The new Guideline Hourly Rates in the Court of Appeal

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This blog was written by Andrew Roy, Deputy Costs Judge & Head of 12KBW’s Costs Team.

Samsung Electronics Co. Ltd & Ors v LG Display Co. Ltd & Anor (Costs) [2022] EWCA Civ 466 is a short but important judgment in which the Court of Appeal considered and applied the 2021 Guideline Hourly Rates (‘GHRs’) in conjunction with the 2021 Guide to Summary Assessment of Costs.

The case

The substantive appeal concerned a price-fixing cartel. Both Samsung and LG were members of the cartel. UK local authorities brought a claim against Samsung for £5.4 million. The claim settled for £1.6 million plus costs. Samsung then sought to bring a contribution claim against LG.

At first instance Sir Michael Burton GBE held that England was not the appropriate forum and dismissed the claim for want of jurisdiction. Samsung appealed. The appeal was dismissed. LG was therefore entitled to its costs of the appeal. The Court of Appeal summarily assessed these.

LG submitted a schedule totalling £72,818.21. The Hourly Rates (‘HRs’) which were billed in dollars equated to:

(a) Between £801.40 and £1,131.75 for Grade A fee earners, as compared to the London 1 GHR of £512.
(b) Between £443.27 and £704 for Grade C fee earners, as compared to the London 1 GHR of £270.

The Court was not persuaded the rates claimed, which were above the GHRs, were justified.

Marks LJ (with whom Snowden and Lewison LJJ agreed) observed that London 1 GHRs applied to “very heavy commercial and corporate work by centrally based London firms”. He continued [@ 4]:

Whilst the guide recognises that in substantial and complex litigation an hourly rate in excess of the guideline figures may sometimes be appropriate, giving as examples “the value of the litigation, the level of the complexity, the urgency or importance of the matter, as well as any international element”. However, it is important to have in mind that the guideline rates for London 1 already assume that the litigation in question qualifies as “very heavy commercial work”.

He was singularly unimpressed with LG’s unconvincing attempt to support the high mark-ups sought, holding [@ 5-7]:

LG has not attempted to justify its solicitors charging at rates substantially in excess of the guideline rates. It observes merely “that its hourly rates are above the guideline rates, but that is almost always the case in competition litigation”.

I regard that as no justification at all. If a rate in excess of the guideline rate is to be charged to the paying party, a clear and compelling justification must be provided. It is not enough to say that the case is a commercial case, or a competition case, or that it has an international element, unless there is something about these factors in the case in question which justifies exceeding the guideline rate.

There is nothing in the present appeal to justify doing so. This was a one-day appeal, where the only issue was the appropriate forum for the trial, the documentation was not heavy, and the amount claimed (£900,000) was modest by the standards of commercial cases. (Emphasis added).

As a result, LG’s costs were reduced to £55,000.

Analysis

Samsung suggests that the Courts will be more reluctant to allow departures from the 2021 GHRs than was the case with their 2010 predecessors. The basis for this is that factors which under the old rates could have been deployed to justify a mark-up (complexity, value, etc.) will in many cases be already to baked into the new rates, at least to a degree.

There are sound reasons why this should be so. There are important material differences between the 2021 GHRs and their predecessors.

As explained by Master Rowley in Shulman v Kolomoisky & Anor [2020] EWHC B29 (Costs) [@ 31] the GHRs “were originally provided to judges when the Civil Procedure Rules arrived in April 1999 and the concept of summary assessment of costs first came into being. Many judges had little or no experience of costs and the guideline rates were there to provide assistance on summary assessment.” However, over time they have been increasingly relied upon in detailed assessment hearings. As observed in Shulman [@ 4]: “When the Master of the Rolls considered a report proposing to vary the Guideline Rates in 2014, he accepted the conclusion that they could be used as a starting point in detailed assessments even though they had originally only been intended to be used in summary assessments. That was, in my view, a reflection of the fact that there is rarely any other starting point offered by the parties to the court when considering the appropriate level of hourly rates”.

The 2021 GHRs reflect this trend. Indeed, they are a culmination of it. The Working Group’s report stated at §2.8 that:

“… there should be no difference in hourly rates allowed on detailed or summary assessment”

In light of this and other related factors it:

“ … resolved to seek evidence on what was in fact allowed by Costs Judges who have experience and expertise in reflecting what is reasonable and proportionate. The evidence was to be of the rates allowed on provisional and detailed assessment. Cases which go to a detailed assessment hearing will be predominantly multi-track and perhaps towards the more complex end of the multi-track spectrum.” (emphasis added)

This approach and the figures it generated were adopted in full. The 2021 GHRs reflect the Working Group’s recommendations precisely and without qualification.

The 2021 GHRs are, thus, far removed from the original conception of the guidelines which were only directly relevant to summary assessments, predominantly in fast-track claims. They reflect the reasonable and proportionate rates allowed in detailed assessment in multi-track claims, and indeed if anything towards the more complex end.

It follows that, whilst mark-ups to the 2010 GHRs would often be appropriate in multi-track cases to reflect that the rates were tailored to fast-track cases, that is not so with the 2021 GHRs. It would appear to follow that significant mark-ups will normally only be justified in cases which are at the higher end of the multi-track.

That said, there are arguments available to distinguish Samsung.

  • Firstly, and most obviously, on the available material Samsung concerned a case which was entirely run of the mill for the cohort covered by the GHRs in question. It will often be possible to show that there are features of given case which take it outside (or at least towards the upper end of) the relevant cohort. It should be noted that the Guide at §29 (as cited in Samsung) states: “It is important to note (a) that these are only examples and (b) they are not restricted to high level commercial work, but may apply, for example, to large and complex personal injury work.”
  • Secondly, this was an appeal. High solicitors’ costs will generally be more difficult to justify on appeal. As per §41 of the Guide: “On appeals where both counsel and solicitors have been instructed, the reasonable fees of counsel are likely to exceed the reasonable fees of the solicitor. In many cases the largest element in the solicitors’ reasonable fees for work on an appeal concerns instructing counsel and preparing the appeal bundles. Time spent by the solicitor in the development of legal submissions should only be allowed where it does not duplicate work done by counsel and is claimed at a rate the same or lower than the rate counsel would have claimed.” Whilst this guidance is predominantly directed at solicitors’ time, it arguably is also relevant to the HRs claimed. The scope for a solicitor to bring significant added value on an appeal will often be much more limited as compared to first instance litigation where many of the most important and challenging tasks (e.g. obtaining evidence) will be performed by the solicitors.
  • Thirdly, and most importantly, Samsung was a summary assessment. Whilst the GHRs are now much more important in detailed assessments than was historically the case, they do not carry the same weight in that process as they do for summary assessments. As per §28 of the Guide: “The guideline figures are intended to provide a starting point for those faced with summary assessment. They may also be a helpful starting point on detailed assessment.”

