COSTS MONKEY

THE PROPORTIONALITY TEST

 

 

 

Home Office –v- Lownds - Court of Appeal 22nd March 2002

 

The definitive test. If the overall costs are considered to be disproportionate the costs will be assessed on the basis each item is necessary.

 

Lloyds TSB Bank Plc –v- Lampert [2002] EWHC 249

 

– the Deputy DJ had incorrectly failed to properly apply the 2-stage proportionality test.

 

Giambrone –v- JMC Holidays [2002] EWHC 2932

 

- the proportionality test is not supposed to be a long drawn out process. It should be assessed and decided in under an hour. Leave to appeal proportionality test decisions should be resisted.

 

Ortwein –v- Rugby Mansions Ltd [2003] EWHC 2077 (Ch)

 

Bill of costs was 107 pages long (narrative 8 pages) excluding 120 pages of schedules! The total costs claimed were £350k, 7 times damages. Costs of DA over £10k. The Seven Pillars of Wisdom NOT to be used as a ‘checklist’. An experienced judge could decide proportionality by reading the papers and the bill

 

Gertrude Clyde & Others –v- Thomson Holidays, SCCO November 1, 2002, Costs Judge Campbell

 

14 Claimants travelling on a coach when a collision occurred with a Turkish taxi driver. The fact that 14 Claimants were involved did not necessarily make it a complex case Individually none of the claims were very large. Total damages were only around £63,000 for all Claimants put together. The bill of costs that was presented fell just short of £170, 000.

 

When applying the Lownds test one should look at the total costs pre and post CPR and apply the Seven Pillars of Wisdom. If the costs are then found to be proportionate (as in this case) the items in the post-CPR costs will have the necessity / reasonableness test applied.

 

EXAGGERATED CLAIMS

 

A Claimant who can show that, at the time of making a claim, the amount they claimed was what they reasonably believed they would recover then they should not be criticised. This must be contrasted to claims made at a level much higher than that which the Claimant reasonably believes they will recover. Take a look at paragraph 38 of Home Office v Lownds [2003].

 

This is an important distinction. For example, a Claimant who genuinely claims £100,000 based on the facts as they appear at the time, but whose claim as the case develops reduces the value to £20,000, has done nothing wrong. This is very different to a Claimant has purposely exaggerated their claim and there are several authorities which deal with exaggerating Claimants.

 

Sirius International Insurance Corporation and ERC Frankona Ruckversicherungs Aklein-Gesellshaft SCCO July 9, 2002, Costs Judge Wright

 

-when deciding what is necessary conduct is an important factor

 

-parties should co-operate in order to keep costs proportionate

 

Good case to use where the amount of damages actually awarded is much less than the total claimed. In deciding whether the costs are proportionate the court should have “regard to the sum that it was reasonable for him to recover at the time he made the claim”.

 

If assessing the costs of the Defendant, having regard to what he believed the Claimant might have recovered if the claim succeeded.

 

However, the additional costs incurred in relation to exaggerated claims will not be allowed, only the costs of pursuing a reasonable claim.

 

Ford –v- GKR Construction [2000] 1 WLR

 

In contract to the Booth case the Claimant was not aware that their claim was exaggerated.

 

Booth –v- Britannia Hotels Ltd [2002] EWCA Civ 579

 

Claimant massively exaggerated her personal injury claim. The claim was pleaded at over £600,000 and settled for only £2500 when the Claimant chose to accept an offer made by the Defendants over two years previously. The reason why? A few weeks before trial the Defendants disclosed their video evidence which clearly showed that the Claimant wasn’t really suffering from the injuries she said she was. This was unmistakably an example of an exaggerated claim – the Claimant was aware they were making a false claim. The final bill of costs submitted by the Claimants was over £96,000! It was only when the case reached the Court of Appeal that it was agreed that a reasonable amount of costs should be allowed “in order to establish a quantum against the background that, at the end of the day,  the sum accepted was £2500…”

 

Morgan v UPS [2008] EWCA

 

This case shows how a Claimant who had told lies was still entitled to his costs after beating a Defendant’s Part 36 offer. The claim appeared to have been initially exaggerated but the Claimant had revised his claim. This case specifically distinguishes the facts from Painting.

 

Costs Monkey