Carry the costs

To what extent is a successful litigant permitted to recover his own costs, as opposed to the costs incurred by his solicitor? Until recently, the answer to this question was relatively clear: a long line of authority supported the proposition that a litigant generally cannot recover his own costs and thus receives no compensation for his work done in preparing the case or for loss of time. A couple of exceptions to this rule are well established.

In The London Scottish Benefit Society v Chorley (1884) 13 QBD 872, it was held that a litigant in person who is himself a solicitor could claim his costs because 'it would be absurd to permit a solicitor to charge for the same work when it is done by another solicitor, and not to permit him to charge for it when it is done by his own clerk'. The second exception arises in respect of work done by a litigant's own expert staff: it may well be that they are the most suitable or convenient experts to employ (see In re Nossen's Letter Patent [1969] 1 WLR 638, 643).

Definition of costs

However, there have been a number of recent cases which raise the question of whether the traditional approach described above has survived the coming into force of the Civil Procedure Rules (CPR). Part 43.2(1)(a) defines 'costs' as including 'fees, charges, disbursements, expenses, remuneration and reimbursement', which is a broad definition apparently capable of including a litigant's own costs, even where he has instructed a solicitor. Separate provision is also made in Part 48.6 for costs incurred by a litigant in person.

In Amec Process and Energy Limited v Stork Engineers & Contractors BV (No. 3) (unreported 15.03.02), HHJ Thornton QC said that the pre-CPR costs cases were of little or no relevance in applying the new costs regime imposed by the CPR and held that work done by Amec's own personnel in collating, analysing and presenting evidence came within the ambit of 43.2(1) so that the costs of that work were thus recoverable.

In contrast, Warren J in Sisu Capital Fund Ltd v Tucker [2005] EWHC 2321 declined to follow the decision in Amec and held that similar costs incurred in that case were not recoverable, saying that there was nothing to support the surprising conclusion that the meaning of 'costs' was changed by the introduction of the CPR.

The decision in Sisu, which was well reasoned and contained a detailed analysis of the case law, was followed in Societa Finanziara Industrie Turistiche SpA v di Balsano & Ors (unreported 30.06.06).

Ripe for clarification

This issue seems ripe for clarification by an appellate court and there are good arguments to be made on either side.

On one hand, the traditional view is that in the case of a litigant's own costs, 'it is impossible to determine how much of the costs is incurred through his own anxiety '¦ private expenditure of labour and trouble by a layman cannot be measured' (see London Scottish). The modern corollary, raised in Sisu, of this perhaps outdated sentiment is that if litigants are entitled to reclaim their costs, a major incentive to take only proportionate and sensible steps in preparing a case will be lost with a resulting escalation in the cost of litigation generally.

On the other hand, there is a convincing argument that it is illogical to compel a litigant to employ a solicitor to perform necessary case preparation work which could be carried out more efficiently and cheaply by the litigant's employees, albeit that those employees are not experts.

Another point is that fears in relation to costs escalation may be assuaged by the fact that questionable or unnecessary costs can be challenged at the detailed assessment stage. In the meantime, it is important for the practitioner to remain alive to the possibility that a litigant's costs are recoverable under the CPR. Clearly, in practice much will depend upon the type of case and nature of the costs involved.

One area in which investigation costs are being awarded with some regularity is litigation under Part 8 of the Enterprise Act 2002 which, inter alia, empowers Trading Standards services to seek civil enforcement orders preventing 'rogue traders' from continuing to breach consumer protection legislation.

Links to litigation

In Wakefield Metropolitan District Borough Council v Nazir [2007] CTLC 46, for example, it was held that the local authority's salaried officers were 'so directly linked' to the litigation in terms of gathering and presenting evidence that their costs were recoverable.

There seems to be a parallel with well-established authorities such as Neville v Gardner Merchant Ltd (1983) 5 Cr App R (S) 349 and R v Associated Octel (1997) 1 Cr App R (S) 435, where the costs of criminal investigations were held to be recoverable, though the usefulness of any comparison with costs in criminal cases was justifiably questioned by the judge in Wakefield. The traditional approach encapsulated by the proverb, 'Don't keep a dog and bark yourself!' should no longer apply in relation to costs: the law should not penalise litigants who, though instructing a solicitor, elect to perform certain case preparation work more cheaply in-house.