It therefore remains to be seen whether, and to what extent, this type of argument would prevail on detailed assessment. Certainly, the author’s attempts to deploy such arguments on detailed assessments have up to now (albeit without being able to cite Samsung in support) met with limited success.

Takeaway Practice Points

  • It is likely to be more difficult to recover a significant, or indeed in some cases any, mark-up on the 2021 GHRs as compared to their predecessors, at the very least on summary assessment.
  • Paying parties should deploy Samsung and the points identified above to keep the rates down.
  • Receiving parties seeking HRs significantly above the GHRs should adduce “clear and compelling” material to justify their mark-ups.

Greyson v Fuller – A Practical Application (Curtis v Lucking)

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This blog is written by Henry King who appeared for the successful Defendant in Curtis v Lucking. The decision in Curtis followed the recent approach of the High Court in Greyson v Fuller [2022] EWHC 211 which highlighted the “highly prescriptive” nature of the pre-action RTA protocol (‘the protocol’) and portal governing MOJ stage 1, 2 and 3 proceedings.

The Facts in Greyson

  • On 28 June 2017, the Claimant (‘C’) and Defendant (‘D’) were involved in an RTA for which D was at fault.
  • On 3 August 2017, C saw a GP expert. The GP advised a 6-month prognosis for total recovery. If C did not recover within 6-months, the GP recommended a further report.
  • C did not recover in line with the expected prognosis and obtained further reports from an orthopaedic expert and a pain management expert.
  • All three reports were disclosed at the same time to the D with the Stage 2 settlement pack.
  • The matter did not settle at stage 2. The matter proceeded to stage 3.
  • The day before the stage 3 hearing, the Defendant served a witness statement taking issue with the service of the medical report on a strict reading of 7.8B, below. The matter was adjourned for full consideration and listed before HHJ Petts (formerly of 12KBW).

The RTA Protocol

Per the RTA Protocol, at 7.8B(2), a further medical report will only be “justified” where it is recommended by the first expert (which it was), and that first report was disclosed to the Defendant

The Decision of the Circuit Judge

In summary, on 19 February 2021 the circuit judge found that:

Paragraph 7.8B of the RTA protocol sets out two conditions for a further medical report to be justified. The first was satisfied. The second was not. Accordingly, the reports were not justified ([@8-9]). The Claimant submitted that 7.8B was a guide, rather than prescriptive. That was rejected by the judge [@ 11]. The judge held that the whole point was (in effect) to keep the Defendant in the loop through disclosure ([@ 12]). The Claimant submitted that 7.8B was a guide, rather than prescriptive. That was rejected by the judge [@11]. The judge held that the whole point was, in effect, to keep the Defendant in the loop through disclosure ([@12]).

However, the judge went on to reject the Defendant’s position that the fact that the reports were not justified meant that they were irredeemably inadmissible ([@ 27vi])

The judge, of his own volition, considered a relief from sanctions test was appropriate ([@ 30; 35]). Following Denton, the judge held that the Defendant’s position was opportunistic [@ 38]. He granted relief [@ 44]. He further held that the breach of 7.8B did not make it appropriate to disallow the costs of obtaining the further reports in principle, but that this could be argued at the adjourned Stage 3 hearing [@ 45].

As to the costs, the judge found that the matter had not left the stage 3 ‘arena’ and so awarded the Claimant fixed costs of £250+VAT (the stage 3 advocacy fee) ([@ 53]). He declined the Claimant’s invitation to transfer the matter to part 7 to allow greater costs recovery on the basis that such a course of action would be “to allow the tail to wag the dog” ([@ 54]).

The Defendant was granted permission to appeal on a point of public importance. This was because in Mason v Laing [2019] 9 WLUK 584, HHJ Gosnell had held that a relief from sanctions analysis cannot arise in a protocol case on the basis that:

  • It is not set out in the highly prescriptive process; and
  • The protocol must have “some teeth and there must be some effect if the Claimant breaches the protocol” ([@ 13]). Those teeth were, in that case, excluding the report and the costs thereof.

The Decision of the High Court

The matter came before Foster J one year later on 3 February 2022. After reciting the history of the case and the parties’ submissions [@1-33], the judge held as follows:

  • If a Claimant’s medical reports are not disclosed in accordance with the protocol, or in an “unorthodox manner”, the Claimant runs a “serious risk” of not recovering those costs and has to persuade the Court the Defendant should properly pay – if the Defendant takes the point ([@ 35]);
  • The overall structure of the protocols is to provide a disciplined and self-contained process that aims at the speedy and proportionate resolution of low value, liability admitted claims by imposing, pre-eminently, “a financial discipline” ([@ 37], emphasis original).
  • Accordingly, where a report is not justified, because of (say) a failure to disclose it in accordance with the rules, the penalty is failing to recover costs which is “written through every part of the scheme as the default sanction for compliance failures” ([@ 38] and [48]).

Curtis v Lucking

Facts

  • On 25 August 2018, C and D were involved in an RTA for which D admitted liability.
  • On 19 December 2019, C underwent an MRI scan at a cost of £650.
  • On 27 July 2020, the C sent the Stage 2 settlement pack. The MRI scan was not included as a disbursement.
  • On 29 September 2020, settlement was agreed. C’s representative sent details of their disbursements. The MRI scan was not included.
  • On or around 26 October 2020, the Defendant had paid the damages and disbursements claimed in full.
  • On 21 December 2020, i.e. two months later, the C’s representatives wrote to the D seeking payment of the MRI fee.
  • In the event, Part 8 proceedings were issued for the recovery of the MRI fee and, in due course, a detailed assessment listed before DJ Davies.
  • On 10 March 2021, the detailed assessment took place.

Point in Issue

Aside from the fact that the C sought to recover the costs of the MRI scan as a disbursement, two months after the file had been closed for a further disbursement, the case centred around whether, by analogy, Greyson applied and whether the sanction for failing to disclose the MRI scan meant that the costs could not be recovered. The provision for disbursements is included in  paragraph 7.32 of the Protocol:

Submitting the Stage 2 Settlement Pack to the defendant

7.32 The Stage 2 Settlement Pack must comprise—

…

(4) evidence of disbursements (for example the cost of any medical report);

Submissions

The Defendant submitted that evidence of disbursements means all disbursements i.e. at the point of the pack, the Claimant is presenting the full extent of his or her claim, including disbursements. Therefore, a failure to provide a disbursement meant that the cost could not be recovered. The Defendant relied on the passages of Mason v Laing and Greyson v Fuller above.

