Disbursements – Pre-action costs – Pre-litigation work – Recoverability of costs

Susan Elizabeth Cuthbert v Stephen Ronald Gair & Wendy Isabell Gair (t/a Bowes Manor Equestrian Centre) (2008): Sup Ct Costs Office (Master Haworth): 3 September 2008

The appellant (C) appealed against a costs order made in favour of the respondent equestrian centre (R) following her discontinuation of a personal injury claim against R.

C had suffered personal injuries while attending an equestrian event. She instigated a claim for damages against R. R’s insurers engaged a firm of loss adjusters (Q) to investigate the case at a stage before solicitors were formally instructed. Subsequently, R instructed solicitors to defend the action and the case was allocated to the fast track. Thereafter, C discontinued her claim and R requested a detailed assessment of its costs. R sought to recover costs in relation to the work undertaken by Q, the details of which were set out in two invoices.

The first invoice concerned bills for work done at a time before R had instructed solicitors and the second invoice included bills covering work done by Q after solicitors had been instructed. R claimed that those invoices were disbursements for the purposes of the detailed assessment.

The costs judge allowed recovery of those costs. C submitted that the sums in Q’s invoices related to pre-litigation work undertaken by someone other than a legal representative and did not fall within the categories of costs recoverable on an inter-parties basis.

Held: (1) A person who acted without a solicitor was not entitled to recover, as a disbursement, any fees and expenses paid to a third party for work of a kind which a solicitor could have done, Agassi v Robinson (Inspector of Taxes) (Costs) (2005) EWCA Civ 1507, (2006) 1 WLR 2126 applied. In the present case, the work that Q had billed for under the first invoice included corresponding with C’s solicitor, investigating the accident, obtaining witness statements and dealing with documentation. That work was work that would normally be carried out by a solicitor and R was not entitled to recover costs in respect of them.

(2) In respect of the second invoice, it was necessary to assess the relationship between R’s solicitors and Q. If R’s solicitors had sought Q’s assistance on an agency basis then they would have been entitled to recover Q’s costs not as a disbursement but as a profit cost, Crane v Canons Leisure Centre (2007) EWCA Civ 1352, (2008) 2 All ER 931 applied. However, no true agency agreement existed between R’s solicitors and Q; there was no letter of instruction and no terms of engagement. On that basis, it was not possible for R to recover Q’s fees after the instruction of a solicitor by R.

(3) Furthermore, the work undertaken by Q did not fall within the category of ‘expert assistance’ that otherwise might have rendered the costs recoverable, Nossen's Letter Patent, Re (1969) 1 WLR 638 Ch D applied. The present was a simple case of an insurer contracting out part of its work in order to investigate claims made against the insured. It was routine work which many insurers would have undertaken in-house.

The mere fact that R’s insurer chose to contract out that work to Q did not render the costs recoverable under the Nossens exception.

Appeal allowed.

R Mallalieu (instructed by a costs advocate) for the appellant; JHM Farber (instructed by P Jane M D Phillips) for the respondent.