Solutia UK Limited v Griffiths & Ors

On a standard-basis assessment, the reasonableness of instructing solicitors whose location attracts higher rates is judged objectively, but in the particular circumstances confronting the litigant when the choice was made. The availability of competent and less expensive regional solicitors is relevant, but it is not the ultimate test.

Prior knowledge, relevant expertise, successful conduct of related claims, the efficiencies of a co-ordinated approach, client confidence and the paying party’s conduct may justify the choice. A costs judge errs by concentrating excessively on whether another firm could have acted competently and failing to consider such material circumstances.

Following a gas escape from chemical works near Wrexham, 165 local residents instructed London solicitors who had successfully resolved two earlier groups of claims arising from the same incident. The third group’s claims settled for about £90,000, with costs to be assessed on the standard basis.

A costs judge held that instructing London solicitors was unreasonable because competent solicitors nearer to the claimants could have handled the litigation. Miss Barbara Dohmann QC, sitting as a deputy High Court judge, allowed the claimants’ appeal. The defendant appealed, seeking restoration of the costs judge’s decision.

The central questions were whether the choice of London solicitors was reasonable under RSC O.62,r.12(1), and whether the deputy judge was entitled under Part 52 of the Civil Procedure Rules 1998 to find the costs judge’s decision wrong.

Appeal dismissed unanimously, with costs.

1. Lord Justice Latham held that the governing inquiry was whether, having regard to the litigation’s extent and importance and to the litigants’ particular circumstances, the choice of solicitors was objectively reasonable. The existence of competent and less expensive solicitors outside London was relevant, but did not determine that inquiry.

2. The costs judge had concentrated on whether solicitors in Manchester or elsewhere could have handled the claims competently. He had given little or no weight to the circumstances existing when the third group instructed the London firm. Those circumstances included the firm’s successful settlement of the first two groups’ claims, its accumulated factual and technical knowledge, the avoidance of duplicated work, its established relationship with the defendant’s solicitors and the advantages of a co-ordinated approach.

3. The omission of those material considerations placed the costs judge’s decision outside the permissible ambit of reasonable discretionary decisions. The deputy judge was therefore entitled to hold that his exercise of discretion was flawed and to allow the claimants’ appeal.

4. Sir Christopher Staughton agreed, while stressing that the result depended on the particular circumstances and should not be treated as a general precedent for employing London rather than regional solicitors. The very substantial difference between London and Manchester rates was a relevant consideration, although it did not alter the result.

5. Lord Justice Mance agreed that competence elsewhere was a factor rather than the ultimate test. He emphasised the London firm’s previous knowledge and success, the villagers’ confidence in it, evidence of inefficiency among some local solicitors, the defendant’s failure to object during the earlier claims and its positive encouragement of some later claimants to approach that firm.

6. The court expressed serious concern that claimed costs of £210,000 exceeded twice the £90,000 recovery. Sir Christopher Staughton and Lord Justice Mance observed that, under the newer procedural regime, courts should use costs estimates and case-management powers to restrain disproportionate expenditure, particularly in group litigation. Those observations did not determine the appeal, which concerned litigation conducted under the former rules.

1. Court of Appeal (Civil Division): Dismissed the defendant’s appeal unanimously and upheld the deputy High Court judge’s conclusion that instructing the London solicitors was reasonable.
2. High Court, Queen’s Bench Division: Miss Barbara Dohmann QC, sitting as a deputy judge, allowed the claimants’ appeal because the costs judge had focused on the availability of other competent solicitors and had not given sufficient weight to the special circumstances surrounding the instruction.
3. Costs judge: Master Seager-Berry decided the preliminary costs issue against the claimants, holding that the action could competently have been handled by solicitors outside London and did not reasonably require London solicitors.