The Claimant argued that this is not what 7.32 said. The Defendant was reading in the word “all” which was not there. In the alternative, this sanction contended for by the Defendant was not written into the protocol and accordingly there was no such sanction.

Decision

The judge found that the fee could not be recovered. He held that 7.32 meant evidence of all disbursements regardless of whether it said “all”. This was because it would be “tautologous” to include the word “all” as it was clear from a plain reading of the provision. Further, the judge was greatly assisted by the case of Greyson. He held that whilst on a different point (a medical report rather than a disbursement); fundamentally the same issue was at stake. Given the decision in Greyson, the sanction must be failing to recover costs. Accordingly, the MRI fee was not allowed.

Comment

As DJ Davies said in his judgment, the word “prescriptive” is used more times in relation to the Protocol than any other part of the CPR. This decision indicates that the “serious risk” outlined by Foster J will be upheld by County Courts (unless there is a good reason not to) in relation to all facets of the protocol, including disbursements. This is to be applauded. The whole point of the fixed costs regime is certainty. Such decisions promote certainty between the parties, and ensure that the rules are applied, and the protocol followed.

Practical Takeaways

  • The RTA protocol is highly prescriptive. A failure to comply with its express provisions will likely lead to a sanction.
  • That sanction will likely be the failure to recover costs.
  • This applies to medical reports and disbursements.

Cost Capping Orders

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PGI Group Ltd v Thomas & Ors [2022] EWCA Civ 233 is a rare example of a reported decision on an application to appeal and the first published decision on costs capping orders (“CCOs”) since the Jackson reforms introducing costs budgeting came into force.


Coulson LJ heard the Defendant’s application to appeal from Cavanagh J’s order (having sat with Costs Judge Brown) refusing to cap the Claimants’ future costs at £150,000, having subsequently budgeted them at just under £850,000 (£1.5 was million claimed). The decision is a useful reminder of the principles applicable to CCOs.


Kate Boakes of 12 King’s Bench Walk appeared as junior counsel for the Respondents, led by Benjamin Williams QC.

Background
This case arises out of a group claim brought by 31 Malawian women who worked at tea and nut plantations in Malawi, as employees of a Malawian company. They claim to have suffered sexual assault, rape and discrimination perpetrated by their male colleagues. The Applicant, and Defendant, is the parent company of Lujeri. The claim is headed to a trial of two test claims in June this year.

Incurred Costs
At the time of the application, the Respondents’ incurred costs were c. £1.6 million which, together with the £848,140 budgeted costs, gave a total of c. £2.5 million. The Applicant’s incurred costs were £750,000, and its future costs were budgeted by Cavanagh J at £1,750,000, giving the same total of £2.5 million.

The Order Sought to be Appealed
The applicant sought to appeal Cavanagh J’s order of 29 October 2021 refusing a CCO and his subsequent order of 8 December 2021, fixing the respondents’ costs budget in the sum of £848,140. In other words, despite the Claimants’ cost being budgeted at just over half the costs sought, the Defendant submitted the Claimants’ future costs to trial should be reduced to £150,000. This figure was said to be in line with the likely costs of pursuing the claims in Malawi.

The Test for a CCO

CPR r. 3.19(5) requires an applicant seeking a CCO to demonstrate that:
(a) such an order is in the interests of justice; and
(b) that there is a substantial risk that, without such an order, costs would be disproportionately incurred; and
(c) it is not satisfied that the risk in subparagraph (b) can be adequately controlled by –
(i) case management directions or orders made under this Part; and
(ii) detailed assessment of costs.
(6) In considering whether to exercise its discretion under this rule, the court will consider all the circumstances of the case, including –
(a) whether there is a substantial imbalance between the financial position of the parties;
(b) whether the costs of determining the amount of the cap are likely to be proportionate to the overall costs of the litigation;
(c) the stage which the proceedings have reached; and
(d) the costs which have been incurred to date and the future costs.
It was also noted that CCOs are very rare and that per CPR PD 3F at 1.1 they will only be made “in exceptional circumstances”.

The Judgment at First Instance
All three limbs of the test under CPR 3.19(5) must be satisfied for a CCO to be granted. Cavanagh J found that none were satisfied and accordingly refused to grant a CCO.
He noted that according to the Defendant, the maximum damages each Claimant was likely to recover, if successful, was around £10,000 and whilst modest by English standards this sum would be “very significant for poor Malawian plantation workers”. Further, he noted that the claims were about more than money: the Claimants sought vindication. He noted that: “The importance of the matter to the parties is a relevant consideration, in relation to proportionality (see CPR 44.4(3)(c)).” Further, if a CCO were made it would likely “force the claimants to discontinue these proceedings”.

The Grounds of Appeal
The three grounds of appeal were as follows:
Ground 1: The judge applied the wrong proportionality test;
Ground 2: The judge failed properly to take account of the costs already incurred in his analysis;
Ground 3: The judge was wrong to hold that the costs of prosecuting the claims in Malawi was irrelevant to proportionality.

Coulson LJ noted that all three grounds of appeal went only to the second limb of the test under CPR r. 3.19(5)(b), that is to say, whether costs would be disproportionately incurred without a cost capping order for £150,000. It was commented [@18-19] that:


“The grounds do not on their face go either to the first pre-condition (namely that a CCO is not in the interests of justice) or the third (namely that the risk of costs being disproportionately incurred could be adequately controlled by cost budgeting).
That seems to me to be fatal to the application… because it would leave untouched the judge’s conclusions that a CCO was not in the interests of justice and that any risk of costs being disproportionately incurred could be dealt with by costs budgeting (which is what he went on to do).”

Refusal of permission to appeal

Coulson LJ reminded himself that decisions on costs are “pre-eminently matters of discretion and evaluation”. As such, appellate courts will only interfere if the decision is “wrong in principle, or if something was taken into account which should not have been, or was not taken into account which should have been, or is “plainly unsustainable”.

The application to appeal was given short shrift. It was noted that the decision was:

“not only well within the ambit of [the judge’s] discretion, but was also a conclusion which the vast majority of judges would also have reached. In short, that is because: £150,000 was accepted by everyone as being nowhere near the minimum reasonable and necessary costs … It is less than a fifth of the sum which the judge calculated as the appropriate costs budget.”

Comment

Coulson LJ was unimpressed with the Defendant’s application. The application sought to cap the Claimants’ costs at a tenth of the Defendant’s, at an amount that would have stifled the claims. Not only would a CCO of £150,000 amount to strike out by the back door but by setting the amount of the CCO by reference to the costs of litigation in Malawi would amount to a forum non-conveniens decision by the back door as well. Further, the Defendant’s focus on a cost/benefit analysis which did not give due weight to the wider importance of these claims and the desire for “vindication” was again, not well received when the first requirement of a CCO is that it be “in the interests of justice”.

