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Morgan v Spirit Group Ltd, Court of Appeal, 2 February 2011

10 February 2011
The issues

Costs – exaggerated claim – Multi Track claim – whether appropriate on Summary Assessment to assess costs on basis of allocation to the Fast Track.

The facts

In November 2004 the Claimant slipped in a nightclub owned by the Defendant and fractured her wrist. Liability was admitted by the Defendant. There was a one day Trial in March 2009. The Claimant had advanced a claim for general damages in the region of £9,000.00 to £10,000.00 and special damages in the sum of £31,092.48, exclusive of interest. The Judge awarded £13,419.03, inclusive of interest.

The Claimant sought her costs and produced a Bill of Costs showing a grand total of £99,206.29. There was a CFA with a 100% success fee. The success fee element, including the success fees of Counsel amounted to £39,412.80, plus VAT of £6,824.74. At the end of the Trial the Judge adjourned the question of costs to a further one day Hearing. At that Hearing he ordered the Defendant to pay a contribution of £25,000.00 toward the Claimant’s costs, concluding that the case had been in reality “a little Fast Track personal injury case” and that costs should be looked at as if the case had been allocated to the Fast Track.

The Judge approached the case by looking at what was proportionate to expect the Defendant to pay and came to the conclusion that the very limit of what was reasonable for a Defendant to pay a Claimant in a case such as this would be £20,000.00. He went on to say that having regard to the fact that there were contingent fee agreements, that substantial justice would be done if he made an Order that the Defendant should contribute the sum of £25,000.00. Leading up to this conclusion the Judge had made some damning findings about the claim and the way in which the litigation had been conducted.

The Claimant Appealed.

The decision

The Court had sympathy with the practical and no doubt cost saving approach taken by the Judge. It was not however an approach open to him in the light of the decisions in Flowers Inc v Phonenames Ltd [2001] and Lownds v The Home Office [2002]. Lownds said that it was important for the Judge to take a global view of the proportionality of the costs incurred but, before he fixed a figure for costs, he had to advance from that to an item by item consideration of the individual elements of the Bill by way of a Summary Assessment of alternatively, direct a Detailed Assessment which would fulfil that task. A Judge carrying out a Summary Assessment would have firmly in mind that the Court’s discretion when carrying out such an assessment was very wide and that a minute examination of detail was not always required and that a broad brush could, where appropriate, be used. Generally it would be a pity if the Summary Assessment procedure were to become bedevilled by formulae of time consuming intricacy which would often be wholly disproportionate to the exercise being carried out. However, the Costs Order had, insofar as it fixed a figure for the Defendant’s contribution, to be set aside. An assessment of costs had to be carried out and that now would have to be a Detailed Assessment.

This did not mean however that all aspects of the Judge’s decision on costs had to be overturned. The Trial Judge was uniquely placed to form a view as to the broader characteristics of litigation and as to the factors needed to be taken into account in deciding what costs should be awarded. He could reflect this view in a variety of different ways. He might make an Order for payment of only a proportion of a party’s costs. Or, as happened in Drew v Whitbread, he could decide that Trial costs should be restricted to Fast Track costs, despite the case being a Multi Track case. He might also give indications as to the way in which the Trial had been conducted. Here the Judge dedicated a full Court day to the costs question and had been provided with evidence and argument on the subject from the parties.

The Judge had been entitled to find that the claim had been exaggerated in a way which should properly sound in costs. The Judge had been entitled to find that the Claimant’s solicitors had conducted the claim unreasonably. The Claimant’s objections to these findings had no merit. The Judge had formed his own view with the benefit of having experienced the litigation at first hand. The Judge had been entitled to treat the level of costs claimed as evidence of conduct that was relevant on the question of costs. The Claimant relied on the guidance in Section 11.1 of the Costs Practice Direction to the effect that the relationship between costs and damages was not always a reliable guide to proportionality. The guidance in fact said that the relationship between the total of the costs incurred and the financial value of the claim may not be a reliable guide. Lownds specifically required a Judge to take a global look at the costs to see whether the total sum claimed appeared to be disproportionate and that was what the Judge did. The Judge had also been entitled to conclude that the claim should have been allocated to the Fast Track. The Claimant had submitted that the allocation of the case to the Multi Track did not increase costs. There was plenty of material supporting the notion that if the case had been run in a more reasonable way, at a more realistic level, as would have been the case had it been acknowledged to be a Fast Track case, the costs would have been less by virtue of there being, for example, less correspondence, less need for preparation and advice and possibly more chance of settlement. There was therefore no reason to interfere with the Judge’s determination that the costs of the case should be approached as if it had been a Fast Track case and the case should go to the Costs Judge for Detailed Assessment on that basis. The other observations of the Judge would also remain relevant for the Costs Judge, save insofar as they related to the fixing of a figure of £25,000.00.

Appeal allowed.

Matter remitted to the Costs Judge for Detailed Assessment. The Assessment to be carried out as if the case had been allocated to the Fast Track.

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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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