Tribe v Southdown Gliding Club [2007] EWHC 90080 (Costs)
reliance on estimates of costs by a paying party

The Claimant brought a claim for personal injury against the Defendant. He entered into a CFA with his solicitor and purchased an ATE insurance policy under the Accident Line Protect scheme; cover limited to £100,000

The parties filed Allocation Questionnaires with costs estimated at £7,500 by the Defendants and the overall costs estimated at £50,000 for both liability and quantum. Following receipt of expert evidence the Claimant wrote to the Defendants offering to discontinue on the condition that there be no order as to costs.

Six weeks later one of the Defendants served a Listing Questionnaire and a breakdown of costs which showed costs in respect of liability only of £234,000 with the estimated future costs (again liability only) of almost £80,000

Three days later the Claimant served a Notice of Discontinuance. The Claimant settled costs claimed by the Second Defendant in the sum of £17,800; the total costs of the First and Third Defendant stood at £244,500 up to Notice of Discontinuance.

The question for the court was whether the costs claimed by these Defendants should be limited to the sums estimated in the Allocation Questionnaire.

The Costs Judge found :
  • that the estimate given by the Defendants in the AQ was low
  • had the Claimant been aware at the outset of the true magnitude of the claim for costs against him he would have purchased additional cover
  • there was no doubt that the Claimant had relied upon the estimates of costs
  • while the estimate provided by the Defendants was too low, it was not so low as to be unreasonable for the Claimant to have relied upon it  
  • the explanation put forward by the Defendants for the increase in costs was unsatisfactory in that it did not explain the difference between the costs estimated and the costs now claimed                                                                                                              
Taking all these matter into account the Costs Judge found that this was an appropriate case to reduce the costs that may be recovered by the receiving parties to take into account of the paying party's reliance on the estimate.

The Costs Judge noted that as the estimate can not be a cap, the appropriate starting position should be which one would expect to see incurred in a case of this size (in his view this was about £100,000 - £150,000 and then to take into account three competing factors : -

  1. The low estimates
  2. a deduction of the costs of the trial dealing with the assessment of damages
  3. the additional matters relied upon by the receiving party as reasons why the costs had increased.
 Taking into account the above the Costs Judge came to the view that the most the receiving party should receive was £70,000