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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  EWCA Civ 53 (09 February 2010)
Cite as:  EWCA Civ 53,  PIQR P11,  CP Rep 22,  2 Costs LR 213,  1 WLR 1725,  WLR 1725
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ON APPEAL FROM EXETER COUNTY COURT
His Honour Judge Leeming
District Judge Wainright
Strand, London, WC2A 2LL
B e f o r e :
Vice-President of the Court of Appeal, Civil Division
LORD JUSTICE HOOPER
LORD JUSTICE ETHERTON
Assisted by SENIOR COSTS JUDGE HURST
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Andrew Hogarth QC and Benjamin Williams (instructed by Wansboroughs Solicitors) for the Respondent
Hearing date : 1st December 2009
Crown Copyright ©
Lord Justice Waller :
The facts in more detail
"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."
"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."
"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."
"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."
"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 . . ."
"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"
Stay to allow for settlement of the case
(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
(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.
"Court's discretion and circumstances to be taken into account when exercising its discretion as to costs
(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
(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.
(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
(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)"
"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."
"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."
"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  EWHC 3483 (Ch) at : 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."
Lord Justice Hooper :
Lord Justice Etherton :