Wraith v Sheffield Forgemasters Ltd (Truscott v Truscott)

On a standard-basis taxation, the court must decide first whether the costs were reasonably incurred, including whether it was reasonable to instruct the particular solicitor. It must then decide the reasonable amount to allow.

Higher rates outside the locality do not alone make the instruction unreasonable. The decision requires an overall assessment of the litigant’s reasonable interests, including the importance and complexity of the case, locations, advice received, accessibility and likely fees. If the choice of solicitor was reasonable, the recoverable rate is assessed by reference to comparable firms in that solicitor’s area. If it was not reasonable, recovery is assessed by reference to the solicitor who reasonably ought to have been instructed.

These conjoined appeals concerned the taxation of costs on the standard basis where the successful party had instructed solicitors charging higher rates than firms local to the court or litigant.

In Truscott v Truscott, a district judge had allowed London solicitors’ charges after they successfully resisted an improperly obtained charging order. Judge Coltart allowed the paying solicitors’ appeal because the London rates exceeded local rates.

In Wraith v Sheffield Forgemasters Ltd, a severely injured Sheffield claimant’s trade union instructed London solicitors. Potter J, sitting with assessors, rejected the paying party’s objection to the London rates: [1996] 1 WLR 624. The common issue was whether non-local solicitors’ charges were recoverable from the paying party.

1. Appeals allowed unanimously. Kennedy LJ gave the judgment, with which Waite and Auld LJJ agreed. The governing words of Order 62 rule 12(1) of the Rules of the Supreme Court require two separate decisions: whether the costs were reasonably incurred, and what reasonable amount should be allowed.

2. The first question concerns the reasonableness of the litigant’s decision to retain the solicitor concerned. It is not answered solely by comparing that solicitor’s hourly rates with local rates. The court must assess all relevant circumstances from the position of a reasonable litigant.

3. Relevant matters include the importance and apparent complexity of the dispute, the locations of the litigant, court and solicitor, dissatisfaction with previous advisers, recommendations, accessibility, and what the litigant knew or could reasonably be expected to know about comparative fees. Specialist experience is relevant only if it formed part of the reason for the instruction.

4. If retention was reasonable, the proper rate is the broad average cost for a comparable firm in the area in which that solicitor practises. If retention was unreasonable, the reasonable amount is assessed on the notional basis of the solicitor or class of solicitor who should have been retained.

5. In Truscott v Truscott, Judge Coltart erred by treating the higher London rates as conclusive. On the relevant factors, it was reasonable to retain the London firm. His order was set aside and the district judge’s order restored.

6. In Wraith v Sheffield Forgemasters Ltd, the trade union’s knowledge of available local representation and its likely cost was imputed to the claimant. A union’s general practice of sending work to London solicitors was of limited relevance. Where there was no London connection or distinctive expertise required, London-rate costs might not be recoverable. The matter was remitted to the Deputy District Judge.

• Court of Appeal (Civil Division): Allowed both appeals. It restored the district judge’s order in Truscott v Truscott and remitted Wraith v Sheffield Forgemasters Ltd to the Deputy District Judge.
• High Court: Potter J, sitting with assessors, had rejected the objection to the London solicitors’ rates in Wraith v Sheffield Forgemasters Ltd: [1996] 1 WLR 624.
• County Court: Judge Coltart had allowed the paying solicitors’ appeal in Truscott v Truscott, holding that it was not reasonable to instruct the London firm if its rates exceeded local rates.