Naylor v Monahan & Anor

One of the many changes introduced by the CPR was the summary assessment of costs under CPR rule 44.7(a). This allows a speedy and efficient assessment of costs at the end of many types of hearing, thereby avoiding the need for a lengthy, detailed assessment of costs at a later date, with all the additional expenditure that that entails. It hardly needs to be said that applications to appeal which arise out of the precise methodology adopted by a judge on such a summary assessment will often be counter-productive, and lead to additional costs being wasted on fruitless criticisms of the original summary assessment. Unhappily, in smaller cases, the costs involved in such an application can outweigh the costs at stake in the original litigation. This is one such case.

This was a claim for general damages arising out of a road traffic accident. Liability was not disputed. There was a hearing on 21 February 2011 as to the quantum of damages before His Honour Judge Moorhouse at Middlesbrough County Court. The judge awarded the claimant the sum of £3,000. That was more than the amount offered, so the claimant was entitled to his costs.

The judge then proceeded summarily to assess those costs. The draft bill before him was in the total sum of £8,614.64: in other words, as is all too often the case, the costs of the litigation were almost three times the amount of the damages awarded. The judge summarily assessed those costs at £5,024. Despite the fact that this process produced a figure representing about 60% of the actual costs incurred, a not untypical percentage following a detailed assessment of costs, the claimant now seeks permission to appeal against that assessment.

Because it was not clear from the transcript, Miss Khan, who appeared both below and before me on behalf of the defendants/respondents today, has helpfully explained how the judge arrived at his assessed figure. The principal component was the sum of £2,628, which was based on the judge’s decision that an appropriate, reasonable and proportionate figure for the work done and recoverable by the claimant’s solicitor, under the individual items in the draft bill, was 15 hours. That was multiplied by a Grade C rate of £146 per hour, the judge having concluded that that was the appropriate rate, to give a total of £2,628. To that was added £828 for counsel’s brief fee (plus VAT); £1533 for other disbursements; and £35 by way of witness expenses. None of the last three items were disputed. Those four elements make up the £5,024 figure which the judge awarded.

The course of the hearing before the judge, for which I have a transcript, appears to have been this. Miss Khan’s first criticism was that the claim for £174 an hour for a solicitor at Grade B was too high, and that the work did not warrant a solicitor higher than Grade C, at an hourly rate of £146. She then moved on to criticise as excessive the hours being claimed by the claimant’s solicitors under the various individual heads in the bill. She said expressly to Judge Moorhouse that she was prepared to go through each item, one by one, although what she in fact did was to take some items as examples of her criticism that the claimed hours were excessive. This included one of the largest individual items, which was a claim for 20 hours attendance on the claimant and communications with the claimant, which she said (I consider rightly) was much too high. By reference to these examples, she argued that the total claim of almost 27 hours was excessive. She said that ‘something in the region of 18 hours’ might be a reasonable and proportionate figure for the work done by the claimant’s solicitors.

In reply to those submissions, counsel then instructed, Mr Robert Smith (not to be confused with Mr Matthew Smith, who appears before me today), expressly said that he did not propose to go through each item in the bill. In truth, in relation to the criticism of the total hours claimed, he did not attempt to meet the defendants’ criticisms at all, save to submit that the figures relied on by Miss Khan were, as he put it, “a step considerably too far.” That was a significant omission.

The kernel of the judgment on costs was as follows. The judge said:

In the notice of appeal, the claimant claims that the judge failed to undertake the summary assessment in accordance with the CPR, and that in particular:

In his careful and realistic submissions to me this afternoon, Mr Smith put his application for permission to appeal in a slightly different way. He submitted that the real criticism of Judge Moorhouse’s approach was that there was no explanation of why the judge concluded that 15 hours, as opposed to the much larger number of hours claimed in the bill, was the appropriate figure. He accepted that the judge was not obliged to provide a judgment that dealt with each item in the bill one by one. But he argued that the judge was obliged to consider each item, and that there was nothing in his ex tempore judgment which allowed the claimant to know if he had done that, and/or whether he had reached a conclusion based on such a detailed consideration. Mr Smith said that the approach was redolent of the summary imposition of a judicial tariff which, he submitted, the judge had no discretion to do.

The principal authorities relating to the summary assessment of costs can, I think, be summarised as follows:

In both Flowers and Morgan, the Court of Appeal allowed the appeal against the original summary assessment because the judge who had undertaken it had not looked at the individual items at all, but had instead identified a round figure which he considered - without further ado - to be the appropriate amount of proportionate and recoverable costs. He had not looked at the components of the bill at all. In addition, in both cases, the judge had adopted this erroneous approach because he had concluded that the claimed costs were wholly disproportionate to the sums at stake in the litigation.

In the context of these authorities, it is important not to lose sight of the purpose of a summary assessment of costs. It is designed to ensure that a successful party does not have to wait months for a further hearing at which the costs of mounting his successful claim are picked over in detail, causing him more expense and more inconvenience. The summary assessment of costs is intended to produce a more robust and cost-effective method of resolving disputes about costs, allowing the court to exercise a broad discretion as to the assessment of those costs. Thus, as Black LJ stressed in Morgan, a judge carrying out a summary assessment of costs:

Applying the principles summarised in paragraphs 10-12 above to the present case, it seems to me that, in the round, Judge Moorhouse was entitled to assess the costs in the way that he did. It is true, as Mr Smith has pointed out, that his oral judgment was terse. I have no doubt that it would have been better if he had provided a more detailed explanation of why he concluded that Miss Khan was right and that the solicitor’s hours fell to be significantly reduced. But it is plain that:

Accordingly, despite Mr Smith’s very careful submissions to the contrary, I have concluded that the judge’s approach cannot now be criticised. I consider that the judge acted within the broad-brush discretion that he had, notwithstanding the absence of a more detailed explanation for why he considered the claimed hours to be excessive. This summary assessment came at the end of a short trial and, as the transcript makes plain, the judge had other parties waiting. A degree of robustness is not only permitted by the CPR, it is positively encouraged. The judge was persuaded that Miss Khan’s point that the costs were excessive was correct and he found accordingly. He arrived at his own figure for reasonable/proportionate hours, which he was entitled to do.

For these reasons therefore, this application for permission to appeal is refused.