Practical Takeaways

  • In any appeal, if the applicable test is cumulative, and none of the elements were found to be satisfied at first instance, all elements of the test should be expressly challenged in the grounds of appeal;
  • Ensure that a CCO will not amount to strike out via the backdoor, i.e. ensure that the amount of the CCO order does not stifle the claim.
  • Be reasonable – proposing to cap the other side’s costs at less than one tenth of your own is unlikely to be well received! It needs to be at or above the minimum reasonable and necessary costs required to litigate in England and Wales.
  • Arguments attacking proportionality need to not just address quantum but also what is at stake in the litigation;
  • You will need to justify why costs budgeting and or detailed assessment will not adequately control costs: perhaps if the Costs Judge will not be able to adequately distinguish between costs reasonably incurred and costs unreasonably incurred in a complex case, see the judgment [@8].

Interim Costs Orders and Part 36 offers: a recent restatement of the arguments and principles

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This blog is written by Jeremy McKeown, a member of 12KBW’s costs team and considers the decision of Master Brown in NAX (a protected party, by JAX) v (1) MAX (2) Liverpool Victoria General Insurance Group Ltd [2021] EWHC 3492 (QB).

The matter concerned a request by the Claimant for final costs orders and/or an interim payments on account of costs.

The decision represents a helpful example of the submissions employed by Claimants and Defendants in such applications and a succinct restatement of the principles the court will apply.

Background

The claim arose out of a serious motorcycle accident in January 2017 when the 23 year-old Claimant suffered a brain injury, multiple fractures to the hip and femur and injuries which led to a below-knee amputation of his leg. The claim was pleaded close to £8 million.

Judgment was entered for primary liability and the Defendants accepted that the Claimant had suffered life-changing injuries, however, there was disagreement surrounding loss of capacity and alleged contributory negligence.

The claim had not been costs budgeted, though budgets had been served. The Claimant’s total costs were budgeted at around £1.23 million plus VAT, about £400,000 of which had been incurred. The Defendants’ total costs budget totalled around £500,000, approximately £175,000 having been incurred.

The matter was complicated by a series of pre-issue Part 36 offers, the earlier of which related to apportionment of liability and later offers in respect of quantum.

What the Claimant Sought & Why the Defendants Objected

The Claimant sought an interim costs order for (1) payment of his costs of the action up to end of the relevant period for the Part 36 on liability, and (2) an order relating to quantum from that date until the end of the relevant period for a second Part 36 liability offer, and (3) a further order for outstanding costs of the action to be assessed if not agreed.

The Defendants objected on a number of grounds, principally that the case was at too early a stage to make such orders. Witness statements had not been served and medical evidence had not been finalised which created doubt about the nature and extent of any damages eventually awarded.

The Decision

On the question of granting a final order for costs of the action

First, the Judge did not need to, nor did he in fact, make a finding that there was a high risk of poor conduct on the part of the Claimant. The fact that there was a possibility of exaggeration in relation to certain injuries was enough, see the judgment [@ 21-22].

Second, it was not appropriate to make orders on the understanding that the trial judge could set them aside for “material change of circumstances” ; a process which raised “the potential for time consuming and expensive application to set aside a final order made at the interlocutory stage”. Moreover, the court could not say with confidence that anything that would emerge could be described as “wholly a change of circumstances rather than the emergence of evidence, the nature of which could not be anticipated” [@ 23].

Third, whilst the judge accepted the force of the Claimant’s argument that the court ought to be wary of applying too much force to “slight risks” of something emerging, nevertheless “in cases where there are or remain issues of liability it seems to me there is greater potential for issues based or conduct-based costs orders at the conclusion of the case.” [@ 24].

Accepting the Defendants’ broader argument, the court was “not satisfied to the high degree of confidence necessary that [it] should at this early stage, and on limited evidence available, make the final orders sought”, being that a trial judge may consider it appropriate to make a different order. That judge would be in a much better position to consider the CPR 44.2 factors [@ 25].

The Claimant cited the Serious Injury Guide, section 9.3(iv) as support for the submission that issues of contributory negligence were issues of quantification rather than liability. The court dismissed this argument as an insufficient basis to grant an interim order which the court otherwise thought inappropriate to grant. Moreover, it was doubtful whether “resolution of liability” in that Guide was meant to cover the situation where primary liability only had been resolved [@ 27-28].

On the question of granting an interim payment

The period between the CMC and trial (up to 18 months) was “within the range of what might be regarded as normal”. The period between incurring disbursements and an expected final order was likely to be way short of the period identified in X v Hull & East Yorkshire Hospitals NHS Trust (unreported), where the Court of Appeal accepted that “an exceptionally long period before quantum can be finalised” was a “critical fact” [@ 29].

The Judge referred himself to the underlying funding documents and compared them to the Law Society’s model CFA, which provides that clients are ordinarily liable to their solicitors for the payment of costs when the claim is “finally decided in [their] favour”. One exception might be where interim costs orders have been made (e.g. following interlocutory hearings) when the solicitors are usually entitled to payment of those costs. However, the court noted that “entering into a CFA is that the solicitors will wait until the conclusion of the case before getting paid their fees.” [@ 30].

As to disbursement funding loans, the fact that a claimant had ATE insurance would assist in securing such finance. Further, an award of interest may be made at the conclusion of the case under CPR 44.2(6)(g) which “might compensate a claimant for the costs of financing disbursements” per Jones v SS for Energy and Climate Change [2014] EWCA Civ 363.

The nature of the risk with which the court is concerned when deciding whether to make an interim order was dealt with [@ 36]:

“…not the risk that such orders would be reversed and the interim payment paid back but the risk that by making an order for interim payment it would diminish such security as may currently exist against the Defendants’ incurred and future costs.”

It was necessary to look at the amount of the potential award of costs in the Defendants’ favour (£500,000 in the costs budget) to decide whether there was sufficient security to meet any final costs award in the Defendant’s favour.

