No ‘benchmark’ for average reduction under Lownds test

The court cannot identify a ‘benchmark’ of an appropriate overall reduction to a bill under the second ‘necessity’ limb of the Lownds test, the High Court has ruled.

Mrs Justice Laing, sitting with Master Leonard as assessor, also refused to disallow 144 hours of time spent by fee-earners at Irwin Mitchell discussing the claimants’ case in TUI UK Ltd v Tickell & Ors [2016] EWHC 2741 (QB).

She was hearing an appeal from a decision of Master Howarth on the costs of a claim by 205 claimants over a cruise on MV Thomson Dream (pictured). Many claimants were ill and all had holidays which were not of the quality they had paid for. The claims, which started in 2011, were settled shortly before trial in February 2014, with 116 claimants settling for 60% of the value of their holidays (on average, £500), 57 claimants who suffered relatively minor illness for less than £1,500 (on average £700) and the 32 claimants who had been more seriously ill for more than £1,500. The defendant denied liability throughout.

The total costs claimed were £1,768,011.25. Master Haworth, who decided that the costs were disproportionate, allowed £999,121.36. He assessed the generic bill at £365,580. There was no appeal against that. But the defendant (the judge described TUI as the defendant even though the appellant in this ruling) contended that following assessment of the individual bills, the overall base costs which the master allowed – £630,456 – were too high. TUI submitted that this represented some 80% of the total base costs claimed and that 60-70% rather than about 80% would be the norm.

The agreed method for assessing the individual bills was that the parties each chose a representative ‘sample’ claimant from three groups for the master to assess. The parties then added together the amount allowed for the two bills, divided it by two and multiplied the result by the number of claimants in each group. The result was the amount he assessed for each group of claimants. Laing J said: “This was a rough and ready approach, but the parties agreed that it was a sensible and proportionate alternative to an assessment, by reference to the points of dispute, of each of the 205 individual bills of costs.”

TUI argued that in assessing the individual bills of costs, the master did not give effect to his decision that the costs were disproportionate and in particular that he did not apply the necessity test with sufficient rigour.

However, citing what Lord Woolf MR said about necessity in Lownds, along with Lord Neuberger MR in Motto – who said that while necessity was a higher hurdle than reasonableness, “it does not carry with it the strictest sense of necessity” – Laing J said: “These authorities do not support the defendant’s proposition that one can identify a ‘benchmark’ of appropriate overall reduction, on the basis of necessity, by a given percentage of the costs claimed. The extent to which claimed base costs will be reduced will depend upon the facts of the particular case.”

The main point of dispute raised by TUI was that Master Haworth was wrong on several grounds to allow 144 hours of inter-fee earner discussions on the individual bills at the claimants’ solicitors, Irwin Mitchell.

The judge said: “There was a general point of dispute about this head of work. It was that no such discussions had been necessary, and that they all, therefore, should be disallowed. Because of the general nature of this objection, the claimants’ solicitors did not include in the bundle of attendance notes which they prepared for the master the attendance notes recording inter-fee earner discussions. The bills, in any event, had relatively full descriptions of the items of work claimed – 135 hours were claimed on the general bills and 205 on the individual bills.

“The defendant eventually made, during the hearing, an offer of 104 hours. The master allowed 95 hours of generic time and 144 hours on the individual bills; that is, slightly rounded up, 70% of the claim. By the time the master made his ruling on this head of claim, the parties had agreed that the master should deal with this head ‘on a broad brush basis’, applying the test of necessity. As the master recorded, the alternative would have been to spend a day on this aspect of the bills…

“The master found against the defendant on the question whether or not this was a case in which inter-fee earner discussions were in principle justified. There was no way, in his view, if a case was mainly being conducted by a paralegal, that the case could be conducted without the involvement of some of the fee earners.”

Laing J rejected TUI’s submission that the master was wrong to say that the vast majority of the inter-fee earner discussions billed involved paralegals. “It is… quite clear that he was right to say that that work had been done by the lowest level of fee earner possible.

“I agree with the master that, in principle, if, as here, much of the work on files was being done by paralegals under the supervision of legal executives, it was necessary, from time to time, to have discussions between fee earners, specifically supervising solicitors, including partners.”

She similarly dismissed the submission that Master Haworth was wrong not to look at the attendance notes. “It is clear… that the parties had sensibly agreed that the claimants did not need to go the expense of producing the attendance notes and taking the master through them. The parties also agreed that the master should deal with this topic with a broad brush.”

The appeal on this and some other points was dismissed.


Credit: Piergiuliano Chesi

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Costs News
Published date
14 Nov 2016

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