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Wednesday 17th December 2003
Insisting on Estimates: Leigh v Michelin Tyres PLC [2003] EWCA Civ 1766
In Leigh v Michelin Tyres PLC [2003] EWCA Civ 1766 on 8th December 2003 the Court of Appeal gave guidance on how costs estimates in allocation questionnaires should affect the assessment of costs.
The claimant was injured at work and the claim was allocated to the multi track. The Claimant’s solicitor filed an allocation questionnaire stating that profit costs of £3,000 had been incurred and overall profit costs would be £6,000. The trial date was set for 23 July 2001 but the case settled for £48,000 plus costs on 16 July.
The claimant’s solicitor lodged a bill for £21,891.28 which to the Defendant’s dismay was allowed on assessment by a district judge at £20, 488.53. The Defendant’s appealed arguing that Claimant’s solicitor should be limited to the estimate plus 15% and relied upon Costs PD 6.6:
“6.6 On an assessment of costs of a party the court may have regard to any estimate previously filed by that party, or by any other party in the same proceedings. Such an estimate may be taken into account as a factor among others, when assessing the reasonableness of any costs claimed.”
The Court of Appeal agreed that the estimate had been hopelessly inadequate and that no adequate explanation had been given for that gulf between the bill and estimate, but nonetheless dismissed the appeal. A poor estimate alone is insufficient to warrant a penalty. This was tantamount to treating estimates as a cap. However the claimant’s solicitors were criticised for not serving a copy upon their client pursuant to Costs Practice Direction 6.4(1). The Court held that such costs estimates may be taken into account where one of the following three criteria are met:
i) Estimates made about the overall likely costs of the litigation were to be a useful yardstick by which the reasonableness of the costs finally claimed could be measured. Any substantial difference would require an explanation.
ii) If the paying party relied on the estimate, for example if the paying party pursued the litigation in the belief his opponent’s costs were relatively low.
iii) Where the court may have made a different case management direction about the conduct of a case had a realistic estimate been given.
The tests are to be applied at the outset of the assessment to avoid the danger of the double jeopardy envisaged in Lownds. In the present case the receiving party argued that the estimate had been so inadequate because of inter alia late disclosure and unexpected expert engineering evidence. The court made clear that reasonably accurate estimates could be given for run of the mill cases at the Allocation Questionnaire stage and must be updated at the Listing Questionnaire stage. Estimates were part and parcel of both modern case management and proportionate litigation. In the court’s view it is therefore more vital than ever that costs estimates are treated seriously and sufficient provision is made for the future. If that future includes costs capping on the basis of estimates, the importance of this decision cannot be stressed too much.
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