Jefferson v National Freight Carriers Plc
|England & Wales
|LORD WOOLF CHIEF JUSTICE,MRS JUSTICE BLACK
|07 February 2001
| EWCA Civ 2082
|Court of Appeal (Civil Division)
|07 February 2001
 EWCA Civ 2082
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
The Combined Court Centre
Newcastle Upon Tyne
Lord Woolf Chief Justice and
The Honourable Mrs Justice Black
MR M DITCHFIELD appeared on behalf of the Claimant
MR J THOMPSON appeared on behalf of the Defendant
This is an appeal as to the quantum of costs awarded by His Honour Judge Fawkes at this Court on 17 April last. The appeal is made with the permission of the Judge. In giving permission, the Judge indicated that there would be an advantage in an appellate Court giving more guidance as to the appropriate levels of costs.
Unfortunately, the matter was dealt with very summarily in the Court below. I should, therefore, immediately point out that Mr Ditchfield, who has appeared for the Claimant before us, did not appear in the Court below. The Judge was given limited assistance by Counsel appearing on behalf of the Claimant in the Court below on the question of costs.
The facts leading up to the appeal can be set out very shortly. The Claimant, Mr Jefferson, with the assistance of his Union, was bringing the claim. He had the misfortune to suffer a minor injury at work; he was a van driver and he was using a van in the course of his employment, the floor of the van was defective and he suffered an injury to his back while attempting to dislodge a wheel of a pallet truck which he was manoeuvring in the vehicle.
The Claimant, in his claim, limited his claim to £5000. Although this was not a matter drawn to the attention of the Judge, he made an offer under Part 36 of the CPR in the sum of £2,600, but that offer was not accepted by the Defendant who contested the claim at the hearing and alleged contributory negligence.
The Judge, in an admirably clear judgment, dealt with the claim, found that there was negligence on the part of the Defendants and dismissed the suggestion that there was contributory negligence. He assessed general damages, on the basis of an agreed medical report, at the sum of £1,750, with special damages agreed at £525.74. The Judge made a summary assessment of costs, and he came to the conclusion that in respect of the schedule which had been prepared by the Claimant, the appropriate sum at which to assess costs was £3,500.
The schedule was drawn on the basis of the Claimant's solicitors using a fellow of the Institute of Legal Executors, a grade 2 fee earner, at the hourly rate of £135. There was set out in the schedule hourly rates for various activities which, it was said, had been carried out. The total costs of the solicitors activities on behalf of the Claimants were put at £4,441.75. There were then fees for Counsel of £34 for drafting the pleadings, £500 for the hearing, making total fees of £534 for Counsel.
Furthermore, there were set out other expenses, including Court fees of £520 and certain minor items, coming to a total of £537.67. There was then an item for VAT on solicitors fees of £777.30, and VAT on Counsel's fees of £93.45, and there was even an item for VAT on other expenses, not Court fees, of £1.32, making a total of £6,905.49.
As it is contended that the approach of the Judge was far too summary, it is right that I should set out from the transcript what was said with regard to costs. The Judge asked Counsel appearing for the Defendant, "Have you seen a schedule of costs?"
He then replied:
"Yes, my primary submission is one of proportionality. The total damages in this case amount to, subject to interest, a little over £2,275, in fact it is £2,275 and a few pence, plus interest. Your Honour, the total sum claimed, the grand total, you will see is £6,905.49."
Then Counsel went on to say:
"On the question purely of proportionality, how can it be justified to incur costs of nearly £7000 for a claim which has been determined to be worth, subject to interest, only £2275. That is my primary submission, and I perhaps can go into a little more detail in the schedule itself if you wish me to."
The Judge then said:
"Not at the moment, proportionate has to play a part."
Then Counsel for the Claimant said, "Yes", and the Judge said to Counsel for the Claimant,
"Damages are £2,250 plus interest. It is difficult how it is proportionate to have costs amounting to three times that amount."
