Willis v Nicolson

A costs-capping order is a prospective case-management device. The court has ample power under the Civil Procedure Rules to make one at any stage, but it must have reliable information and act early enough to affect future conduct and expenditure. Costs estimates assist the exercise but do not themselves cap recoverable costs, and a discrepancy from an estimate does not justify punishment where good reasons explain it. The lower court’s finding that there was no real risk of future costs being unreasonable or disproportionate was not appealed. The Court of Appeal therefore had no basis to impose a lower cap or remit the issue to a costs judge. The court declined to issue comprehensive general guidance, leaving that question for the Rules Committee.

The claim arose from a road accident in which Brenda Willis’s car collided with Neil Nicolson’s motor bike, causing catastrophic injuries. Following a liability trial, Mrs Willis was held principally responsible, with Mr Nicolson one-third contributorily negligent.

The appeal concerned costs rather than liability. Field J refused to impose a costs cap, finding no real risk that future costs would be unreasonable and disproportionate, but ordered that costs incurred after 31 July 2006 should not exceed the claimant’s estimate of £459,496. The appellant challenged that order, arguing that a lower cap should have been imposed or the matter remitted to a costs judge.

The judgment was delivered by Lord Justice Buxton for the court. Lady Justice Smith and Lord Justice Wilson agreed.

1. Disposition. The appeal failed. Field J had found that there was no real risk that future costs would be unreasonable and disproportionate. That finding was not challenged in the grounds of appeal. The Court of Appeal therefore had no basis to impose a lower limit or remit the issue to a costs judge. The court also lacked material enabling it to reassess the reasonableness of the claimant’s costs. The order limiting future costs to £459,496 accordingly stood.
2. Power and character of capping. The court accepted that the various powers in the Civil Procedure Rules permit a costs-capping order at any stage: King v Telegraph Group Ltd [2005] 1 WLR 2282. Such an order advances assessment and limits recoverable costs prospectively. It is essentially a case-management decision, depending heavily on the judge’s perception of the needs of the particular case.
3. Estimates and proportionality. Costs estimates are necessary for a capping exercise. The Costs Practice Direction requires substantial discrepancies between estimates and assessed costs to be explained, but an estimate cannot itself perform the function of a cap. A party cannot be penalised merely because incurred costs differ from an estimate where there are good reasons. The judgment also explained the approach in Lownds v Home Office (Practice Note) [2002] 1 WLR 2450, under which proportionality is addressed through necessity and the reasonable amount allowed for necessary items.
4. Practical guidance. Any cap must be approached cautiously. The court needs reliable information about the case and the demands of the relevant litigation. A cap should operate prospectively and be considered early enough to influence expenditure and preparation. The court must also consider the way in which legal professionals intend to conduct the case and may control expert costs through permission requirements and, in appropriate cases, limits under the Civil Procedure Rules.
5. Unresolved wider guidance. The court identified competing views on when a single-case cap should be imposed, including the real and substantial risk approach, but deliberately left that disagreement unresolved. It declined to issue comprehensive principles, indicating that any general guidance should be considered by the Civil Procedure Rules Committee after consultation.

• Court of Appeal (Civil Division): In [2007] EWCA Civ 199, the appeal against the costs order was dismissed.
• High Court of Justice, Queen’s Bench Division: Field J, in [2006] EWHC 2684 (QB), refused to impose a costs cap as such but limited future costs to the claimant’s estimate of £459,496.