The Claimant argued that the Defendants had several ‘securities’ in the event an interim costs order was made but was later reversed. The Judge dealt with each in turn [@ 40 – 48]:

  • Defendants can set-off against an order for costs in Claimant’s favour: (the matter was decided before the Supreme Court’s decision in Ho v Adelekun [2021] UKSC 43 so is likely of limited use).
  • A Claimant’s ATE insurance indemnity would cover any adverse costs in the Defendants’ favour: it was relevant that the same indemnity would have to be used to cover the Claimant’s own disbursements. Since the indemnity figure was capped at £100,000, there would be little indemnity left to meet the Defendants’ costs.
  • Defendants can set-off any costs against the award of damages (per the usual QOCS rules): the Defendants raised the following potential problems with predicting a substantial damages award and using it as ‘security’:
  • even though there had been substantial interim payments on account of damages, there was also a substantial prospect that by the time of trial these sums in respect of past losses will have all been spent;
  • in respect of interim payments for future losses, even though the Claimant might anticipate a substantial award of damages, it may well take the form of periodical payments. If so, that figure would not then be available to meet the Defendants’ costs;
  • even though the Schedule of Loss was pleaded at almost £8 million, the evidence of quantum was at an early stage and the court ought not simply take as established the assumptions upon which the Claimant has calculated that figure. In other words, the Claimant may have grossly over-estimated the quantum of the claim;
  • it was important not to rule out a significant deduction for contributory negligence (specifically, relating to the Claimant’s failure to properly secure his helmet).

In terms of how to calculated what figure would be reasonable when making an interim payment of cost, the court restated the principles in Excalibur Ventures LLC v Texas Keystone Inc [2015] EWHC 566 (Comm), per Christopher Clarke LJ [@ 50]:

What is a reasonable amount will depend on the circumstances, the chief of which is that there will, by definition, have been no detailed assessment and thus an element of uncertainty, the extent of which may differ widely from case to case as to what will be allowed on detailed assessment. Any sum will have to be an estimate. A reasonable sum would often be one that was an estimate of the likely level of recovery subject, as the costs claimants accept, to an appropriate margin to allow for error in the estimation. This can be done by taking the lowest figure in a likely range or making a deduction from a single estimated figure or perhaps from the lowest figure in the range if the range itself is not very broad. [@ 23]

To this end, Master Brown reviewed, in a broad-brush fashion, the breakdown of what the Claimant claimed in costs and concluded they seemed vulnerable to “heavy reduction on detailed assessment” [@ 53].

In terms of the “bald assertion” by the Claimant’s costs lawyer that work done was “indivisible” as between liability and quantum, the Judge was concerned about proceeding at an interim stage on such bald assertions. If the court was to do so, it would expect to see “considerably more detail justifying the costs lawyer’s conclusions” [@ 54].

Outcome

For the reasons above, the court concluded that it was not appropriate at this stage to make final orders as to costs in the action. Further, it was not appropriate to an make an order for an interim payment on account of costs.

Practical takeaways

  • Parties applying for final or interim costs orders should be mindful of the stage of proceedings and ask themselves whether there are too many unknowns at the point at which they make their request. Uncertainties, such as whether the pleaded quantum is realistic, whether costs are likely to be substantially reduced on detailed assessment and live issues of contributory negligence will impact the court’s decision.
  • The case offers a party intending to oppose an interim costs application some useful submissions they might consider employing.
  • Courts are conscious not to fetter the discretion of the trial judge by making costs orders too early. In general, the trial judge is likely to be in a better position to consider all the circumstances at the conclusion of the case and make a more appropriate costs award.
  • The Judge is likely to look critically at whether the ‘security’ a Claimant says the Defendant has, such as ATE indemnity insurance, set-off against damages et al. will in fact be sufficient if the interim order is later reversed.
  • The risk with which the court is concerned is not the mere fact that the order might be reversed and the interim sums repaid. It is whether, in making the interim order, that itself diminishes the ‘security’.
  • The likely period between incurring disbursements and trial is relevant. An exceptionally long period is a “critical fact”. Here, the predicted 18-months was considered normal.
  • “Bald assertions” by costs lawyers are unlikely to be sufficient. The court will expect to see “considerably more detail justifying the costs lawyer’s conclusions”.
  • In obiter comments, the court queried whether “resolution of liability” mentioned in the Serious Injury Guide was meant to cover the situation where contributory negligence was at large and primary liability only had been resolved.

Hugh Hamill of 12KBW, instructed by Keoghs, appeared for the successful Defendants.

When will specialised solicitor hourly rates be recoverable?

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This blog is written by Lois Aldred, a member of 12KBW’s costs team and is the second of a two-part blogpost looking at R v Barts Health NHS Trust [2022] EWHC B3 (Costs). This blog focuses on the second central issue considered by Master Rowley: when will specialised solicitor hourly rates be recoverable?


The background to this case is set out in our previous blog, see here. In short, it involved a severely brain-damaged little girl, Tafida, and whether her treatment ought to be withdrawn and only palliative care be given. 

The hourly rates claimed were subject to challenge before Master Rowley. The Claimant lived in London but had instructed Irwin Mitchell in Manchester, the paying-party took issue with this. An obvious reminder was given that it is usually a bad point to suggest that it was unreasonable to instruct solicitors in a different area, if the area is cheaper than the claimant’s locality. It was held [@ 42]:

“There can hardly ever be any criticism of a receiving party who instructs solicitors in a less expensive area of the country.”


Once Manchester was accepted the Court found that the 2021 Guideline Hourly Rates were the preferred starting point for work undertaken in 2019, rather than the 2010 Guideline Hourly Rates. No great surprises there, you might say.

The need for the exercise of specialist skill once the baton has been passed to Counsel


The more interesting and central point made by the Defendant questioned the need for the exercise of specialist skill by the solicitors if the “baton of responsibility and importance to the claimant” had been passed to Leading and Junior Counsel and if the solicitors relied heavily upon counsel’s specialised knowledge and skill to take the case forward. As such, it was argued the claimant’s solicitors did not “have to exercise any more skill, effort and specialised knowledge than that of an un-specialised solicitor.”
Master Rowley reminded himself that in cases that do not require a specialist solicitor, the hourly rate will be reduced to a non-specialist firm rate or more junior solicitor rate. Nonetheless this was not apposite here. The Court held [@ 50]:


“it is hard to imagine any case involving more importance to the client or, given the need for urgent action, one which would score more heavily on the circumstances in which the work was done.”

The Defendant also argued that the claimant’s solicitors did not display their skill in this particular case, and rendered their own specialism redundant due to the choice of Counsel and the arguments run. This was resolutely rejected [@ 53]:

“It is in my view, a remarkable suggestion that a case whose own weight clearly justified using expertise to pursue it, can be downgraded in the choice of an appropriate solicitor by that solicitor’s choice of external assistance.”

