The Court of Appeal has for the first time considered the contentious issue of summary assessment of costs and allowed an appeal against an assessment of costs of £1,750 against costs claimed of £21,388 in the case of Contactreal v Davies and Davies. The proceedings had been commenced at the start of 1998 for a declaration under Section 81(1) of the Housing Act 1996 in respect of service charge arrears and insurance totalling £5,513.45. Prior to the hearing on 25 July 2000, the parties settled regarding the arrears, but as there was no agreement as to costs, the case was heard on costs alone by the circuit judge.
The case was a transitional matter in which a lot of the costs had been incurred pre-26 April 1999, totalling £7,686.15 plus VAT for solicitor fees and £1,586 plus VAT in counsel fees. By the time the case was heard on 25 July 2000, the claimant's statement of costs totalled £21,388.57 and the defendant's stood at £11,602.95. There had been one previous order for the claimant's costs in any event and three costs orders for costs in the cause at earlier hearings.
The claimant's request that the costs be subject to assessment was refused. Instead the court assessed the claimant's costs at £1,750, of which £750 related to the previous order for costs in any event. The judge referred to the figure given in the claimant's statement of costs as “absurd” bearing in mind 1999's figures, and said “it was out of all proportion to clock up these costs”.
The claimant appealed on the basis that, inter alia, the judge had failed to exercise his discretion correctly as to the summary assessment of costs and the issue of proportionality, and in particular failed to give proper consideration as to what pre-CPR costs would have been allowed on taxation, failed to give effect to the previous costs orders, and more generally failed to give proper consideration to Part 44.5. Permission to appeal was initially refused on 17 November 2000 on the basis that “costs were at large and very much within [the district judge's] discretion. Under the new rules proportionality matters… the judge's conclusion overall does not seem outside the generous range of discretion”. The appellant requested an oral hearing, at which permission to appeal was granted. The Court of Appeal set aside the order as requested, and ordered that the appellant's costs as awarded in the judgment of 25 July 2000 be remitted for detailed assessment on the standard basis.
It was stated by the Court of Appeal that, once the £750 awarded at an earlier hearing had been taken into account, only £1,000 had been awarded for the whole of the proceedings, including court and counsel fees. This was far too low and outside the proper exercise of the judge's discretion. In considering proportionality, the judge had placed too much weight on the size of the bill and on the amount in issue, and had failed to distinguish pre-Woolf costs from those incurred under the CPR. So he had applied his discretion incorrectly.
The judge was commended for applying the principles of proportionality, reflecting the overriding objective and endeavouring to allow only reasonable costs. It was also noted that summary judgment is by its nature a “rough and ready process” with a significant margin for disagreement. But in this case the Court of Appeal felt that the judge had erred in the exercise of his discretion.
The discretion of the judge to assess costs summarily, while wide, should not be exercised so narrowly as to ignore all considerations beyond the costs claimed and the amount of money involved. Proportionality extends beyond this to a consideration of the time spent, the complexity of the case and the financial position of the parties. Costs may exceed the amount in dispute and still be proportional under the CPR, and while it is probably fair to say that in general the Court of Appeal will usually not entertain appeals on the question of summarily assessed costs, such an appeal will be successful if it can be shown that the judge acted beyond the wide discretion afforded under the CPR.
James Wilson is an assistant solicitor at Shoosmiths and acted for Contactreal in its appeal