MacInnes v Gross, [2017] EWHC 127 (QB), Judgment 3 February 2017

Refusing to award indemnity costs in a difficult, but not hopeless, case the judge accepted that the unsuccessful claimant’s last approved costs budget of £234,000 in a claim pleaded at €13.5M, was evidence of a reasonable and proportionate approach. When setting the level of interim payment the receiving side’s last approved costs budget will almost always be the correct staring point.  

The underlying proceedings concerned an unsuccessful claim for €13.5M pursuant to an oral contract said to have been made in a restaurant. The claimant’s case was that it was agreed that he would personally provide services to the first defendant and/or the second defendant company for which he would be remunerated. The first defendant denied that there was any binding contract between himself and the claimant.

The issue on costs concerned the correct basis for the assessment.  The first defendant sought costs on an indemnity basis, arguing that the unsuccessful claim was exaggerated, opportunistic and had been pursued in an unreasonable manner.  The claimant maintained that the costs should be assessed on the standard basis.

Awarding costs on the standard basis, HHJ Coulson considered, inter-alia, whether the claimant litigated his claim in a reasonable and proportionate manner. Taking account of the budget filed on behalf of the losing claimant he found that the approved costs budget of around £234,000, when set against a claim for €13.5M, demonstrated the proportionate way in which the litigation was conducted.

When calculating the amount of the interim payment on account of costs, the judge confirmed that the days of ‘educated guesswork’ are gone – the starting point will almost always be the receiving side’s last approved costs budget. The judge expressed the view that 10% is the maximum deduction appropriate in a case in which there is an approved costs budget (this of course was a case that went to trial).

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