A case came before the Court of Appeal recently in which two parties were disputing a matter of a few thousand pounds but had run up costs at trial of almost £100,000.
In Peakman v Linbrooke, Goldring LJ roundly condemned the trial judge in the Sheffield County Court for allowing costs to rise so far out of proportion to the sums in issue.
The normal rule is that if you win at trial the other side pays your costs, not always 100%, but a substantial proportion nonetheless. A trial judge has discretion to award costs as he sees fit and the appeal courts are generally reluctant to interfere with that discretion as the trial judge is closer to the parties, their conduct and the issues. Peakman was unusual in that the did amend the trial judge’s costs order.
Mr Peakman, a self-employed cable jointer, claimed damages of about £2200 from a sub-contractor, Linbrooke, for work he had carried out for them to join multi-strand cables to junction boxes along railway lines in the Vale of Glamorgan and areas. Linbrooke claimed just over £3000 from him, the cost of putting right the work he had done, and counterclaimed for what they alleged was lost business arising from his poor work. The counterclaims were substantial and pushed the case into the multi-track instead of the proper place for claims of a few thousand pounds i.e. the small claims court.
Mr Peakman was ordered to pay £265 damages to Linbrooke after the trial and each party had to bear their own costs. Mr Peakman appealed the costs position because he felt he should not have to bear his own costs of the trial given that it had been allocated to the more expensive trial track as a result of counterclaims that did not succeed and, in all probability, should have not have been made at all.
The Court of Appeal granted Mr Peakman 50% of his trial costs, amending the trial judge’s discretion on costs. In particular they expressed as close to judicial dismay as you are likely to find about the way the trial had been conducted. Lord Justice Goldring said:
“What happened in this case exemplifies much that is wrong with our civil justice system. The costs involved dwarf the damages. The trial took far too long. [....] I am afraid that it is clear that overall the judge failed to exercise that degree of control over these proceedings which he should have. The CPR gives him wide powers in that regard. Unfortunately he did not exercise them.”
Comment
The effective control of litigation is crucial to keep costs down at every stage of every case. The Civil Procedure Rules governing the conduct of litigation have an Overriding Objective clearly stating that the court must deal with a case proportionately to the amount of money involved, the importance of the case, the complexity of the issues and the financial position of each party.
Primarily the parties’ legal advisers should control costs by effective case management and use of alternatives such as mediation, but where that is not possible the court certainly should exercise control and no doubt the judiciary has taken note of Lord Justice Goldring’s comments. No other judge would wish to receive such a public rebuke from one of the most senior judges in the country.
For more information or advice on costs dwarfing damages, please contact
Susan Hopcraft.
