Courts not there to punish solicitors for providing a wrong estimate
The High Court has set aside an order capping costs to 20% above the solicitor’s estimate, in an important case on costs.
In Mastercigars v Withers [2009] EWHC 651 (Ch), [2009] All ER (D) 316 (Mar) the defendant law firm, Withers, had billed its client, Mastercigars, for more than £1m for its work in a trademark dispute. Mastercigars sought a ruling that the firm was bound by its earlier costs estimate of only £265,570.
The claimant obtained an order under s 70 of the Solicitors Act 1974, for an assessment of 16 out of 21 bills amounting to a total of about £1.1m. Withers had estimated the trial would last for four days, but in fact it lasted 15 days. Mastercigars conceded that more work had been done than originally anticipated, but claimed that they themselves had carried out most of this work.
The costs judge ruled that Withers was largely bound by its original estimate plus a “margin” of 20%. On appeal to the High Court, however, Mr Justice Morgan said: “The figure of 20% has all the appearance of being arbitrary rather than calculated.”
Morgan J stated, in his judgment: “The court should decide whether the costs claimed should be reduced by reason of its findings as to reliance and, if so, in what way and by how much. Whether there should be a reduction, and if so to what extent, is a matter of judgment...It is not the proper function of the court to punish the solicitor for providing a wrong estimate or for failing to keep it up to date as events unfolded.”
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