Leigh v Michelin Tyre Plc
| Jurisdiction | England & Wales |
| Judge | Lord Justice Dyson: |
| Judgment Date | 08 December 2003 |
| Neutral Citation | [2003] EWCA Civ 1766 |
| Docket Number | Case No: A2/2003/0541 |
| Court | Court of Appeal (Civil Division) |
| Date | 08 December 2003 |
[2003] EWCA Civ 1766
Lord Phillips, Master of The Rolls
Lady Justice Arden and Lord Justice Dyson
Case No: A2/2003/0541
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM TELFORD COUNTY COURT
(His Honour Judge Nicholas Mitchell)
Mr John Foy QC and Mr Mark Whalan (instructed by Messrs Tinsdills) for the Respondent
Mr Guy Mansfield QC and Mr Simon J Brown (instructed by Messrs Ricksons) for the Appellants
This is the judgment of the court.
Introduction
One of the principal objects of the Woolf reforms was the control of costs. The Civil Procedure Rules include a number of innovations which were designed to enable the court to limit recoverable costs and thereby further the overriding objective defined in CPR r. 1.One of the innovations was the requirement that parties provide cost estimates at important stages of litigation (notably the allocation and listing questionnaire stages), and the conferring on the court of the power to take the parties' estimates into account on an assessment of costs. At the heart of this appeal lies CPR 43 PD para 6.6 which provides:
"On an assessment of the costs of a party the court may have regard to any estimate previously filed by that party, or by any other party in the same proceedings. Such an estimate may be taken into account as a factor among others, when assessing the reasonableness of any costs claimed."
In the present case, the claimant's solicitors filed an allocation questionnaire in which they said that they estimated the claimant's solicitors' profit costs to date at £3000 plus VAT, and their overall profit costs as likely to be £6000 plus VAT. The practice direction in force at that time (February 2000) did not state that the estimate should include disbursements in accordance with the definition of "costs" in CPR 43.2(1)(a). The practice direction has since been changed to spell out that estimates must include disbursements. The claimant's solicitors never revised their estimates. In the event, the litigation was eventually settled, and they lodged a bill of costs in which they claimed £21,741.28. This comprised £14,482.80 in respect of profit costs, £4314.70 for disbursements and £2943.78 for VAT. The first of these figures included £11,744 for their profit costs in respect of the period after the allocation questionnaire stage. This should be compared with the estimate of £3000 given at the allocation questionnaire stage for future solicitors' profit costs. The district judge assessed the claimant's recoverable costs at £20,488.83 inclusive of VAT. He made no deduction to reflect the fact that the claimant's solicitors had previously given what proved to be a wholly inadequate estimate for their future profit costs. The defendant says that the district judge erred in not reducing the assessed costs to reflect the earlier estimate. It failed to persuade Judge Mitchell that the district judge was wrong. Permission to appeal was given because it seemed that the appeal raised an important point of principle as to the relevance of costs estimates in the assessment of costs.
The Rules and the Practice Direction
At the date of the allocation stage in the present case, the practice direction supplementing CPR 26 provided that the allocation questionnaire should be in Form N150, which required estimates to be given of costs incurred by legal representatives to date and of the overall costs. CPR 26 PD para 2.1 provided: "attention is drawn to the Costs Practice Direction, para 4.5(1) which requires an estimate of costs to be filed and served when an allocation questionnaire is filed". CPR 43 PD section 4 dealt with estimates of costs. Para 4.1 provided:
"This section sets out certain steps which parties must take in order to keep the parties informed about their potential liability in respect of costs and in order to assist the court to decide what, if any, order to make about costs and about case management".
