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Finster v Arriva London & Anor, Supreme Court Costs Office, 31 January 2007

5 March 2007
The issues

Costs – exaggerated claim – proportionality – power of Costs Judge.

The facts

The Claimant was an unemployed city metals trader. In August 2001 he was travelling in his friend’s car to play golf. A police car pulled them over. The Claimant began to step out of the car. As he did a bus, operated by Arriva, hit the car. The Claimant was physically shaken and fell onto the pavement from the passenger side. The bus did not hit him directly. He developed whiplash. The Claimant suffered symptoms sufficient to interfere with his golf for 3 months. The Claimant referred to the accident as “a huge impact”. The claim, when issued 3 years later, was valued at £1.4 million. The special damages element included a large claim arising from a very highly paid job offer which the Claimant said was withdrawn from him as a result of his whiplash. The claim settled in January 2006 for £10,000.00 plus costs. There had been, in the course of the action, Applications and Case Management Hearings and a 3 day split Trial on liability before settlement. At an early stage the Defendant made a payment into Court of £10,000.00 which was not accepted. After the Trial on liability the Defendant offered to allow the £10,000.00 to be taken out of time without costs penalty. The Defendant offered to pay the Claimant’s reasonable costs on a standard basis. Eventually the Claimant accepted the offer and the claim settled for £10,000.00. The costs, as presented, amounted to £54,000.00. The matter went to Detailed Assessment. It came before the Deputy Master on two general Points of Dispute relating to “exaggeration” and “proportionality”.

The decision

The matter had previously come before the Deputy Master and it had been argued, following Aaron v Shelton that the paying party was not entitled to raise matters of conduct which were not raised in the letter offering to allow the Claimant to take the monies in Court which brought about the settlement. The Deputy Master adjudged that the offer did not debar the Defendant from relying on alleged exaggeration of the claim when arguing on proportionality and reasonableness on the standard basis. The Deputy Master had taken the view that to hold that the Costs Judge was not entitled to consider allegations of an over valued case as part of the reasonableness and proportionality tests would deprive the notion of standard basis costs of meaning. The issue of who had “won” the case was not decisive. The Costs Judge had to have regard to the terms of the settlement. It would have been open to the Defendant to settle on terms other than an outright Standard Basis Costs Order. It would have been open to the parties, if they had wished, to adopt the approach followed in Hooper v Biddle and settle quantum subject to an adjudication by the Court as to what Costs Order was appropriate. It was not reasonably open to the Costs Judge to interfere with the terms of settlement and decide that the Claimant “lost” and ought to be entitled only to some lesser substantive Order as to costs (such as standard basis costs only up to a given date). It did not follow that the Costs Judge lacked power to disallow periods of costs or costs in particular categories, or costs at particular rates, if such was required on the standard basis. That might occur where costs in a particular date range were unnecessarily incurred or not claimable at all or were caused unreasonably. Nor was the Costs Judge debarred from considering the relatively low extent of recovery compared with the very large sum claimed as part of the circumstances of the case.

Were the costs disproportionate?

Lowndes required the Costs Judge to take a “global view” of the issue of proportionality. The decision that costs were prima facie disproportionate did not determine the amount of costs to be allowed but it allowed the manner of assessment.

What sum might the Claimant have believed he would recover reasonably at the time he made his claim?

The Claimant argued that the point in time which the evaluation required by Lowndes had to be applied was the point at which the claim was begun. Taking that view would lead to the conclusion that a party who valued their claim reasonably but afterwards discovered that their valuation was unrealistic would gain a benefit when it came to the test of global proportionality. Had it been necessary the Costs Judge would not have held herself constrained to consider only the valuation at the time of commencement. The approach taken by the Claimant had to vary as the litigation progressed to take account of the circumstances and the overriding objective demanded that proportionality be kept in view. If the value of a case changed the litigant should tailor their approach to keep it proportionate. Having regard to the evidence considered by the Costs Judge, if the claim had been valued at around £15,000.00 the Costs Judge would not have expected arguments as to over valuation to have merit or to have arisen.

Was the Bill of £54,000.00 disproportionate given that valuation?

This was not a complex or a novel claim demanding special skills. The Claimant’s conduct was relevant. He had rejected an offer of mediation and did not accept at first the payment in of £10,000.00. He made no counter offer at the time. He gave the impression of intending to press his high value claim. The Defendant’s conduct was relevant. It made efforts to settle. It did increase its costs by the manner in which it switched to an escalated mode of defence once the Claimant had not accepted the payment but Lowndes had indicated that a Defendant was “normally entitled to take a claim at its face value”. The Costs Judge was satisfied that the Bill appeared globally disproportionate.

The costs would be allowed equivalent to the reasonable costs of a one day liability Trial.

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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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