IN THE HIGH COURT OF JUSTICE
NEWCASTLE UPON TYNE DISTRICT REGISTRY
ON APPEAL FROM MIDDLESBOROUGH COUNTY COURT
The Law Courts, Quayside,
Newcastle upon Tyne, NE1 3LA
Before:
THE HONOURABLE MR JUSTICE COULSON
Between:
LESLIE STUART NAYLOR | Claimant/ Appellant |
- and - | |
DAVID MONAHAN | 1st Defendant/ Respondent |
- and - | |
CHURCHILL INSURANCE CO LTD T/A PRUDENTIAL | 2nd Defendant/ Respondent |
Mr Matthew Smith (instructed by Tilly, Bailey & Irvine LLP) for the Claimant/Appellant
Miss Ruwena Khan (instructed by Plexus Law) for the Defendants/Respondents
Hearing date: 26 May 2011
Judgment
The Honourable Mr Justice Coulson:
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:
“Turning now to the question of costs, I have before me the claimant’s application for costs which totals £8,614.64, which is submitted by Miss Khan that the appropriate fee earner should have been a grade C fee earner. It is only a small claim, now that it has been admitted from the outset and I am rather inclined to agree with her and, therefore, the appropriate rate would be £146 and not £174.
As far as the total costs are concerned, I think the appropriate number of hours is 15 hours under the first heading ‘base costs’. And, accordingly, that will affect the amount of VAT.”
Thereafter, the judge invited counsel to do the mathematics outside court which they did, leading to the figure of £5,024.
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:
He failed to undertake an item by item assessment;
He failed to have regard to the costs actually incurred and/or the work actually done.
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:
The court should focus on the detailed breakdown of costs actually incurred and should carry out an assessment by reference to the items in the draft bill. Having done that, the court should also look at the total sum at which it has arrived to see whether that sum is reasonable and proportionate: see 1-800 Flowers Inc v Phonenames Limited [2001] EWCA Civ 721.
The two-stage approach (albeit in a different order) was also identified in Lownds v Home Office; Practice Note [2002] EWCA Civ 365. Lord Woolf MR said that it was necessary for the court to consider whether the global sum claimed was disproportionate, by reference to CPR r. 44.5(3). If the costs were disproportionate, then the court will want to be satisfied that the work in relation to each item was necessary and, if so, reasonable. If the global costs were disproportionately high, no more should be payable than would have been payable if the litigation had been conducted in a proportionate manner.
In the most recent case on this topic, Katherine Morgan v The Spirit Group Limited [2011] EWCA Civ 88, Black LJ said at paragraph 27:
“As Lownds shows, it is very important for the judge to take a global view of the proportionality of the costs incurred but, before he fixes a figure for costs, he must advance from that to an item by item consideration of the individual elements of the bill, by way of a summary assessment or alternatively, he must direct a detailed assessment which will fulfil that task. Naturally, any judge carrying out a summary assessment, appropriately focused on the detailed breakdown of costs, will have firmly in mind that the court’s discretion when carrying out such an assessment is very wide and that a minute examination of detail is not always required and a broad-brush approach can, where appropriate, be used. It would be a great pity if the summary assessment procedure were to become bedevilled by formulaic and time consuming intricacy, which would often be wholly disproportionate to the exercise being carried out and the nature of the litigation in hand.”
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:
should consider the component parts of the bill, and not simply start and finish at the round figure that he or she may consider to be reasonable and proportionate; but
should not be obliged to go through a box-ticking exercise, in which he or she is forced to comment in detail upon each item of the draft bill.
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:
Judge Moorhouse considered the individual items, because the transcript shows that he asked a number of questions about the individual component parts of the bill;
Although neither counsel had taken him expressly through each item of the bill in detail, it was plain from Miss Khan’s approach that she identified individual items to exemplify her wider criticism that the total hours claimed by the solicitors, which formed the principal element of the bill, were simply too high;
The judge concluded, as he was entitled to do, that Miss Khan was right and that the hours claimed were, in total, too high and that a significantly lower figure, along the lines that Miss Khan had suggested, was reasonable and proportionate. He arrived at his own assessed figure of 15 hours. That approach was in accordance with the methodology advocated in Lownds;
The judge’s decision to reduce the claimed hours was all but inevitable, given the claimant’s failure to meet the criticism that the claimed hours were excessive, and gave rise to a reduction from the claimed amount of about 40%, which is not uncommon on a detailed assessment of costs.
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.