THE BRIAN MAY COSTS CASE: TRANSCRIPT NOW AVAILABLE: PROPORTIONALITY APPEAL DID NOT BITE THE DUST
Thanks to the good offices of the ACL the judgment on appeal of May -v- Wavell Group Ltd is now available here. The claimant’s appeal on the issue of proportionality was allowed. The figure of £35,000 plus vat for costs was replaced with £75,000 plus vat.
” In my view the new rules intended a fresh start. It seems to me that one has to go back to the wording of sub-rule 44.3(5) and reach a judgment as to the amount of costs whose relationship with all the factors identified in that sub-rule is a reasonable one. Whether the relationship is reasonable is, in my view, a matter of judgment, rather than discretion, and, as I have said above, requires a costs judge to attribute weight, and sometimes no weight, to each of the factors (a) to (e). Further, it seems to me that the word proportionate is intended to have a consistent interpretation across rule 44.3(2), rule 44.3(5) and 44.4, which means that in considering proportionality the court is to have regard to all the circumstances (see CPR 44.4) which includes, but is not limited to, the further factors specified in CPR 44.4(3) even though they are not specifically referred 26 to in CPR 44.3. There is a considerable degree of overlap but the plain intention is that there should be a holistic approach; the costs judge is intended to stand back and look at the overall picture.
56. Whether the relationship between the costs and the relevant factors is reasonable requires an objective assessment and an objective balance to be undertaken in respect of them with a view to achieving the policy objectives of compensating the receiving party for his expenditure but not requiring the paying party to pay more than the litigation warranted.”
The claimants brought an action in private nuisance. Proceedings were issued and the claimants accepted the first offer of £25,000. The claimants were automatically entitled to their costs.
The bill of costs came to £208,236.54. All the work was done post 1 April 2013 and subject to the test of proportionality.
After an assessment of the costs on an item by item basis on assessment the reasonable costs came to £99,655.74.
The Master reduced the recoverable costs to £35,000 plus VAT. The case was at an early stage when it settled. The proportionate amount of costs is inevitably smaller for a case that settles early than one that reaches a final hearing.
The claimants appealed the assessment.
The appeal was allowed and the figure of £35,000 replaced with £75,000 plus VAT.
THE SUMS AT STAKE
The judge, His Honour Judge Dight, CBE sitting with Master Whalan held that the Master had misconstrued the sums at stake.
The judge firstly considered the evidence in relation to the value of the case.
64. On a detailed assessment I would not have expected to see valuation evidence or indeed specific evidence as to the rental value of the property in question but some material on which a costs judge could properly reach a view as to the sums in issue. The court at that stage is not being asked to consider what sum would have been awarded but at a range which fairly represented the sums in issue between the parties. As the respondents rightly submit, there were no admissions in this case and therefore whatever the appellants claimed was in issue between the parties. A conservative view (by way of judicial notice or otherwise) of the rental value of the appellants’ property would have shown that the potential damages were far greater than the £25,000 which the learned Master concluded to be the sum in issue between the parties. The county court deals with many different types of property disputes and it would readily be appreciated by a judge of the court that the letting value of the appellants’ property and the diminution in it arising from a nuisance could be substantially more than the sum for which the claim settled. It would not have been unreasonable for the learned Master to conclude that the annual letting value of each house was £500,000 and that a reduction due to the alleged nuisance for the period claimed would have been in the range pleaded by the appellants, namely £50,000 to £100,000.
65. Nor do I agree that there was no material before the court on which the learned judge could have come to a conclusion that a figure greater than £25,000 was in issue. The claim form, pleadings (both verified and therefore having the status of evidence) and narrative in the bill together set out the figures and the basis for them. In undertaking the proportionality assessment the learned Master could have had regard to them. Had he done so he would have concluded that the sums in issue were £50,000 to £100,000. In terms of county court litigation that puts the claim into a different context.
66. The Master was, of course, entitled to have regard to the figure at which the case settled but only as part of the overall weight to be attached to the first factor. A settlement figure might provide some indication of the former battle ground but it is the battle ground which is to be identified when looking at the “sums in issue” and not the final figure which brought the battle to an end.
67. The Master in looking at the final figure and considering the sums in issue appears to have been looking for the appellants’ view as to the value of the claim. In one sense there will always be a subjective element to the question of what sums are in issue because account has to be taken of the sum which a claimant chooses, perhaps on advice, to value his claim at and one has to take account of the sum or sums which a defendant chooses, again perhaps on advice, to admit or challenge. However the task of the court is, in my judgment, to undertake an objective evaluation of the sums which are in issue having regard to all the material before it, including the highest figure put on his claim by the claimant and the lowest figure, if any, admitted by the defendant. The task of the court is, it seems to me, to determine what realistically is in dispute because it is unlikely that a reasonable relationship exists between costs and a figure (whether claimed or admitted) which is simply plucked from the air or is in some other respect fantastic. A paying party ought only to be expected to pay the price of an objectively realistic case advanced against it.
