The Supreme Court Costs Office

No.22 of 2004

Hall Farm Merchants (Gatenby) Ltd v Department for Environmental Food and Rural Affairs
6 October 2004
Mr Justice Poole (sitting with assessors)

The original dispute between the parties arose out of the 'foot and mouth crisis' in 2001. The Claimant was retained by the Government to supply decontamination and other services at various farms in the period March to August of that year. The Claimant raised more than 900 invoices to the Government totalling approximately £6.5 million. The Government made payments totalling approximately £3.1 million in respect of some of the invoices and the Claimant commenced proceedings for the balance. The Government served a defence which put the Claimant to proof of the invoices being sued upon and also reserved the right to reclaim any part of the £3.1 million already paid if its ongoing investigations into the invoices showed them to be overpaid or not properly due and owing.

At a case management conference the claim was stayed for three months to enable a mediation to take place. That mediation proved unsuccessful. The Claimant then made a Part 36 offer to settle for approximately £3.5 million (the total claim plus interest then being approximately £4 million). Shortly thereafter the Defendant made a Part 36 payment of £945,000 which the Claimant promptly accepted. The Claimant's bill of costs in those proceedings totalled £171,000.

At the outset of the detailed assessment the Defendant raised the following objections. Shortly after making a Part 36 offer for a sum equal to its original claim in the proceedings the Claimant had accepted a payment of less than a quarter of that sum. That fact indicated a failure by the Claimant to properly identify the true value of its claim and also a willingness to prosecute an exaggerated claim which had caused both parties to the action to have to incur additional costs. On assessment the court should therefore use the powers it had under the CPR to reduce the costs payable by the Defendant by treating the Claimant's bill as disproportionate and/or reducing it by an appropriate percentage having regard to the level of exaggeration.

The costs judge held that, in all the circumstances, the Claimant's bill did not appear to be disproportionate and that there was no exaggeration in the claim as would lead him to reduce the costs on that basis. The Defendant appealed but the judge dismissed the appeal without hearing from the Claimant.

The judge held that the nature of the defence served put the entirety of the Claimant's invoices back into dispute. Accordingly the financial subject matter of the claim exceeded £6 million. Although the Claimant had settled for a sum less than a quarter of the remedy it sought in these proceedings, it in fact recovered over 60 percent of its total claim. The judge was therefore not persuaded that the claim was improperly exaggerated or that any exaggeration had led to increased costs for either side. He also held that, even if the proceedings had claimed only the sum later recovered (£945,000) the costs being claimed (£171,000) did not appear to be disproportionate.