When costs of the costs, cost!
Gary Knight looks at an interesting judgment from DCJ Colin Campbell involving the argument that summary assessment costs of £1,500.00 plus vat and court fee applied because the Claimant had “exaggerated” costs of the action.
Neutral Citation Number :  EWHC 2390 (SCCO)
Case No: SC-2021-BTP-000964
UK SOVEREIGN INVESTMENTS LTD (Claimant) -V- UK SOVEREIGN INVESTMENTS LTD (Defendant)
A matter heard by Deputy Costs Judge Colin Campbell with his judgment handed down 7 September 2022.
The main claim for damages had been resolved in the favour of the Claimant who recovered the sum of £103,816.82.
The Claimant submitted a Bill of Costs seeking £83,425.18. The matter was listed for a detailed assessment but required adjournment due to the Claimant’s advocate’s illness.
During the hiatus the issue of costs was resolved with the Claimant accepting a global sum of £59,000.00 inclusive of interest.
The only live issue was that of the costs of the detailed assessment procedure.
It was the Defendant’s case that the liability should be limited to the costs payable on a provisional assessment, that is to say £1,500 plus VAT, and the court fee on commencing detailed assessment proceedings – per CPR 47.15.
The Claimant, on the other hand, unsurprisingly argued that there should be no such limitation and that the costs should be allowed in the sum of £19,755.24 as set out in its Form N260.
It was agreed that the issue should be resolved by the Court “on the papers”, to save the expense of a hearing.
Skeleton arguments (including Points of Dispute and Replies) on behalf of both the parties, were filed with the Court.
The Defendant’s submissions included reference to the fact that Bills up to £75,000 are dealt with as provisional assessments: per CPR 47.15(1) and PD 14.1 to CPR 47.15. and that in proceedings which do not go beyond provisional assessment, the maximum amount which the court will award to any party as costs of assessment is £1,500 plus VAT and any court fees paid.
The Defendant further submitted that the Claimant’s bill only exceeded the sum of £75,000.00 because it had been “grossly exaggerated” with “unreasonable conduct” citing the recovery of £59,000.00 including interest, as being “indicative that the original claim was grossly excessive and disproportionate”.
The Claimant’s position was that the agreed costs considered, amongst other issues, the expense of a detailed assessment in London when the Claimant’s costs lawyer was based in Manchester and the risks associated with detailed assessments.
Deputy Costs Judge Campbell did not accept the Defendant’s submissions.
He stated that he had not carried out a detailed assessment after hearing full argument and was, therefore, not “in a position to make a finding that the figure advanced in the bill was one that was exaggerated, and that the Claimant’s conduct had been “unreasonable conduct””
Acknowledging that “There may have been many reasons why the Claimant was willing to discount the bill about which the court does not know and will never be told. However, it is reasonable to surmise that this would be for one or more of the following reasons: a) to reflect a discount for risk, since a receiving party rarely, if ever, recovers every pound claimed; b) that the Claimant wanted accelerated receipt of the money to be able to use it now, for example, to pay down a debt or loan; c) that the Claimant merely wanted finality; d) or simply, that the solicitors had advised that the points of dispute were arguable and if things went the Defendant’s way on the day, an offer of £42,500 inclusive of interest and costs of assessment made on 27 July 2021, might not be beaten, thereby putting the claimant at risk as to costs”.
The Deputy Costs Judge also regarded a factor in favour of the Claimant and against the Defendant that the former accepted in settlement, a figure much closer to its own Part 36 offer of £60,000 made on 25 July 2022, than the sum of £42,500 inclusive of interest and costs advanced by the Defendant. Put another way, it was within the Defendant’s gift to make a realistic Part 36 offer at an early stage which would have put the Claimant at risk at to costs going forward, were the sum allowed at detailed assessment to be less the offer. As it seems to me, what the Defendant is trying to do now is to have a second bite of the cherry, having failed to make an offer under Part 36 which could have achieved exactly what he is asking the court to do now, namely, to make a different order to the default order to be found in CPR 47.20
Agreeing with the Claimant that rule 47.15 is self-contained in the sense that “it does not say what the Defendant wants it to say, namely that if a bill is brought in for assessment at over £75,000 but is allowed at less than that figure, it means that it was obviously exaggerated, so provisional assessment costs must apply. On the contrary, the rule says no such thing, in circumstances where it would have been open to the rule makers to provide that where a bill was reduced under £75,000, the receiving party would only be entitled to provisional assessment costs rather than, as here, to detailed assessment costs”.
The Deputy Costs Judge did, however, consider the claim for costs of £19,000.00 to be “strikingly high” allowing £9,000.00 plus vat plus the court fee.
An interesting decision which exampled the Court’s willingness to consider issues on paper rather than require a fully contested hearing.
It was also interesting to note that when arriving at the sum of £9,000.00, a rate of £225 per hour was allowed for the costs lawyer, no doubt acknowledging the nature of the work undertaken justified a rate well above the often proposed Grade D rate advanced by Paying Parties for work undertaken by costs lawyers.
It will no doubt be noted that the Deputy Costs Judge was a long serving Costs Judge at the SCCO before his retirement.
Link to High Court Judgment Template.
Gary Knight, Partner and Costs Lawyer