Counsel replied, in response, "Your Honour, the work has been carried out." The Judge then said, "I am not suggesting the work has not been carried out." And Counsel added,
"This was a trial of liability, as well as quantum. There are a number of witnesses from whom witness statements have been taken, the Defendants choose not to rely upon a third witness, but that is a matter for them. Fortunately the medical report was agreed by them. Whilst I accept, your Honour, that proportionality must, after the CPR rules, be considered, in my submission I respectfully leave the actual sum for your Honour."
The Judge then said,
"First of all, you do not normally claim VAT when both sides are VAT registered, that makes the costs look much higher, so that is in your interest really."
Counsel said, "We normally do claim that, your Honour." And the Judge said, "When do you not claim VAT?" And Counsel said, "It is not really a matter that Counsel gets involved in, your Honour." And the Judge said, "The bill was effectively £6000, and if we exclude VAT, £3,500."
The Judge there indicating the figure that he was going to award. Counsel said,
"I am reluctant to agree to a figure which your Honour puts forward at £3,500, is effectively halving the total expenditure which has been claimed, and my instructions are that this was not a straightforward case. We have had oral evidence, and we also have documentary evidence. A lot of vehicle inspection reports have been disclosed and had to be considered, I don't really think I can take the matter much further."
And Counsel for the Defendant then said,
"Unless your Honour is persuaded to go beyond the £3,500 figure you indicated a short time ago, I would not seek to persuade you to go any lower."
The Judge then said,
"The Defendant will pay the Claimant's costs summarily assessed at £3,500, and if you can manage to calculate those without VAT you will get rather more than you would otherwise."
I find the Judge's final comment about VAT a little bit difficult to understand. He was, in fact, as is now agreed, right to deduct the figure of VAT, that he was right to do so is made clear by the relevant Practice Direction. So what we have here is a Judge reducing a bill of £6000 to £3,500. He has been influenced to do so by the submission which was made by Mr Thompson, Counsel for the Defendant, primarily on, at any rate, on the basis of proportionality, which the Judge said has to play a Part.
Now, I have made criticism of Counsel appearing for the Claimant in this case, and I would suggest that if you consider the terms of the transcript, insofar as Counsel for the Claimant contributed to the discussion on costs, it is manifest that he was really giving the Judge virtually no assistance. However, in his submissions, Mr Ditchfield argues strongly that it is the Judge's task to investigate the matter, and not merely to deal with it in as summary a way as occurred on this occasion.
In order to assess the approach of the Judge, it is necessary to consider the relevant rules of the CPR which deal with the issue of costs. The starting point, therefore, is part 44.3. That provides,
"(1) The court has discretion as to—
(a) whether costs are payable by one party or another'
(b) the amount of those costs; and
(c) when they are to be paid.
(2) If the court decides to make an order about costs—
(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but
(b) the court may make a different order."
Then there is further provisions contained in part 44.3, to which it is not necessary to refer because they go to the circumstances in which the Court should exercise its discretion as to whether or not to make an order for costs, and nobody on this appeal suggests that the Judge was other than right to make an order for costs in favour of the Claimant.
The next provision of the CPR to which it is necessary to refer, is part 44.4. That part provides:
"(1) Where the court is to assess the amounts of costs (whether by summary or detailed assessment) it will assess those costs—
(a) on the standard bases; or
(b) on the indemnity bases, but the court will not in either case allow costs which have been unreasonably incurred, or are unreasonable in amount."
There is a reference then to rule 48.3,
"(2) Where the amount of costs is to be assessed on the standard basis, the Court will—
(a) only allow costs which are proportionate to the matters in issue; and
(b) resolve any doubt which it may have as to whether costs were reasonably incurred, or reasonable and proportionate in amount in favour of the paying party."
There is then a cross-reference to part 44.5. Subsequently, part 44.4 goes on to deal with the situation where the costs are to be assessed on the indemnity basis. The important distinctions between where costs are to be paid on indemnity basis and on a standard bases, are first of all that the issue of proportionality drops out when costs are ordered to be paid on an indemnity basis. Secondly, the position is that where the costs are made on the indemnity basis, the burden of showing the costs...
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