Various Claimants v Scott Fowler Solicitors (a firm) & Ors

Costs management requires the court to approve each disputed budget phase at a figure within the range of reasonable and proportionate costs. The exercise is evaluative, not an arithmetic calculation. Proportionality requires a reasonable relationship between costs and relevant matters, including the sums in issue and the complexity of the litigation. Complexity is graduated and must be assessed both globally and by phase. There is no fixed percentage relationship between costs and claim value, including any rule that costs exceeding 50 per cent of the claim are disproportionate. Guideline rates assist but do not fix permissible rates. The court may consider budget detail and comparisons, but neither is determinative.

The court considered costs management in four related professional-negligence claims brought by groups of investors against Scott Fowler Solicitors and Wilsons Solicitors. The claims concerned failed hotel and student-accommodation developments and alleged failures by the defendant solicitors to protect deposits.

The parties had been directed to provide budgets for lead claims and generic issues. Several budget phases remained disputed. The central issues were the proper application of Practice Direction 3E, the relationship between reasonableness and proportionality, the relevance of claim value and complexity, and the significance of guideline rates and comparisons with other budgets.

1. Costs management. Under PD3E paragraph 7.3, the court had no power to approve agreed phases. For disputed phases it had to review the proposed figures and approve them, with revisions where appropriate. Approval concerned the total for each phase, rather than a detailed assessment in advance. The court could have regard to underlying figures, but was not required to do so.
2. Reasonableness and proportionality. The court had to apply both tests. Reasonableness might require close attention to the calculations, whereas proportionality did not. The objective was to set a figure within the applicable range, not to calculate an objectively correct figure. The court was not bound by a party’s choice of an expensive legal team or counsel.
3. Proportionality factors. An initial overall review by reference to CPR rule 44.3(5) was useful, followed by consideration of each phase under PD3E. Complexity was a graduated assessment of the relationship between the complexity of the work and the costs claimed, not a binary complex or non-complex classification. Different phases could therefore attract different proportionality assessments.
4. No mathematical rule. The court approved the principle in Group Seven Ltd v Nasir that the rules prescribed no particular mathematical relationship between costs and sums in issue. It rejected the suggested 50 per cent starting point attributed to that decision and the related interpretation in Marks and Spencer plc v Asda Stores Ltd. Guideline rates were relevant but were not an infallible guide and did not prevent higher rates being allowed.
5. The disputed budgets were revised in accordance with the table annexed to the costs management order. The court declined to comment usefully on incurred costs where the information was insufficient.