finished within a day and the sums awarded have fallen well within the fast track limits, but that was not on the face of it this case. This case had run into a second day due at least very arguably to the fact that liability was fought hard. Simply ruling that costs of the trial should be on a fast track basis may have meant that the costs judge gave no separate consideration to the question whether it was a trial that would always have been likely to run into a second day.
  54. I accept that, if appreciating that the case had run into a second day, she had given reasons as to why it should not have done so, and that on that basis fast track trial costs was all it was reasonable for the paying party to have to pay, she could not have been faulted. But it is not clear to me that the costs judge would necessarily have found that to be so and given the further unfortunate factor that the costs judge had placed before her a note suggesting that the Recorder had found exaggeration when that was not so (which, as I have said, it seems to me did influence her in the view she formed), it is in my view right that in the circumstances the matter should be remitted to the costs judge for her to reconsider the position in the light of this judgment.
  55. Lord Justice Hooper :

  56. I agree.
  57. Lord Justice Etherton :

  58. I also agree.


BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2010/53.html