Master Rowley no doubt was assisted by a perusal of the correspondence between Counsel and the Claimant’s Solicitors that lead him to the conclusion [@ 54] that:

“There is very much a team effort between solicitors and counsel”. He went on [@ 55]: “I therefore conclude that the solicitors not only had the requisite skill, effort and specialised knowledge and responsibility appropriate for this grave case but also demonstrated it in their dealings with counsel and other solicitors. There is no warrant in my view for there to be a reduction in the hourly rates claimed simply on the basis that counsel was also involved in dealing with matters.”

The hourly rates were awarded as claimed.

Practical Takeaways

  • Paying parties should take a realistic view as to whether the case merits a specialist firm with corresponding fees in formulating offers on costs.
  • In cases requiring specialism a whole team of specialist legal advisors, including Counsel may well be reasonable.
  • Receiving parties, be prepared for your file to come under scrutiny from the Costs Judge when determining whether the work your fee earners undertook merited any ‘specialist’ fee. The Costs Judge may not have a background in your specialism, so make it easy and show your worth.

Unravelling the assessment of costs in concurrently heard proceedings

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This blog is written by Lois Aldred, a member of 12KBW’s costs team.

In R v Barts Health NHS Trust [2022] EWHC B3 (Costs), as part of detailed assessment proceedings, Costs Master Rowley dealt with several preliminary issues. The two central issues were:
1) How will a court determine the recoverable costs in proceedings A against the irrecoverable costs of proceedings B when both proceed concurrently, and share some common costs?
2) When will specialised solicitor hourly rates be recoverable?

This is the first of a two-part blog and considers issue (1).

Background

A little girl, Tafida (the receiving party and claimant) was at the centre of this case. Sadly in 2019 she sustained a brain injury, thereafter she required full time paediatric intensive care. Her treating physicians at the Defendant Trust believed active treatment being withdrawn would be in Tafida’s best interests. Tafida’s family opposed this and unsuccessfully applied to the Trust to transfer Tafida to an Italian hospital for alternative treatment. The family brought a challenge by way of judicial review. The Trust concurrently brought proceedings under the Children Act 1989 for a best-interests determination.


At the conclusion of the hearing Macdonald J ordered the Defendant to pay 80% of the Claimant’s costs in the Judicial Review proceedings with no order as to costs in the Children Act Proceedings (save for detailed assessment of the publicly funded parties).


Separating the recoverable from non-recoverable costs in concurrent proceedings


The detailed assessment proceedings before Master Rowley primarily related to the order the Defendant pay 80% of the claimant’s costs in the Judicial Review proceedings. Master Rowley had to consider whether any of the costs claimed fell outside that costs order and instead came within the order following the Children Act proceedings, for which the claimant had no entitlement to costs.


The Defendant, as the paying party, argued that the Children Act application was the central application. Accordingly, the Defendant submitted that Medway Oil and Storage Co Ltd v Continental Contractors Ltd [1929] AC 88 should be applied, with the effect that only the costs which were over and above those which would be incurred in the Children Act proceedings could be recovered.

Master Rowley rejected “the harshness of the Medway Oil approach”. Medway Oil required the same parties to be involved in a claim, counterclaim or possibly more than one set of proceedings. He distinguished Medway Oil as the Litigation Friend for the Claimant (XX) acted in a different capacity in the two sets of proceedings before Macdonald J. In the Judicial Review proceedings, the litigation friend acted for Tafida but in the Children Act proceedings the Court Appointed Guardian advanced Tafida’s interests. Consequently, it was found Medway Oil did not apply as it would be wrong to characterise one of the proceedings as the “more central proceedings.”


But how is the assessing judge to handle the division of the costs common to both proceedings, given some work would be recoverable and some not?

In rejecting the Defendant’s contention that Medway Oil applied Master Rowley gave short shrift to the contention that indivisible common costs are irrecoverable. He held [@ 24]:

“It is my experience that common costs are rarely non-divisible in any event. Almost all work which is common between two issues or two parties et cetera can properly be divided between the recoverable and unrecoverable element. Even the level of some court fees will depend on the extent of the claims brought and may be divided between successful and unsuccessful claims or parties. The only problem is a practical one. It is extremely time consuming to contemplate each attendance note or other documentation in order to come to a conclusion on where to divide each piece of work. The authorities are keen to stress that a blanket approach to the percentage that is recoverable is not the way the court should proceed. This approach was taken by Master Simons in Jean Mary Doris Haynes (personal representative of the estate of Brian Haynes deceased) v Department for Business Innovation and Skills [2014] EWHC 643 (QB) and was only upheld by Jay J in the absence of any other option. In practice, the allowance of the same percentage may become the de facto approach when a similar proportion appears to be appropriate on reviewing a number of items of work.”

He further held [@ 37]:
“To the extent that there are any non-divisible items however, then it seems to me that the receiving party is correct in saying that they are recoverable in full. That is the tenor of the authorities in cases such as Haynes.”
While Master Rowley rejected the Defendant’s high-impact points he left no doubt that the onus is on the receiving party to attempt to attempt a reasoned division in its bill.

What level of scrutiny will be expected by the assessing judge at a detailed assessment?

The clue is in the name. The answer (it seems): is “Detailed scrutiny”.
Although, if there is a group of pieces of work that appear to have a similar allowable percentage a more broad-brush percentage allocation to those grouped items could be appropriate. However, it was held [@ 34-35]:

“detailed assessment hearings where division is, or may be, required are time-consuming affairs. There is little for it but to consider each item that is claimed….”
“It is, and always has been, for the receiving party to draft the bill of costs to reflect any necessary division of the work that has been done. There is no realistic way, absent the receiving party’s file, for the paying party to be able to interpret the time claimed in order to be able to challenge items in the bill in the fashion contended for by the claimant. If that division has not been carried out, bills are regularly returned in order for them to be redrawn.”

This should be a warning to strike fear in all but the most bullish of receiving party’s Cost Draftsperson. Master Rowley went on:

“Where, as here, the receiving party argues that it is not required, then it will have the effect of the court receiving more speculative arguments from the paying party and being required to spend longer on each entry before reaching a decision.”

An interesting example where caution is required was where Counsel’s brief fee covers both recoverable and irrecoverable work. When this is the case, a division needs to be undertaken so that the non-recoverable costs can be removed. This is even the case where Counsel’s fee would have been judged reasonable if it only covered the recoverable costs.

Practical Takeaways

  • The harsh Medway Oil approach may be distinguishable where an individual acts in different capacities in concurrent proceedings and where it would be wrong to characterise one of the proceedings as the “more central proceedings.”
  • Determining the costs recoverable under a costs order in concurrent proceedings requires careful (and sometimes time-consuming apportionment).
  • Receiving parties who decline to attempt a division of common costs do so at their peril.
  • The Costs Judge will, in the main, expect to scrutinise each item that is a potential common cost so it’s worth the receiving party doing the work to get it right in the bill.
  • Time may be wasted if the receiving party’s bill has to be re-drawn or fails to make a decent attempt at division. The receiving party should not be surprised if they foot the bill for any delay or associated costs.
  • If the receiving party either declines to re-draw their bill or otherwise does not properly attempt to divide common costs they can expect the assessing judge to be more receptive to some of the paying party’s arguments as to why particular items are irrecoverable.

