The Supreme Court Costs Office
No.4 of 2006
Garbutt v Edwards [2005] EWCA Civ 1206, [2006] 1 Costs LR 143
27 October 2005
Brooke, Tuckey & Arden LJJ
The issue on this appeal was whether a paying party can claim his liability to the receiving party under an order for the payment of costs should be discharged, or that it should be reduced, if the solicitor for the receiving party failed to give his client an estimate of costs in accordance with the Solicitors Costs Information and Client Care Code as required by the Solicitors’ Practice Rules.
To answer this question, the Court of Appeal needed to address two important principles, the indemnity principle and the status of the solicitor’s certificate of accuracy attached to the bill of costs.
Having reviewed the law (Harold v Smith, Hollins v Russell, Bailey v IBC Vehicles etc) the Court of Appeal held that a contract between client and solicitor would not be rendered unenforceable by a failure on the part of the solicitors to give an estimate of costs as required by the Code:
“... I conclude that it is a question for the Judge assessing costs in any particular case whether to take into account any failure by the receiving party to provide an estimate in the circumstances and of the kind required by the Code ...” (Arden LJ at paragraph 43).
At paragraph 46, Arden LJ continued:
“The answer to the question of principle identified in the first paragraph of this judgement is that the paying party can, if he has grounds to do so, submit that, if the receiving parties’ work had been estimated in accordance with the requirements of the code, a lower amount of costs would have been incurred. In those circumstances he can ask the Costs Judge to require the receiving party to prove that such an estimate was given ...
47. The Costs Judge must, however, give weight to the certificate as to accuracy ... the Costs Judge must therefore be satisfied that there are grounds for requiring the receiving party to prove that there was an estimate. The Costs Judge must be satisfied that there is some real basis for the paying parties’ contention that the receiving party should be required to prove that there was an estimate, or an adequate estimate and that the dispute is not ... a sham or fanciful dispute. In addition the Costs Judge must be satisfied that the absence of an estimate, or a proper estimate, as to costs could have had both a calculable effect and not a material effect, on the costs claimed. Otherwise the application will waste time and costs will then be used as a springboard for satellite litigation of the kind that brings litigation into disrepute”.
The Court concluded at paragraph 54 thus:
“No reasons were advanced to the Judge as to why the presence of an estimate of costs would have made any difference to the amount of costs that the paying party should be required to pay. In those circumstances the Judge’s order was correct and I would dismiss this appeal”.