By the time the listing stage had been reached, some significant changes had been made to the practice direction. In particular, section 4 of CPR 43 PD had been replaced by section 6. The new para 6.1 was in almost the same terms as its predecessor para 4.1. An "estimate of costs" was now given a wider definition: it was an estimate of "base costs (including disbursements)". "Base costs" were defined by para 2.2 of the practice direction as costs other than the amount of any additional liability as defined by CPR r. 43.2. Paras 6.3 to 6. 6 of the amended practice direction provided:
" 6.3 The court may at any stage in a case order any party to file an estimate of costs and to serve copies of the estimate on all other parties. The court may direct that the estimate be prepared in such a way as to demonstrate the likely effects of giving or not giving a particular case management direction which the court is considering, for example a direction for a split trial or for the trial of a preliminary issue. The court may specify a time limit for filing and serving the estimate. However, if no time limit is specified the estimate should be filed and served within 28 days of the date of the order.
6.4(1) When a party to a claim which is outside the financial scope of the small claims track, files an allocation questionnaire, he must also file an estimate of base costs and serve a copy of it on every other party, unless the court otherwise directs. The legal representative must in addition serve an estimate upon the party he represents.
(2) Where a party to a claim which is being dealt with on the fast track or the multi track, or under Part 8, files a listing questionnaire, he must also file an estimate of base costs and serve a copy of it on every other party, unless the court otherwise directs. Where a party is represented, the legal representative must in addition serve an estimate on the party he represents.
(3) This paragraph does not apply to litigants in person.
6.5 An estimate of base costs should be substantially in the form illustrated in Precedent H in the Schedule of Costs Precedents annexed to the Practice Direction.
6.6 On an assessment of the costs of a party the court may have regard to any estimate previously filed by that party, or by any other party in the same proceedings. Such an estimate may be taken into account as a factor among others, when assessing the reasonableness of any costs claimed."
The other important new elements were (a) the requirement that legal representatives should serve on their clients their estimates of costs; and (b) the provision in para 6.6 that cost estimates may be taken into account on an assessment of costs when assessing the reasonableness of any costs claimed. Section 6 of the PD has not been further amended, and governs the position today.
The only rule relating to the assessment of costs to which we need refer is CPR r. 44.5 which provides for the factors that are to be taken into account in deciding the amount of costs:
"(1) The court is to have regard to all the circumstances in deciding whether costs were –
(a) if it is assessing costs on the standard basis –
(i) proportionately and reasonably incurred; or
(ii) were proportionate and reasonable in amount, or
(b) if it is assessing costs on the indemnity basis –
(iii) unreasonably incurred; or
(iv) unreasonable in amount.
(2) In particular the court must give effect to any orders which have already been made.
(3) The court must also have regard to –
(a) the conduct of all the parties, including in particular –
(i) conduct before, as well as during, the proceedings; and
(ii) the efforts made, if any, before and during the proceedings in order to try to resolve the dispute;
(b) the amount or value of any money or property involved;
(c) the importance of the matter to all the parties;
(d) the particular complexity of the matter or the difficulty or novelty of the questions raised;
(e) the skill, effort, specialised knowledge and responsibility involved;
(f) the time spent on the case; and
(g) the place where and the circumstances in which work or any part of it was done.
(Rule 35.4(4) gives the court power to limit the amount that a party may recover with regard to the fees and expenses of an expert.)"
The notes in the current edition of the White Book state at para 44.7.2:
"On completing the allocation questionnaire and the listing questionnaire the party must set out an estimate of costs incurred to date and an estimate of likely future costs, Section 6 of the Costs Practice Direction deals with this. Considerable care and precision is required in the preparation of such estimates since the estimates of opposing parties are likely to be compared one with another. An over generous estimate may result in an opponent recovering a similar amount, while an under-generous estimate may result in a recovery on behalf of the client which does not reflect the actual costs involved."
The facts
The claimant, who at the material times was employed by the defendant, suffered injuries at work in May 1996 and July 1997. On 27 May 1999, he issued proceedings alleging that the injuries were caused by the defendant's negligence and/or breach of statutory duty. The claim form and particulars of claim were served on 2 September 1999. By its defence served on 2 February 2000, the defendant denied liability, causation and loss. Both parties completed and filed allocation questionnaires, and on 24 February, the claim was allocated to the multi-track. Apart from the costs estimates to which we...
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