The recent decisions reported by the Supreme Court Costs Office in cost appeals numbers 1 to 5 of 2004 highlighted several points

No1 of 2004 MG Young v JR Smart (Builders) Ltd

This case involved an interlocutory appeal to the Court of Appeal.

Leading counsel was instructed on a hearing for permission to appeal that lasted 35 minutes and on the substantive appeal that lasted a day.

The appeal was allowed and the appellant was awarded two-thirds of their costs.

A bill was lodged totalling 102,000, of which the fees of leading counsel were 62,000 and for junior counsel 25,400.

The deputy costs judge held that the costs were disproportionate and that there had been an over-involvement generally of counsel.

He allowed leading counsel 12,200.

On appeal, the judge considered various authorities, including Lownes v Home Office [2002] 1WLR 2450 and R v Dudley Magistrates Court ex parte Power City Stores Ltd [1990] 140 NLJ 361.

The question for the judge was whether the deputy costs judge had applied the correct test.

The judge held that the judgment in R v Dudley Magistrates Court must now be subject to the Lownes v Home Office judgment.

The instruction of leading counsel is not exceptional to the general rule concerning expenditure.

The judge considered that the only possible conclusion was that the costs claimed were ridiculously high.

The seven items under CPR 44.5(3) had to be considered in any case such as this.

Neither the approach nor the conclusion of the deputy costs judge could be faulted.

The judge concluded with a reference to the observations of Mr Justice Moreland in Giambrone and Others v JMC Holidays [CLR 2003 part 2, page 189], in which he said: 'I express the hope that it should be almost never necessary to appeal the preliminary decision, at the first stage, of proportionality.

I would advocate active discouragement of such appeals.'

No2 of 2004 Gillian Melvin v England Palmer (a firm)

This case concerned a dispute over interest in a property in Richmond, south London.

The costs issue was in respect of solicitor and own client bills.

The principle issue was a question of a counsel's fee for the hearing and the preliminary work.

The solicitors had agreed an inclusive fee of 9,000, but neither solicitors nor counsel could produce a skeleton argument or written submissions, which were included in that payment.

Counsel was unable to produce either the documents or the disks on which the documents had been stored.

The costs judge heard evidence from the solicitor and read attendance notes and decided that on the balance of probabilities the work had been properly done and that he was not prepared to make any reduction in counsel's fee.

The claimant appealed, maintaining that the burden of proof was on the solicitor and/or counsel to produce the necessary evidence, that this evidence had not been produced and therefore counsel was not entitled to his full fee.

The judge carefully considered the documents which underlay the costs judge's decision to find in favour of the solicitors, and could find no evidence to suggest that the costs judge had misdirected himself, and accordingly, followed the decision of Mr Justice Buckley in Sally Mealing-McLeow v The Common Professional Examination Board [2000] 2 Costs LR223.

There were no grounds interfering with the cost judge's decision.

No3 of 2004 Chappell v De Bora's of Exeter (a firm)

This action related to a personal injury claim in the defendant's shop in Exeter.

The claimant, who lived in Exeter, instructed local solicitors to act under a conditional fee agreement with a success fee of 71%.

An after-the-event insurance policy was also arranged.

The claimant had an existing before-the-event (BTE) insurance policy with DAS.

DAS would not cover the claim being done by the Exeter firm, as it was not a member of the DAS panel.

The action was eventually settled for 31,156 plus costs.

On the costs assessment, the defendant referred to the Court of Appeal's decision in Sarwar v Alan [2002] 1 WLR 125, in which the Master of the Rolls said: 'We have no doubt that, if a claimant possesses pre-existing BTE cover which appears to be satisfactory for a claim of that size, then in the ordinary course of things that claimant should be referred to the relevant BTE insurers.'

The defendants accepted that this quotation was preceded by the Master of the Rolls saying: 'In this case, we are concerned only with a relatively small personal injury claim in a road traffic accident.

We are not concerned with claims which look as if they will exceed about 5,000, and we are not concerned with any other type of BTE claim.'

However, the defendants submitted that the logic of the judgment should be applied to other cases where BTE insurance existed.

It was agreed that the nearest DAS panel solicitor would be in Bristol or Salisbury.

The judge concluded that it was reasonable in a case of this kind for the claimant to instruct solicitors of her choice in Exeter rather than DAS panel's solicitors, the nearest of whom would have been miles away from where she lived.

Accordingly, he dismissed the appeal in so far as it related to the claimant's choice of solicitor.

The judge had regard to section 17.8(2) of the Costs Practice Direction, and reduced the success fee to 40%.

No4 of 2004 Lynch v Paul Davidson Taylor (a firm)

The main claim in this action related to trespass by the owner of a neighbouring property.

Proceedings were started and summary judgment obtained.

These costs proceedings related to solicitor and own client bills.

The preliminary point was taken before the costs judge that the effect of section 74(3) of the Solicitors Act 1974 was that the solicitors were limited to the costs they were able to recover from the other side at the summary assessment.

The costs judge rejected that contention and assessed the costs at a higher figure forward.

On appeal, the judge affirmed the decision of the costs judge.

The judge held that while there was no direct authority on the point, if the construction contended for of section 74(3) were to be upheld, it would lead to absurd results.

It would mean, for example, that if, as in this case, there had been a formal assessment of the costs as between the parties, that would act as a cap, whereas if there had been no such assessment, either because the costs were agreed or because the action failed, then there would be no such cap.

The judge, however, emphasised that section 74(3) 'bit' in cases where, as between the parties, there were fixed scales of costs, and again emphasised how important it was for solicitors to take the greatest care to discharge their responsibilities on control of costs, in particular by following the Law Society's advice about ensuring that their terms of business were routinely put in writing.

No5 of 2004 Bim Kemi AB v Blackburn Chemicals Ltd

This case concerned a Commercial Court matter which was overruled by the Court of Appeal.

The costs in relation to Commercial Court had been assessed and paid in accordance with the order of that court.

The Court of Appeal then had to give consideration to the effect of that payment of costs.

The court held that the cost of the detailed assessment in the court below should be ordered to be summarily repaid forthwith.

Interest was to be paid on the costs already paid, and ordered to be repaid, at 1% over base rate from the date when they were paid.

The court held that power to award interest on costs under Civil Procedure Rule 44.3(6)(g) was given to the court and should be exercised in this case from the date of the order of the court below.

The Supreme Court Costs Office prepares summaries of recent costs appeals, copies of which are available from the Law Society library, tel: 0870 6062511, or visit: www.courtservice.gov.uk/3561.htm