Voice and Script International Ltd. v Alghafar

The absence of an order allocating proceedings to the small claims track does not prevent the court from assessing costs consistently with the small claims costs regime. Costs remain discretionary and must satisfy the overriding requirement of proportionality.

Where a claim never had a true value above the small claims limit and would have been allocated to that track if allocation had been sought, the normal rule is that the small claims costs regime should apply, unless specific factors justify a different approach.

The claimant sought damages arising from the defendant's failure to return a video card. Although the claim was pleaded at £9,140, it included double recovery and mistakenly treated a dollar figure as pounds sterling. The only established loss was £2,502.43.

District Judge Jenkins awarded ordinary costs of £6,000 because the proceedings had never been allocated to a track. On appeal, His Honour Judge Oppenheimer reduced the damages, interest and costs, but upheld the district judge's approach to costs.

The defendant brought a second appeal on whether the absence of allocation prevented assessment under the small claims costs regime.

1. Appeal allowed unanimously. Lord Justice Judge, with whom Lord Justice Dyson agreed, held that District Judge Jenkins had misdirected himself by treating the absence of an allocation order as conclusive. Although that omission meant that the small claims costs regime was not the virtually automatic starting point, it did not prevent the court from considering an assessment consistent with that regime.

2. The court could apply the small claims costs regime to a claim which should never have exceeded the small claims limit. That conclusion followed from the discretionary nature of costs orders and the overriding requirement of proportionality in civil litigation, including when determining costs.

3. The case was materially different from an ordinary claim genuinely valued above £5,000 which ultimately recovered less. Even on the claimant's best possible case, no award exceeding approximately £4,003 could have been made. The greater sum originally pleaded resulted from mistake, oversight or carelessness, although there was no evidence of bad faith.

4. Lord Justice Judge held that, absent specific factors suggesting otherwise, the normal rule in a case which would have been allocated to the small claims track if allocation had been sought is that the small claims costs regime should apply. Judge Oppenheimer should therefore have intervened in the district judge's exercise of discretion.

5. The costs incurred up to and including 13 June 2001 were remitted to the district judge unless agreed, with payment to be determined under the small claims regime. The appellant received 80 per cent of his appeal costs, assessed in full at £3,000.

1. Court of Appeal (Civil Division): The court allowed the second appeal in [2003] EWCA Civ 736. It remitted the costs up to and including 13 June 2001 for determination under the small claims regime unless the parties agreed them.

2. Brentford County Court, His Honour Judge Oppenheimer: The defendant's appeal was allowed in part. Damages and interest were reduced, the costs awarded below were reduced from £6,000 to £5,000, and the claimant was ordered to pay three-quarters of the defendant's appeal costs. The judge nevertheless upheld the district judge's treatment of the small claims costs issue.

3. Brentford County Court, District Judge Jenkins: At the disposal hearing, judgment was entered for damages of £4,002.43, interest of £755.04 and costs of £6,000. The counterclaim was dismissed. The judge rejected reliance on the small claims regime because the proceedings had never been allocated to a track.