McLinden v Redbond

On an appeal concerning costs, the appellate court may intervene for an error of principle, failure to consider a material factor, or a decision that is wholly wrong because the relevant factors were not fairly balanced. Summary assessment of costs requires a two-stage approach. The court should first consider whether the total claim is disproportionate. If it is, the court must examine the individual items and allow only costs that were necessary and reasonable. A judge must assess the actual items in the costs statement. A broad judicial tariff cannot replace that assessment. Indemnity costs are distinct from standard costs and should not be ordered merely because the court disapproves of a party’s conduct.

The creditor appealed against an order of Chief Registrar Baister allowing only £1,000 towards his costs of successfully resisting the debtor’s application to set aside a statutory demand. The appeal concerned the approach taken to summary assessment and whether the creditor’s costs should instead be assessed by the High Court, including on an indemnity basis.

The available record suggested that the Chief Registrar regarded the issue as simple and applied his own tariff after concluding that the detailed costs were disproportionate. The central questions were whether that approach was lawful, whether the High Court should reassess the costs itself, and whether indemnity costs were justified.

1. Appeal allowed. The Chief Registrar’s costs assessment was set aside because the available record indicated that he had treated the total figure as excessive and applied his own tariff without assessing the individual items in the costs schedule.

2. The applicable approach to an appeal against a costs order, stated in Roache v Newsgroup Papers Ltd [1998] EMLR, requires proof of an error of principle, failure to take account of a material factor, or a decision that is wholly wrong because the relevant factors were not fairly balanced.

3. Under the two-stage approach explained in Lownds v The Home Office [2002] 1 WLR 2450, the court must first adopt a global view of proportionality. If the total costs appear disproportionate, it must then examine each item to determine whether the work was necessary and whether the charge was reasonable. Summary assessment must focus on the detailed items actually incurred. It must not become an exercise in imposing a judicial tariff, as explained in Flowers Inc v Phonenames Ltd.

4. The discretion to assess costs therefore devolved to the appellate court. Following the approach in MacDonald v Tare Holdings Ltd, the judge summarily assessed the costs rather than prolonging the matter through detailed assessment.

5. Indemnity costs were refused. Although the debtor’s misrepresentations were strongly criticised, it was inappropriate to order indemnity costs where no such application had been made below and the court was uncertain about the precise course of the original hearing.

6. The creditor’s solicitors’ bill was reduced to £2,863.75. Correspondence charges were halved, and charges for consulting colleagues were disallowed.

• High Court (Chancery Division): Appeal from the order of Chief Registrar Baister allowing the debtor’s application-related costs only in the sum of £1,000. Appeal allowed and the costs assessment substituted.