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Leigh v Michelin Tyre Plc, Court of Appeal, 8 December 2003

17 December 2003
The issues

Costs – costs estimates – assessment of costs.

The facts

The Claimant brought proceedings against his employer in respect of an accident at work.
The case was settled before Trial. The Claimant’s Solicitors lodged a Bill of Costs claiming
£21,741.28 comprising £14,482.80 profit costs, £4,314.70 disbursements, and £2,943.78
VAT. The District Judge assessed the Claimant’s recoverable costs at £20,488.83.

The Claimant’s Solicitors had lodged an Allocation Questionnaire showing profit costs to date
at £3,000.00 plus VAT and overall profit costs as likely to be £6,000.00 plus VAT. When the
Bill of Costs was lodged the actual figure in respect of the period after the Allocation
Questionnaire stage amounted to £11,744.00.

The Costs Judge who had assessed the claim made no deduction to reflect the fact that the Claimant’s Solicitors had previously given a wholly inadequate estimate for their future profit costs. The Defendant/paying party appealed to the Judge who dismissed the Appeal. The Defendant appealed to the Court of Appeal.

The decision

1. The provisions relating to the giving of estimates of costs were important in assisting the Court to achieve the overriding objective and to control the costs of litigation. The first was to keep the parties informed about their potential liability in respect of costs and to assist the Court to decide what Order to make if any about costs in Case Management. They were an important part of the machinery of Case Management.

2. It would not always be possible at the Allocation Questionnaire stage to provide a reasonably accurate estimate of the likely overall costs, but it should usually be possible to do so, especially in run of the mill cases. Where it became clear during the course of litigation that the estimate was inaccurate, the parties should file an up-dated estimate at the Listing Questionnaire stage. If it was the case that Solicitors were providing costs estimates only at allocation, that practice should cease and Solicitors should always file an estimate of costs at the Listing Questionnaire stage unless the Court ordered otherwise.

3. The Practice Direction to CPR 43 at 6.6 now provided that, on an Assessment of the costs of a party, the Court could have regard to any estimate previously filed by that party as a factor, amongst others, when assessing the reasonableness of any costs claimed. The question therefore was how that paragraph should be applied when there was a substantial difference between the amount of the costs estimate and the costs claimed on assessment. The Court did not intend to provide an exhaustive guide as to the circumstances on which a cost estimate might be taken into account, but intended to assist Judges in the application of paragraph 6.6:-

(i) First the estimates made by Solicitors of the overall likely costs should provide a useful yardstick by which the reasonableness of the costs finally claimed could be measured. If there was a substantial difference between estimate and claim, that difference called for an explanation and if there was no satisfactory explanation, the Court might conclude that the difference was evidence from which it could conclude that the costs claimed were unreasonable;

(ii) The Court would take account of the estimated costs if the other party showed that it relied on that estimate in a particular way – for example where one party decided not to make an offer of settlement, relying on a relatively low estimate of costs given by the other side;

(iii) Thirdly, where the Court would have given different Case Management Directions if a realistic estimate had been given. For example, if a Claimant had provided a low estimate of overall costs, and made a considerably larger claim of costs when seeking Assessment, the Court might conclude that it would have given different Directions from the ones it gave which would have had the effect of reducing the Claimant’s costs such as, for example, trimming the number of experts called;

(iv) It was not appropriate however to hold a party to his estimate simply in order to penalise him for providing an inadequate estimate. To do so would be tantamount to treating a costs estimate as a costs Cap.

Appeal dismissed

Comments

Paragraph 34 of the Judgment noted that the use of CPR 43 Practice Direction paragraph 6.6 to control costs was not the most effective way of doing so. Much more effective was likely to be the prospective fixing of costs budgets, which had been raised before the Civil Procedure Rule Committee in June 2001. The Committee had explored the issue but had not reached any conclusions. The Court invited the Committee to re-examine the provisions relating to costs estimates to see whether they should be amended to make them more effective in the control of costs; and also to reach a conclusion on the issue of costs budgets.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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