WHY FAILING IN A SUMMARY JUDGMENT APPLICATION CAN BE EXPENSIVE: (£1,015,722 – EXPENSIVE)

In BTI 2014 LLC v Pricewaterhousecoopers LLP & Anor [2019] EWHC 3219 (Ch) Mr Justice Fancourt considered the appropriate order for costs when a defendant failed in an application for summary judgment.  The defendants were ordered to pay the costs of bringing the interlocutory application even though they may succeed on their arguments at trial.  Even though this was substantial litigation the judge felt that the sum claimed by the claimant were likely to be held to be disproportional.

“Although the Application raised complex matters of fact and law, I am satisfied that – even in the context of litigation about very large sums of money – some of the costs incurred will be held to be disproportionate and/or unreasonable in amount or unreasonably incurred.”

THE CASE

The defendant failed in an application for summary judgment/to strike out the claim.  The judge had to consider the appropriate award for costs of that application.

THE JUDGMENT ON COSTS

The costs of the Application
    1. BTI seeks its costs of the Application. PWC submits that the right order would be BTI’s costs in the case. It argues, in effect, that despite the outcome of the Application, PWC might be proved right at trial: in particular that there is nothing more in BTI’s case against it than there was in BTI’s case against Sequana and the Directors, and that once the facts are found it might succeed on its argument about the scope of the duty of care.
    2. In my judgment, while acknowledging that PWC might well succeed in one or other of these ways, or for some other reason, that is not a good reason to refuse BTI its costs of a substantial interlocutory application on which it has wholly succeeded. PWC must pay BTI’s costs of the Application, to be assessed on the standard basis if not agreed.
Interest on costs
    1. Since I have not awarded BTI its costs of the 2015 Application, all the costs that PWC must pay were incurred in or from March 2019, when the Application was issued. The significant majority of these were only incurred in or about October and November 2019
    2. In my judgment, there is therefore no sufficient reason to require PWC to pay interest on costs before the judgment date. BTI will only have been out-of-pocket for a matter of a few months at most, and for the most part less than that, at a time when interest rates remain very low. There is no need for an express order entitling BTI to interest on costs from the judgment date.
Interim payment of costs
  1. PWC does not dispute that there should be an interim payment on account of the costs of the Application.
  2. BTI’s costs of the Application are in the eye-watering sum of £1,015,722.79. That amount is in addition to costs of £319,435.77 said to have been incurred on the 2015 Application. BTI sought an interim payment of £700,000, but this was in relation to the costs of the 2015 Application and the Application together.
  3. PWC criticises, in particular, the apparently substantial duplication in the number of fee earners working on the case at BTI’s solicitors; the inordinate length of the evidence adduced on the Application by BTI; the unnecessary use of two Silks on the hearing and, in general terms, the disproportionate amount of fees in comparison with the issues raised by the Application. PWC’s total costs, in comparison, were £276,385.
  4. Although the Application raised complex matters of fact and law, I am satisfied that – even in the context of litigation about very large sums of money – some of the costs incurred will be held to be disproportionate and/or unreasonable in amount or unreasonably incurred. It is impossible, with a short summary of the costs incurred, to make an accurate assessment of these matters, but I propose to take a conservative approach in the absence of any evidence or detailed explanation of why such large sums were incurred (in contradistinction to mere assertion that this was major commercial litigation with large sums at stake and a substantial matter).
  5. I will therefore order PWC to pay £350,000 on account of costs within 14 days.