Case Update: Judge expressing opinion on proportionality of incurred costs

profile_helen_rutherford1 By Helen Rutherford

 

In the recent case of Eil v Knowsley Metropolitan Borough Council (15/06/16) the court was considering the costs position on a claim arising out of a sexual assault. Due to the medical evidence the Claimant limited the claim to £50,000. A budget was submitted by the Defendant for £26,000. The Claimant’s budget was £104,373, of which half had already been incurred.

The judge at the CMC had described the costs as outrageous, given that the only issue was the passage of time. The issues at trial would be limited. the Defendant only wanted to cross examine the Claimant and would not be calling expert evidence.

The judge did not believe the trial would take two days. She considered the budget and decided that the correct figure was £55,379, of which £30,000 was already incurred.

The Claimant was given permission to appeal on the issue of medical evidence and a number of individual costs orders but the case settled before the appeal with costs remaining to be assessed. The Claimant argued that the judge had erred in failing to make allowance for the future costs of the CMC. The judge had limited the Claimant to the amounts already incurred. The concern was that a judge doing the assessment may then assess those costs as being disproportionate, reduce them and thus doubly penalise them, given the comments that the budget was excessive and outrageous.

It was held that a judge exercising power under CPR 3.15 to examine past and future costs estimates was entitled to state whether they found the estimates to be reasonable and to set a budget. A costs judge carrying out an assessment under CPR 3.18 should have regard to the budget and not depart from it without good reason.

The judge had taken the wrong approach to the costs of the CMC in that if she had approved the incurred costs sum without stating an opinion on its proportionality it would not have been open to challenge.

The appeal court made a clarification that, for the benefits of the costs just, the CMC incurred costs were not to be treated as grossly excessive but rather as an approved sum.

Overall the budget as approved at just over £55,000 was not excessive and was not open to challenge.

The appeal court only allowed the appeal on the narrow point of the incurred costs for the CMC. It pointed out that this appeal was not a proportionate use of the court’s time. The costs of the appeal were not a sensible expenditure.

Obviously one issue to consider when looking to appeal is the proportionality of that course of action. In this case the court was critical of the course of action because it seemed disproportionate but did still allow the appeal with respect to the incurred costs.

What this case demonstrates is that in approving the budget (having not allowed the future costs of the CMC and limited the Claimant to the incurred costs) had the judge not commented on the proportionality it would not have been challenged. Because of that comment it was thought that the ultimate costs judge might reduce the costs further, and was seemingly being encouraged to do so by the CMC judge. All the appeal achieved was that opinion effectively being erased and the incurred costs of the CMC were to be treated as an approved sum and not open to challenge.

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