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O'Beirne v Hudson, Court of Appeal, 9 February 2010

5 March 2010
The issues

Allocation – case settled before allocation – whether Small Claims Track costs appropriate.

The facts

On the 30th September 2006 the Claimant was stationary in his car at a roundabout when he was hit from behind by the Defendant. Proceedings were issued claiming General Damages in excess of £1,000.00. Settlement was reached in the sum of £400.00 for general damages and £719.06 hire charges. The Consent Order provided that “the defendants do pay the claimant’s reasonable costs and disbursements on the standard basis, to be subject to detailed assessment if not agreed”. The Defendant argued that had the case been allocated it would have gone to the Small Claims Track and relied on the decision of the Court of Appeal in Voice & Script International Ltd v Alghafar that the costs recoverable should be small claims costs. The Claimant argued that the Consent Order precluded the application of the small claims regime. The District Judge agreed with the Claimant, assessing the Claimant’s costs at £3,987.29.

The Defendant Appealed to the Judge (His Honour Judge Stewart QC). The Judge allowed the Defendant’s Appeal on the basis that on assessment the District Judge had not been precluded by the Consent Order from deciding whether or not the costs should be assessed by reference to the Small Claims Track regime.

The Claimant Appealed to the Court of Appeal.

The decision

There was a Consent Order providing for costs to be assessed on the standard basis.

The Costs Judge was not therefore free to rule that the costs would be assessed on the Small Claims Track basis.

The Costs Judge was entitled however to take account of all the circumstances, including the fact that the case would almost certainly been allocated to a Small Claims Track, if it had been allocated. In so doing, the Costs Judge would have had regard to what could or could not be recovered if the case had been so allocated. Although the Costs Judge would not be bound to allow the costs as if it were on the Small Claims Track the settlement level would be a highly material circumstance in considering what, by way of assessment, should be payable. There was a real distinction between directing at the outset that nothing but small claims costs would be awarded, and giving items on a Bill anxious scrutiny to see whether costs were necessarily or reasonably incurred, and thus whether it was reasonable for the paying party to pay more than would have been recovered in a case that should have been allocated to the Small Claims Track. Would it, for example, have been necessary to have had lawyers and was it reasonable for the paying party to have to pay for lawyers? Generally, the Costs Judge was not entitled to fix the costs solely by reference to the Small Claims Track regime without consideration of each item separately.

The Judge was right to reverse the decision of the District Judge and the Appeal would be dismissed.

The Costs Judge should take account of the fact that the case should have been allocated to the Small Claims Track. Provided a Costs Judge does not purport to vary an original Order or tie himself to assessing by reference of the Small Claims Track, it was quite legitimate to give effect as far as possible to the underlying philosophy of proportionality contained in Lownds v The Home Office.

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