Proportionality at work; Claimant’s costs of £200,000 considered disproportionate to sums in issue of £900,000
The matter of Savoye -v- Spicers Ltd was won by the Claimant, Savoye & Savoye Limited, who secured payment of the sum of £889,300 and the enforcement of the adjudicator's decision. The case ultimately came down to one issue, whether or not the work done, and to be done, by the Claimant amounted to "construction operations" as defined by the Housing Grants, Construction and Regeneration Act 1996 in the contexts of the facts and contracts between the parties.
Following the finding in their favour, the Claimant sought their costs on the indemnity basis on the grounds that the Defendant, Spicers Ltd, acted unreasonably in advancing an unreasonable defence and or jurisdictional challenge and maintaining the same to the adjudicator’s decision. The Claimant’s claim for costs totalled £201,790.66. The Defendant countered that their challenges were genuine areas of factual dispute which could only be resolved by way of a trial; rather than Summary Judgement, as had been applied for by the Claimant. The Defendant went on to challenge the Claimant's costs on the grounds that they were excessive, unreasonable and disproportionate.
A number of issues were considered by Justice Ackenhead:
- Indemnity costs
- Summary Judgment
- Proportionality
Indemnity Costs
On the issue of indemnity costs, Justice Ackenhead considered whether the Defendant's conduct could be considered unreasonable to a high degree. He found that there were genuine areas of dispute and factual disagreements on which the Judge could only come to a clear decision on during trial. The Defendant's conduct was not deemed to have been unreasonably and costs were therefore to be assessed on the standard basis.
Summary Judgement
The Claimant was not found to have been unreasonable in their request for summary judgement as an adjudicator’s decision had been secured in their favour. However, it was found that the costs of the third summary judgment application should be borne by the Claimant as they should, by then, have realised that there was a factual issue which was difficult for the Court to decide on a summary judgment application. Justice Ackenhead noted in this regard that much of the cost of the preparation of witness evidence would have been required for trial in any event and so it would have been wrong to say that they should not be allowed.
Proportionality
In relation to the issue of proportionality, the Court had regard to the following:
- The relationship between the amount of costs claimed for and the amount in issue
- The amount of time spent
- Costs or time spent before the Court proceedings commenced (in this case in relation to the adjudication)
- The extent to which the case is a test case
- The importance of the case to either party
The Judge's considerations were as follows:
- The case revolved around a relatively narrow issue of whether the conveyor system was attached to the floors and therefore formed part of the land
- Numerous legal issues were advanced but there were limited issues of principle to be resolved
- The case could not be considered a test case where numerous other cases would depend
The matter was of commercial importance to the parties but there was no suggestion that either entities' existence depended on the outcome. In essence, the Court proceedings had been a rerun of the issues arguments and evidence which had been submitted at the adjudication; for which each party had to pay its own costs.
In light of the above the costs were found to be disproportionate; even given that the sums in issue were almost £900,000. It is worthy of note that the Judge commented that, had no other information been available, he would have been minded to consider a proportionate figure at about half of the amount of costs claimed.
The costs were then summarily assessed and a number of factors taken into account including:
- The use of Partner’s time a high rate; reduced by about 80%
- The total amount of Solicitor’s time claimed; reduced by around 50%
- The fact that the summary judgment application should not have been pursued as it was
- The level of Counsel's brief fee considering her previous involvement, again reduced by about 50%
Taking the above reductions into account, the costs were reduced to £96,465.00, which was considered to be a proportionate figure and was within the ambit of the Judges' previous suggestion of a proportionate figure.
Comments
It is important to remember that proportionality is not based purely on the amount of costs as claimed and there are often wider factors which will be considered by the judge.
Find the full judgment here: http://www.bailii.org/ew/cases/EWHC/TCC/2015/33.html
Comments