Law report: Lawyer's costs were unreasonable

18 May 1999 Sullivan v Co-operative Insurance Society Ltd Court of Appeal (Lord Justice Judge and Lord Justice May) 12 May 1999

WHILST A litigant was entitled to engage any lawyer he chose, the question whether he had been reasonable in his choice had to be looked at objectively on the taxation of his costs.

The Court of Appeal allowed the appeal of the Co-operative Insurance Society against the amount allowed in relation to solicitors' charging rates on taxation of the plaintiffs' costs, following an award of damages made against the Society.

The plaintiff had claimed damages for injury to his health from exposure to asbestos dust. His claim was settled with an award of provisional damages and the Society was ordered to pay the plaintiff's costs on County Court scale 2 on the standard basis.

On taxation of the plaintiff's costs the Society objected, inter alia, to the allowance of hourly rates claimed. The main basis of the objection was that the plaintiff had, through his union, instructed solicitors in London and that the case had proceeded in the Central London County Court when, because it was so closely connected with Manchester, it ought reasonably to have been conducted by Manchester solicitors in Manchester, in which event the costs incurred would have been less.

The deputy district judge decided the issue in favour of the plaintiff, and an application for a review of that decision was dismissed by the judge, for the following reasons: (a) the case was potentially very serious; (b) there could well be other cases arising from the same source in the near future; (c) it was vital to get the best legal advice; (d) in the event of there being other actions, co-ordination and consistency of approach were vital; (e) the union was entitled to use the solicitor it used for its important work; and (f) the medical experts paramount in the field were generally to be found in London.

The Society appealed, submitting that the judge had failed to apply, or had wrongly applied, the decision of the Court of Appeal in Wraith v Sheffield Forgemasters Ltd; Truscott v Truscott [1998] 1 All ER 82.

Edward Morgan (Reid Minty) for the plaintiff; Nicholas Bacon (E.K. Lewis, Manchester) for the Society.

Lord Justice May said that the relevant law was to be found in Wraith v Sheffield Forgemasters Ltd; Truscott v Truscott [1998] 1 All ER 82. There were two limbs to Order 62 rule 12(1) of the Rules of the Supreme Court: whether costs had been reasonably incurred, and whether they were reasonable in amount. The question whether it was reasonable to instruct particular lawyers when that might be regarded as out of the way or a luxury was part of the question whether the costs had been reasonably incurred, and in determining that question the court took account of and balanced a wide range of relevant circumstances.

The fact that a union or other organisation habitually used a particular firm of solicitors was a relevant factor, but of limited relevance on taxation in an individual case. Litigants were entitled to engage any lawyer they chose, and from a subjective point of view the choice might be entirely reasonable. The question was, however, to be judged objectively.

Although the judge had undoubtedly had in mind the important consideration that the present case was a Manchester case with no obvious connection with London, that had not featured in his stated reasons, which had substantially overstated the scope and difficulty of the case. Although of the greatest importance to the plaintiff, it was, in objective terms, an asbestosis case without extraordinary legal complication or special feature. Further, the judge's reasons had substantially understated, by clear inference, the availability of fully competent legal practitioners in the Manchester area, and the shadowy possibility that the case might be regarded as something of a test case would not seem to diminish the ability of Manchester lawyers to deal with it.

Accordingly, although the judge had applied correct legal principles and had made a largely discretionary judgment on sustainable grounds, his decision was wrong in the light of the judgment in Wraith.

Kate O'Hanlon

Barrister