Morgan v The Spirit Group Ltd

Where costs are not fixed, the normal procedure under the Civil Procedure Rules 1998 is summary or detailed assessment. A court must not fix a costs figure by applying a judicial tariff or broad estimate without engaging with the receiving party’s itemised costs. A global assessment of proportionality is required, but it must be followed by item-by-item consideration, either summarily or through detailed assessment. A trial judge may still reflect the character and conduct of the litigation through a proportionate-costs order, including directing that costs be assessed as if the case had been allocated to a lower track.

The claimant appealed against a costs order made by His Honour Judge O’Brien in the Cambridge County Court after liability for her personal injury claim had been admitted and damages had been assessed at £13,419.03 inclusive of interest. The judge ordered the defendant to contribute £25,000 towards costs, treating the claim as one which should have been dealt with on the fast track and avoiding a detailed assessment.

The central issue was whether the judge could use the general costs discretion, including Civil Procedure Rules 1998 r 44.3(6)(b), to fix a stated contribution without summary or detailed assessment.

The appeal was allowed. The order requiring the defendant to pay a contribution of £25,000 was set aside. It was replaced by an order that the defendant pay the claimant’s costs subject to detailed assessment, conducted as if the case had been allocated to the fast track.

1. Assessment required. Under the Civil Procedure Rules 1998, detailed or summary assessment is the normal method of calculating costs where costs are not fixed. The power to order payment of a stated amount under r 44.3(6)(b) did not authorise the judge to circumvent that process.
2. Summary assessment. A summary assessment must focus on the detailed breakdown of costs actually incurred. The court may use experience and a broad brush, and may review the total for proportionality, but it must remain directed to the individual items. The approach in 1-800 Flowers Inc v Phonenames Ltd, [2001] EWCA Civ 721, applied.
3. Global and item-by-item proportionality. Lownds v Home Office: Practice Note, [2002] EWCA Civ 365, required a global view of proportionality followed by item-by-item consideration. If costs are globally disproportionate, only costs that would have been recoverable had the litigation been conducted proportionately should be allowed.
4. Trial judge’s wider discretion. Setting aside the fixed figure did not overturn the judge’s broader findings. A trial judge may take account of the character and conduct of the litigation and may direct that costs be assessed as if the claim had been allocated to the fast track, even where it was allocated to the multi-track. The judge’s observations remained relevant to the detailed assessment, but the costs judge was not constrained by the figure of £25,000.
5. Further reduction. The matters relied on by the defendant had already been reflected in the direction for fast-track assessment. They did not justify a further reduction by way of a separate proportionate-costs order.

• Court of Appeal (Civil Division): The appeal from the Cambridge County Court was allowed. The £25,000 costs contribution was set aside and detailed assessment was ordered on the basis that the case was to be treated as a fast-track claim.
• Cambridge County Court: His Honour Judge O’Brien ordered the defendant to pay a contribution of £25,000 towards the claimant’s costs after the damages trial.