Civil litigation in recent years has been dominated by cases and commentary concerned with costs, court fees, procedure and proportionality. In this article, Gwendoline Davies and Marshal Ahluwalia look at how a little-known older case remains relevant today, and could even provide an effective way to help today’s commercial litigators and their clients to resolve their disputes quickly and cost-effectively.

Justice -v- Proportionate Cost

Anyone involved in commercial dispute resolution today will be familiar with the Overriding Objective [1] – that is, the fundamental principle underpinning the conduct of civil litigation in England and Wales. The Overriding Objective requires the court to deal with cases justly and at proportionate cost. This means that achieving justice in any individual case must be weighed against its financial value, relative importance and complexity and against the resources of the court [2].

Against the background of downward pressure on recoverable legal costs and rising court fees [3], practitioners and clients alike will be interested in any possible ways to help them achieve justice without compromising on efficiency. A case which actually pre-dates the Jackson Reforms by several years could help do just that.

Khiaban -v- Beard: an oldie but goodie!

In Khiaban v Beard [4], a road traffic accident claim, the claimant’s insurers had asked the claimant to bring court proceedings (in his name but at their expense) for the excess that he had had to pay out only - in this case, just £125 – to determine liability. They had agreed with the defendant’s insurers in the background to abide by the court’s decision on liability in relation to the wider insured damages. By proceeding in this way, the claimant and its insurers paid only a minimal court fee of £27 (the court fees would have been much higher if the claim had been for the full amount of insured damage) and kept their legal costs to a minimum.

The district judge did not approve and was very critical of this approach. Acting on her own initiative pursuant to CPR 3.3, she ordered that the claimant serve amended particulars reflecting the “true value of the claim” and consequently pay the higher court fee. The claimant appealed successfully.

The Court of Appeal confirmed that:

  • A claimant is not obliged to include in his pleaded case all the claims which he could arguably advance against a defendant (although, of course, there are obvious risks for the claimant in not doing so).
  • A claimant can legitimately limit its claim for the purposes of reducing costs and ensuring that it is dealt with proportionately.
  • It is no part of the judicial function to extract from parties the maximum possible court fees by forcing a claimant to claim more than he or she wishes.
  • If issues on liability were so complex that the claim should be allocated to a different track than the minimal claimed value would indicate, it would be open to the court to allocate the case to a different track accordingly.

WM Comment

Utilising the underlying principles from the Khiaban case and thinking very carefully pre-issue as to the financial value of a claim in respect of the amount in dispute could well result in early resolution. Inflated claims are rarely conducive to early settlement and can increase costs significantly. Proceeding in this way could well be regarded as acting entirely in the spirit of the post-Jackson CPR, and will assist parties when it comes to the costs budgeting process and the recovery of costs overall in those cases where litigation does ensue.

Of course, perhaps the most effective way of controlling the issues and amount in dispute (and, in turn, the parties’ legal costs), is to focus on more commercial negotiation and alternative dispute resolution being explored prior to the issue of any court proceedings.