Willis v Nicholson
| Jurisdiction | England & Wales |
| Judge | Lord Justice Buxton,Lady Justice Smith,Lord Justice Wilson |
| Judgment Date | 13 March 2007 |
| Neutral Citation | [2007] EWCA Civ 199 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2006/2214 |
| Date | 13 March 2007 |
[2007] EWCA Civ 199
[2006] EWHC 2684 (QB)
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MR JUSTICE FIELD
Lord Justice Buxton
Lady Justice Smith and
Lord Justice Wilson
Case No: A2/2006/2214
Mr Jeremy Morgan QC (instructed by Berrymans Lace Mawer) for the Appellant
Mr Nicholas Bacon (instructed by Harris Cartier LLP) for the Respondent
Hearing date : 23 January 2007
This is the judgment of the court.
The facts and the course of the litigation
The accident out of which these proceedings arose regrettably occurred as long ago as September 2002. It was a routine traffic accident, in which Mrs Willis, driving her car, knocked Mr Nicolson off his motor bike. But the consequences for Mr Nicolson were far from routine. He suffered catastrophic, life-long, injuries. The damages recoverable are likely, on full liability, to be at least in the area of £ 5 million.
Proceedings were not issued until shortly before the expiry of the limitation period in September 2005, although the claim had been intimated by informal letter more than a year before that. The proceedings were and are strenuously defended by Mrs Willis' insurers. Although Mrs Willis had been convicted in August 2003 of an offence of driving without due care and attention in respect of the incident, her advisers pleaded, and maintained the plea, that the whole of the fault for the accident was that of the claimant, and that Mrs Willis' criminal conviction had been against the weight of the evidence. As a result, an application for an interim payment was strongly opposed, and it was not until April 2006, by order of Holland J, that such a payment was made. A separate trial was ordered in relation to liability. In July 2006, Sir John Blofeld held Mrs Willis to have been principally to blame, but that Mr Nicolson was one-third contributorily negligent in not keeping such look-out as enabled him to adjust his speed to avoid Mrs Willis. That led to a substantial increase in the amount of interim payment already made. A hearing of the issues of quantum was fixed for March 2007, but has now been adjourned for reasons unconnected with the present application.
This appeal, however, is not about the merits of the case, but about the costs incurred and to be incurred by the claimant, and whether the court should order a “cap” on those costs. There have been three occasions when the claimant has been obliged to provide estimates of his costs. The first two were under the requirements of CPR part 43 PD 6.4(1), at the time of the Allocation Questionnaire in October 2005 and of the pre trial check list on 19 June 2006. The third was by order of the court in connexion with the present application on 31 July 2006. The estimates provided on those occasions were as follows:
October 2005
Costs to date £75,000 to £80,000
Further costs to conclude £125,000 to £170,000
Total costs for the whole action £200,000 to £250,000
June 2006
Costs to date £417,252
Further costs to end of liability trial £146,937
Thus, total costs to end of liability trial £564,189
July 2006
Costs to date £499,846
Further costs on quantum £459,496
Total costs for whole action £959,342
The costs estimated for the Defendant were very significantly smaller than those of the Claimant but, as has often been observed, that discrepancy is characteristic of heavy actions of this type.
The size of the figures put forward on 19 June 2006, and the increase from the original estimate, caused the Defendants to issue an application for a costs capping order. That application was dismissed, but pending an estimate from the claimant for all future costs for the whole action. That was the estimate provided on 31 July 2006. The size of that estimate led to the application with which this appeal is concerned, filed on 22 September 2006, which simply asked for “an order that the Claimants' solicitors' costs be capped”, and gave as the reason for the order that “there is a real and substantial risk that without such an Order costs will be disproportionately or unreasonably incurred”.
That application came before Field J on 13 October 2006. He refused to impose a cap as such, holding that he was unable to find that there was a real risk that future costs incurred from 31 July 2006 would be unreasonable and disproportionate (that being the asserted basis of the application, as set out above), but he felt that the Defendant “merits a measure of protection”. He accordingly ordered that costs incurred from 31 July 2006 to the final determination of the claim should not exceed the estimate given of £459,496. That order was no burden to the Claimant, since he was in any event prepared to give an undertaking to that effect. The Defendant appeals the order, saying that on his findings the judge should either have ordered a lower limit, or have remitted the case to a costs judge for him to set such a cap.
Before addressing that specific issue it is necessary to say something in general terms about “costs capping”.
Costs capping
In cases where a Group Litigation Order has been made it is well recognised, first, that excessive costs may be a significant problem; and second that the court must for that reason, amongst others, exercise direct and continuing control over the proceedings. Costs capping, or something equivalent to it, is therefore a familiar exercise in that context. And after some uncertainty as to the exact basis for such an order in an individual case, such as the present, it is now settled that the various weapons of the Civil Procedure Rules give the court ample powers to make an order at any stage of the proceedings: King v Telegraph Group Ltd [2005] 1 WLR 2282[85]. The effect of a costs capping order is to advance the process of assessment and limitation of costs from the assessment after trial to an earlier point in the process; and to limit the amount of recoverable costs prospectively and not merely by an exercise conducted after the costs have been incurred. Unless a successful application is made to increase the cap, the party against whom an order has been made cannot recover on final assessment more than the amount of the order. That does not prevent the paying party from attempting on final assessment to reduce that amount, but the Senior Costs Judge indicated to us that his colleagues, having assessed the costs once, would look for good reasons, usually founded in a change of circumstances, before they intervened further.
Such orders are essentially case-management decisions, depending heavily on the judge's perception of the needs of his case, and general statements about when and in what circumstances a costs capping order should be made can only be general statements. We were shown some observations of first-instance judges, some of them of great experience in this field, that orders should only be made in limited circumstances, of which the most conspicuous is the dictum of Gage J (as he then was) in Smart v East Cheshire NHS Trust [2003] EWHC 2806 (QB) [22]:
the court should only consider making a costs cap order in [single] cases where the applicant shows by evidence that there is a real and substantial risk that without such an order costs will be disproportionately or unreasonably incurred; and that this risk may not be managed by conventional case management and a detailed assessment of costs after a trial.
By contrast, there have been various indications in this court encouraging the use of costs capping. Those indications include the observations of Sir Christopher Staughton in Solutia UK Ltd v Griffiths [2002] PIQR P176 [27]-30]; Dyson LJ in Leigh v Michelin Tyre plc [2004] 1 WLR 846[34]; and in particular Brooke LJ in King v Telegraph Group Ltd [2005] 1 WLR 2282[92]:
it would be very much better for the court to exercise control over costs in advance, rather than to wait reactively until after the case is over and the costs are being assessed.
This difference of opinion is in need of resolution, but for the reason given in §24 it is not resolved in this judgment.
Something must also be said about costs estimates. A capping exercise cannot proceed unless the court has estimates on which to work; and where an estimate has been ordered, and the costs sought on assessment differ by more than 20 per cent from that estimate, paragraphs 6.5A and 6.6 of the “Costs Practice Direction” (...
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