The Pitfalls of Medway Oil

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This blog is written by Andrew Roy who is head of 12 King’s Bench Walk’s Costs Team. He also sits as a Deputy Costs Judge. He appeared for Mr Kimmins (D2) in Green (below).

Introduction

Green v Generali FA and Kimmins [2021] EWHC B25 (Costs) per Costs Judge Rowley at [41]:

“raises a novel point about the interaction between the Medway Oil approach to claim and counterclaim with the traditional splitting of work done between more than one claim where the work has benefitted both proceedings. I have not found this point easy and I am unaware of any direct authority upon it.”

More generally, the case provides an important illustration of: (1) the perils of the bear trap that is Medway Oil and Storage Co Ltd v Continental Contractors Ltd [1929] AC 88; (2) the consequential need to be exceptionally careful as to what orders are obtained or agreed in any multi-party action.

Facts

The claim arose out of a catastrophic road traffic accident in France in which D2’s passenger tragically died and in which D2 suffered severe injuries. C (the passenger’s estate) brought a claim against D1 (the insurer of the other driver). D1 issued contribution proceedings against D2. D2 had already brought his own claim against D1. The actions were ordered to be tried and managed together.

D1 and D2 sensibly agreed to each meet 50% of C’s claim, to be adjusted as necessary in light of the resolution of liability between each other. C’s claim settled on this basis. D2’s contribution claim against D1 and D1’s claim against D2 were subsequently compromised 75:25 in D1’s favour.

The liability agreement in respect of D2’s claim against D1 was embodied in a consent order which provided that “[D1] shall pay [D2’s] costs of liability”. Quantum of D2’s claim was subsequently agreed. This agreement was also embodied in a consent order which provided that: “[D1] shall pay [D2’s] costs of the action”. The liability agreement in respect of D1’s contribution claim against D2 was later embodied in a third consent order which provided that “[D2] shall meet [D1’s] costs of the Part 20 Claim”.

The Costs Proceedings

D1 subsequently served a bill on D2 claiming costs of dealing with liability, etc in respect of C’s claim and D1’s concurrent claim against D2, applying a 50% moiety.

D2 contested D1’s entitlement to any such liability costs. He did so primarily on the basis of the Medway Oil principle that a claimant who successfully defends a counterclaim is “only entitled to such extra costs as were occasioned by the counterclaim”. D2’s argument was that this principle applied to any additional claim (Cinema Press Ltd v Pictures and Pleasures Ltd [1945] KB 35, Parkes v Martin [2009] EWCA Civ 883) so as to preclude recovery, D2 having not obtained a wider or more tailored costs order. He also argued that the same result was arrived at by conventional construction of the third consent order against the background of the previous orders. D1 in reply argued that this was incorrect and unfair given that, between D1and D2, D1 won 75:25.

The Judgment

Cost Judge Rowley found for D2, holding that D1 could not recover any liability costs.

He held that Medway Oil and the previously reported cases following it did not by themselves necessarily provide a complete answer. This was because in Medway Oil there was no possibility of the work done in relation to liability being attributable to any claim other than the claim and counterclaim brought in those proceedings. The scenario here, where the benefit of the liability investigations might be spread across two different proceedings, was not considered.

He nevertheless held that, whilst division of the work between the two sets of proceedings might be a natural approach, it would lead to an absurd result. Medway Oil precluded recovery against D2 of a proportion of liability work done. These costs could only have been recovered if D1 had successfully defended C’s claim.

It was not open to D1 to circumvent this by seeking a proportion of the liability costs in the proceedings against D1. The judge recognised that D2 had succeeded in its claim against D1 and that viewed in isolation the third consent order would justify D2 recovering liability costs. However, the third order had to be interpreted in the context of preceding orders. Doing so lead to the conclusion that D1’s part 20 contribution claim against D2 fell to be treated as counterclaim to D1’s claim against D2. It followed that D2 claim for liability costs fell foul of Medway Oil.

Practice Points

There are three important points to take away from this case, one specific and two general.

  • The specific point is that litigators always need to keep Medway Oil firmly in mind in cases where it might apply (potentially any case where there is more than one claim). The very fact that Medway Oil is liable to produce unfair and counterintuitive results is what makes it such a nasty bear trap. It is in one sense easy to understand why D1 in Green assumed that it would be able to recover some of its liability costs. That was obviously the fair outcome. Indeed, this very point was explicitly recognised in Medway Oil itself. The House of Lords therefore emphasised the need for a party who would be adversely affected to obtain a more tailored costs order.
  • The first general point is that later orders will be construed against the background of earlier ones. It is thus vital to ensure insofar as possible that the terms of any order are not liable to foreclose any later order a party might wish to seek. If they do then the only way to avoid the type of result that D1 suffered in Green would be to try and ensure that the later order explicitly qualified the earlier one. However, that would almost inevitably be an uphill struggle. A later order which is inconsistent with a previous one is likely to be deemed to entail a variation of the earlier order. The test for variation is a demanding one; Tibbles v SIG Plc (t/a Asphaltic Roofing Supplies) [2012] EWCA Civ 518; [2012] 1 W.L.R. 2591.
  • The second even more general point that follows from this is that litigators always need to think very carefully about what cost orders they seek or agree. It is vital to look around the corners and consider all potential costs implications. Cases where Medway Oil could come into play are a paradigm example of this. However it is a point which applies generally.
  • Whilst this point may seem trite, it nevertheless bears emphasis. That the very experienced lawyers acting for D1 in Green failed to heed it with serious adverse consequences is eloquent testimony to this.

Abated Brief Fees – What’s reasonable?

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This blog is written by Cressida Mawdesley – Thomas, a member of 12KBW’s Costs Team.

The decision of Deputy Master Campbell in Hankin v Barrington & Ors [2021] EWHC B1 (Costs) considers: (1) what is a reasonable brief fee for leading counsel in a 13-day liability and quantum personal injury trial; and (2) what is the appropriate level of abatement when a case settles nearly three weeks before trial.