68. In my judgment the learned Master therefore misinterpreted the meaning of “sums in issue in the proceedings” and misapplied the test. Had he directed himself to ascertain on an objective basis the range of figures realistically in dispute between the parties having regard to the reported decisions on nuisance caused by development works and taking account of the material before him he should have come to the conclusion that the range was £50,000 to £100,000.
There was then a consideration of the issue of “complexity”.
69. Ground 2 looks at the complexity of the litigation. The Master found that the case was neither legally nor factually complicated. Certainly the law in the area is clear, and I have set out the relevant principles above, but the absence of a dispute between the parties as to the applicable legal principles does not mean that those which do apply area not complex. Nevertheless the appellants conceded that the case was not legally complicated. In a sense the facts here were not complicated, in that there could have been no real dispute as to the nature and extent of the works which were carried out by the respondents. On the other hand I have no doubt that a nuisance claim against a developer is one which requires a certain degree of expertise and specialist knowledge of both the law which applies and the evidence necessary to prove the claim. In order to prove the claim on what is really the first Andreae principle alone an analysis has to be undertaken to identify whether “the permissible line” has been crossed and whether the developer has taken reasonable steps to minimise the disturbance to the adjoining owners. There is a judgment call to be made. Expert evidence on the issue of liability is necessary at an early stage before such a judgment can be made by the claimant’s advisors. A claim in nuisance requires a relatively sophisticated pleading. If one compares such a claim to the range of claims which are made in the county court it can readily be seen that this is towards the more complex end of the range. It is almost impossible to generalise but there will be many road traffic accident claims and those arising out of sale of goods or contracts, all of similar value (ie £50,000 to £100,00) 32 which may be much less complex than this claim. On the other hand there will be lower value chancery and clinical negligence claims, for example, which may be more complex. Although this case may not have been complex within its category it seems to me that it was complex when compared with other claims of similar value within the county court
The Master reduced costs because there was an early settlement. The judge considered this approach:-
70. By ground 3 the appellants argue that the learned Master was wrong to take account of the fact that the case settled at an early stage because that is not a factor to which the rules specifically draw attention, whereas the respondents say that they do. In my judgment the rules require a costs judge to have regard to all the circumstances which must include the fact that it settled rather than proceeded to trial. However, the real question is as to the impact on the overall assessment of having regard to that fact. I accept, as the respondents submit, and it is, to my mind, obvious that if £100,000 is the proportionate price to be paid after trial it is not likely to be the proportionate price at an earlier settlement. However, that does not address the real point raised by the appellants in the third ground, which is that the Master appears to have reduced the costs further than he would otherwise have done simply because the case settled. In oral argument the respondents suggested that the Master had not squeezed the costs greater at settlement, than he would have done at trial but simply took into account how far the claim had proceeded. I am not sure that is correct, otherwise, I ask rhetorically, why would he have formed the view that the stage which the claim had reached was relevant to the assessment of proportionality. If the Master was really saying to himself that the costs looked disproportionately high for a claim which settled soon after issue then the appellants’ argument would have no substance but paragraph 46 of his judgment suggests otherwise and, insofar as he is really saying that early settlement requires a greater reduction in the overall costs, I respectfully disagree.
71. I have dealt with the question, raised by ground 4, of how the court should take account of the factors once weight has been given to them earlier in this section of the judgment. The search ultimately to be undertaken by the costs judge is for the figure which bears a reasonable relationship to the five factors in the new rule, having regard to all the circumstances. This will be a holistic approach and may be done as the item by item assessment proceeds or as a separate and subsequent stage. However, I doubt, for the reasons given above, that the proper interpretation of the rules requires or indeed entitles 33 a costs judge at the end of an item by item assessment to impose a very substantial reduction on the overall figure without regard to the component parts. I reiterate that what the rules require the judgment to achieve is a balance, a reasonable relation, a correlation which may necessitate a certain amount of fine tuning. There may be a limited range of acceptable difference in the total figure once the rules have been applied, in that different judges could legitimately come to slightly different conclusions as to the proportionate sum, and so long as they have applied the rules correctly they should not be open to challenge on appeal. However, the final figure in this case does not appear to be based on any specific mathematical calculation nor is there a specific explanation of how the weighting of the various factors resulted in the final figure.”
I note the image you picked for this post; I suspect it’s a little too late to apply the reasoning of this case to Lucasfilm v Ainsworth!