This blog was written by Henry King, a barrister in 12 King’s Bench Walk’s Costs Team and looks at the case of Deutsche Bank AG v Sebastian Holdings Inc  EWHC 9 (SCCO). This judgment concerns the costs of detailed assessment proceedings that lasted 97 days and was heard remotely. The Defendant for the purpose of the detailed assessment proceedings was Mr. Vik, against whom a non-party costs order had been made.
The salient takeaway point is that all practitioners (not just costs practitioners) should not assume a matter will settle without detailed assessment proceedings and so should ensure that they keep good attendance notes.
- In 2013, the Claimant obtained judgment against the Defendant for c. $243m. The judgment was 428 pages long. A payment on account of costs of £34.5m was ordered.
- In 2016, the case became one of the foundations of non-party costs order applications where the Court of Appeal held that “the only immutable principle is that the discretion must be exercised justly”.
- In 2017, the detailed assessment proceedings began.
- In due course, the Bill totalled c. £53.4m, of which over £30m was disbursements.
- By 2023, there had been:
- 97 days of detailed assessment (which is twice as long as the trial took);At least 40 ex temporae judgments
- 6 reserved judgments.
- The Bill was finally assessed in the total sum of c. £36.5m. Thus, whilst £2m is a lot of money, vis-à-vis the payment on account (£34.5m was paid) the increase achieved by the detailed assessment process was modest. This was despite the assessment being on the indemnity basis.
This hearing was to determine the liability for costs of the detailed assessment process. Master Gordon-Saker described the process as “painful” and “forensic archaeology”.
The Paying Party achieved a 30% reduction on the costs of the assessment process for the following reasons:
- The Receiving Party claimed costs on an issue it lost and on which it was not entitled to the costs. This caused the master to express “frustration” during the hearing and required an amended schedule to be produced.
- The Receiving Party’s attendance notes were far from adequate. Accordingly, the length of the detailed assessment had been elongated by reason of the Receiving Party’s conduct and that merited a reduction.
This was despite the paying party seeking to challenge “almost every item on the Bill”. Further, the fact that the Bill was reduced by 31% was not held to be a persuasive factor. That position could have been protected by a suitable offer but the Paying Party elected not to make any offers. Senior Costs Judge Gordon-Saker concluded:
The prolongation of the detailed assessment by the Claimant, the claim for the costs of initial margin and, to a much lesser extent, the failure on the issues of the scope of the costs order and the exchange rate, do not justify an order for costs in Mr Vik’s favour but do justify an order that the Claimant should not be entitled to all of its costs of the assessment. In considering the percentage that should be disallowed I should bear in mind the costs which Mr Vik will have incurred, in particular in relation to the prolongation and the time spent on initial margin. Inevitably the court’s approach to this has to be broad, but in my judgment justice would be done by depriving the Claimant of 30% of its costs.
The costs of the assessment process are to be summarily assessed. Thus, nearly 10 years post judgment, the case might finally have come to a conclusion.
- Those reading this are advised to keep a good log of their work by way of attendance notes, particularly on higher value matters where assessment is going to be more likely.
- Parties should always make Part 36 offers to protect the costs of the detailed assessment proceedings.