Summary
In this case leading counsel’s brief fee was reduced from £125,000 to £75,000. However, it was held that an abated fee was payable despite the case settling nearly three weeks before trial. In this case 50% of what had been determined to be the reasonable brief fee (£75,000) was allowed as the abated fee (i.e., £37,500). A further deduction was made to account for the work counsel undertook in mitigation of his loss, meaning counsel’s final abated brief fee was £27,500. It was not in dispute that £15,000 was also payable to leading counsel for the mediation.

This blog respectfully suggests it was wrong to account for what leading counsel had earned during the trial period. This is contrary to Lewis v The Royal Hospital Shrewsbury Hospital 20 May 2005 (unreported) (below) and was inappropriate in circumstances where no account was taken of counsel’s 12 lost refreshers. It does not appear from the judgment that Leggatt LJ’s obiter comments in K/S Norjarl A/S v Hyundai Heavy Industries Co Ltd [1991] 3 All ER 211 [@ 222] were drawn to the Court’s attention. In K/S Norjarl A/S it was explained that in a case set down for a lengthy hearing, an abated brief fee would normally include an element of compensation for possible loss of refreshers. Moreover, trying to ascertain what counsel would have earned had their diary not been occupied is an inherently speculative and unsatisfactory exercise.

It is also submitted that interfering with the headline brief fee, before considering the issue of abatement, in a budgeted case (the trial phase at £307,500), undermines the central aim of costs budgeting, which is to provide transparency.

Background
The Claimant suffered severe head injuries which ended his career as a professional rugby player. He claimed £3,155,842.76 from three defendants, all of whom denied liability. The case was listed for a 13-day trial on liability and quantum that was due to start on 15 March 2021. However, the case settled on 24 February 2021, 19 days before the start of trial.

Terms of Settlement
The terms of the mediation agreement were that the First and Second Defendants would pay agreed damages and the Claimant’s costs, with there being no order for costs against the Third Defendant.

Determining an Appropriate Brief Fee
It was noted that there are two elements to a brief fee. The first is to cover all the work done by way of preparation for representation at the trial and attendance on the first day of the trial, see the judgment at 22] citing Hobhouse J in Loveday v Renton [1991] Costs LR (Core) 204. The second, is to compensate counsel’s “commitment” and the fact that other work will likely be turned away once a trial goes into counsel’s diary.

In determining what is an appropriate brief fee a Costs Judge will have to determine what “a hypothetical counsel capable of conducting the particular case effectively but unable or unwilling to insist on the particular high fee sometimes demanded by counsel of pre-eminent reputation” would demand for such a case. In other words, what would counsel competent to undertake the case, but not pre-eminent, charge for such a trial.

Factors relevant to the determining a brief fee will be how “heavy” the trial is, i.e. the number of issues, witnesses, experts jurisdictions et al. Deputy Master Campbell noted in Hankin that whilst this was “a difficult and complex case on liability, causation and quantum” it was “not strikingly more so in these contexts than other tragic and life changing cases which come before the courts involving personal injury and clinical negligence.” It will also be relevant whether counsel has been instructed late. If so, counsel will need to work up his/her “brief from a standing start”.

In this case leading counsel had already charged for 20.5 hours in addition to £15,000 for the mediation: these were “all matters which militate against the reasonableness of the fee [of £125,000] claimed.”


The Deputy Master also compared the fee claimed to other brief fees. It was noted that in East Sussex Fire And Rescue Service v Austin [2019] EWHC 1455 (QB) [2019] Costs LR 709: leading counsel’s brief fee was £50,000 for a 15 day trial in 2013 in a Group Action involving negligence and breach of statutory duty which the judge described as “… not, by any stretch, a typical “run of the mill” personal injury action”.
Deputy Master Campbell also reminded himself [@ 24] that: “Assessing the brief fee is not a case of working out the hours spent by Counsel and multiplying them by an hourly rate – see judgment of Lambert J in [Austin]”; and yet comments “In so far as an hourly rate has been used, it [£550] is too high and reflects a sum for pre-eminence.” The hourly rate claimed was another reason given for reducing the brief fee.

Determining an Appropriate Abatement

As noted above, this case settled 19 days before the start of trial. How close to trial a matter settles is relevant to the level of abatement. In this case it was not submitted that leading counsel had started to “work up his brief fee” as he had not started his trial preparation. However, following Bowcott, where Hallett J attributed 50% of the brief fee to what she described as the commitment element, 50% of what was determined to be a reasonable brief fee was allowed (i.e. £37,500, plus VAT).

As a rule of thumb, although the Courts will always consider each case on its own facts, if a case is listed for more than three days 50% of the brief fee is arguable to compensate the commitment element of counsel’s brief fee, despite counsel not having undertaken any work on the matter.
Deputy Master Campbell went on to deduct £10,000 to account for work undertaken by counsel to mitigate his losses. In so doing he distinguished Lewis v supra where Mitting J held the Master had erred in speculating what Counsel might have earned after the case had settled. However, in this case evidence of what counsel had done was advance so it was held, and Lewis thereby distinguished, there was “no need for any speculation.” It is submitted that this was not correct as Mitting J also held “It was irrelevant whether or not counsel could take on other work”. It is also likely that the lost refreshers, had they been accounted for in the abated fee, would have exceeded the amount counsel earned mitigating his losses.

Concluding Comments
Hankin confirms that even where a case settles over two weeks before trial and trial preparation has yet to commence an abated brief fee is payable. This compensates counsel’s “loss of chance” and the likelihood that other remunerative work will have been turned away.
In this judgment the Deputy Master first assessed what would be a reasonable brief fee for leading counsel in a case such as this. He held that because the £307,500 budgeted for the trial phase had not been allocated as between profit costs and counsels’ fees he was “not constrained” and could exercise his “own discretion” in respect of what constitutes a reasonable brief fee. This decision, if it is followed in future, will mean that unless approved budgets allocate each phase as between time costs and disbursements, the judge hearing the detailed assessment will “not be constrained” by the budgeted sums insofar as determining the level of a brief fee. It is not disputed that there was a “good reason” under CPR 3.18(b) to depart from the budget as there had not been a trial. However, in this author’s submission, the percentage abatement should have been the sole issue for the Court’s determination.

Practical Takeaways

  • When budgets are approved ensure that each phase is allocated between time costs and disbursements.
  • Typically, a 50% abated fee can be recovered when a case settles nearly three weeks before trial (and no preparation has been undertaken) if the case was listed for more than three days.
  • The level of abatement will be determined by how much work counsel has already done to work up their brief fee and how close to trial the matter settles.
  • Whilst there is no obligation to stage a brief fee it will often be wise to do so.
  • Keep the other side informed as to when counsel’s brief will be delivered and the staging of fees.
  • Hankin is a good case for paying parties.
  • However, whether and to what extent it will or should be followed is debatable.