TUI UK Ltd v Tickell & Ors

Where costs have been found disproportionate under the pre-1 April 2013 regime, the court must assess challenged items by applying a necessity test. Necessity is a higher threshold than reasonableness, but does not require the strictest sense of necessity. The amount of any reduction depends on the facts; a standard percentage reduction or benchmark cannot be imposed. On appeal, the court should interfere with a costs assessment only for a plainly wrong decision outside the assessor’s wide discretion, such as reliance on an irrelevant factor or failure to consider a relevant one.

The defendant appealed from Master Howarth’s detailed assessment of costs arising from settled claims by 205 holidaymakers who had travelled on the MV Thomson Dream. The Master had found the costs disproportionate and assessed the generic and individual bills using an agreed sampling methodology. He allowed total costs of £999,121.36, including £630,456 in base costs on the individual bills.

The appeal challenged allowances for inter-fee earner discussions, allegedly unnecessary or duplicated work, the availability of ABTA mediation, and the assessment of a non-lead claimant’s bill as if it were a lead claim. The central issues were the correct approach to necessity after a finding of disproportionate costs and the proper standard of appellate review.

1. Appeal dismissed. The Master had correctly recognised that, following his global finding of disproportionality, the challenged items had to satisfy the necessity test under Lownds v Home Office [2002] EWCA Civ 365.
2. Necessity is a higher threshold than reasonableness, but it does not demand necessity in the strictest sense. The assessment must allow for different judgments which competent practitioners may sensibly make about what litigation requires. The authorities did not support identifying a benchmark percentage by which disproportionate costs should be reduced. The appropriate reduction depends on the particular facts.
3. The agreed broad-brush sampling method inevitably carried a risk of distortion. That risk had been accepted by the parties. The Master was entitled to assess inter-fee earner discussions broadly, having regard to the detailed bills, the team structure and the need for supervision where much of the work was performed by paralegals. He was not required to inspect attendance notes after the parties had agreed that the issue should be dealt with on a broad basis.
4. The availability of an industry-specific ADR scheme could, on appropriate facts, be a distinct issue from the general proportionality of costs. If it had been necessary to decide the point, a non-binding contractual scheme which did not exclude court proceedings would not have justified restricting the claimants to scheme costs on these facts. The defendant had not identified the scheme in its pre-action response, had denied liability, and had not answered the claimants’ offer of ADR. However, the appeal was dismissed because the Master had in fact taken the availability of ADR into account.
5. The Master’s individual decisions on allegedly duplicated or excessive items involved matters of specialist judgment and disclosed no error of principle. The mistake concerning the status of Master Bullen as a non-lead claimant did not establish that the allowance for his witness statement was plainly wrong.
6. The appellate court should interfere with a costs assessment only where the decision is plainly wrong and outside the wide ambit of the assessor’s discretion, including through taking an irrelevant matter into account or failing to consider a relevant matter.

• High Court (Queen’s Bench Division): Master Howarth assessed the costs in December 2015. Permission to appeal was refused by Soole J on 31 March 2016 and granted by Slade J on 14 July 2016. The appeal was dismissed.