WHAT HAPPENS AT A SUMMARY ASSESSMENT OF THE COSTS OF A TRIAL? ALSO THE COSTS AND INTEREST THAT FOLLOWS A PART 36 OFFER

We have already looked at the judgment of HHJ Pearce (sitting as a High Court Judge) in The Huntsworth Wine Company Ltd v London City Bond Ltd [2022] EWHC 98 in relation to the construction of Part 36 offers.  This was also a case in which the court carried out a summary assessment of trial costs. It is interesting to look at the judgment both in relation to assessment and the Part 36 consequences.

WEBINAR ON THE SUMMARY ASSESSMENT OF  COSTS

This case highlights the importance of summary assessment. On the 29th March 2022 I am presenting a webinar “The Summary Assessment of Costs: Procedure, practice and maximising recovery.” Booking details are available here. 

The webinar

Costs will be summarily assessed on all fast track trials and any hearing lasting less than one day.  Summary assessment can make up a significant part of a solicitor’s income and a detailed knowledge of the practice and principles is essential.

• When a summary assessment should be made
• When the receiving party is represented under a conditional fee agreement
• Where the receiving or paying party is a child or protected person
• The importance of the statement of costs
• The court’s approach to costs
• The basis of assessment
• Proportionality
• General principles applied in summary assessment
• Litigants in person
• The significance of the guideline figures for hourly rates
• In-house lawyers
• The solicitor advocate
• Counsel’s brief fee
• Expenses that are not recoverable
• Fast Track Trial Costs
• Summary assessment and the cost of appeals

The webinar also looks at those cases where the courts have provided guidance for parties undertaking a summary assessment.

THE CASE

The defendant had succeeded in defending a case relating to its liability to compensate the claimant for the theft at wine at trial and had judgment for a balance due on the counterclaim.  Further the defendant had beaten its own Part 36 offer which, the judge held, operated in this context as a claimant’s Part 36 offer.  The case was heard under the Shorter Trials Scheme, this meant that the judge carries out a summary assessment of the costs.

THE JUDGMENT ON COSTS

A large part of the costs fell to be assessed on the indemnity basis.  The judge was not, in relation to those costs, concerned with issues of proportionality.  It is clear that that judge found it useful to compare the costs claim by the (unsuccessful) claimant when considering the costs of the defendant.

1. QUANTIFICATION OF THE COSTS ORDER

F1   INTRODUCTION

79. I turn to the quantification of the costs, excluding certain interlocutory costs orders set below. For this purpose, I have regard to the Defendant’s costs schedule, which has been prepared in the format of a costs budget pursuant to PD3E, using Precedent H. In so far as I am concerned with the costs of the issues on which Huntsworth was successful, I have regard to its document headed “Claimant’s Summary of Incurred Costs” and its written submissions.

80. This case involved a number of causes of actions and some involved argument about the duties of bailors. But the most substantial issues were factual ones as to the state of the premises, the circumstances of the theft and the value of the wine. I have dealt above with the value of the claim.

81. In assessing LCB’s costs, I bear in mind the relevant guideline hourly rates pursuant to the current version Summary Guide on the Assessment of Costs. These, so far as relevant to this case are:

82. LCB’s solicitors, who are based in Chester therefore fall geographically within “National 2”, charge grade A fee earner time variously in the range £210-£350. If one divides the Grade A fees claimed by the total number of hours, the average hourly rate claimed for Grade A fee earner work is just short of £304 per hour. This compares with Huntsworth, whose London based lawyers’ have charged grade A work in the range £250 – £495 per hour, with an average hourly rate of just over £328. The hourly rates are therefore similar, though Huntsworth’s solicitors are based in central London, in the “London 1” band.

83. LCB’s solicitors claim specialism in litigation relating to warehousing. I have no reason to doubt that that they have such specialism. This litigation is well outside the norm for guideline hourly rates. An average Grade A rate of around £300 per hour is not excessive for litigation of this nature. I calculate costs on the basis that this is a reasonable hourly rate for Grade A work. In using a Grade A rate, I bear in mind that some of the work charged for could have been done at a lower rate by a lower grade fee earner but that, in using a Grade A fee earner, it can be expected that the work will be done more efficiently and therefore in less time.

84. In dealing with the quantification of costs, Huntsworth point to the comments made by HHJ Pelling QC during the course of the Security for Costs application as to the level of LCB’s costs. I note what he had to say though reach my own judgment on the reasonable (and where appropriate proportionate) costs. In particular, it should be noted that HHJ Pelling QC was (rightly) concerned with costs that were both reasonable and proportionate whereas I, for the most part, am assessing costs on the indemnity basis, and therefore am concerned only with reasonableness and even then with a different test as to the resolution of any doubt which is more favourable to the receiving party. Further, at the time of the hearing before Jude Pelling QC, Huntsworth had not amended its case to plead misrepresentation/misstatement, causes of action which undoubtedly further complicated the trial.

85. I set out in appendix to this judgment a table setting out the figures from my assessment for costs below. The appendix sets out the figures claimed by LCB, the corresponding claim for Huntsworth and the amount which I allow as reasonable and proportionate up the expiry of the relevant period and thereafter as reasonable. It will be noted that the total figure I allow is over £136,000, considerably less than either party claim by way of costs, but still around two thirds of the highest valuation put on their claim by Huntsworth. The figure that I allow as reasonable is some way below the figures claimed either by LCB (£215,185) or Huntsworth (£179,988.22). (The figures for Huntsworth differ from the summary in the document headed “Claimant’s Summary of Incurred Costs” because they do not include the other costs orders in Huntsworth’s favour, in respect of which no claim is made by LCB.)

86. It will also be noted that my assessment of LCB’s costs on the indemnity is considerably lower than what it would appear Huntsworth would value the costs on the standard basis. Footnote 1 to Huntsworth’s draft order appears to assume that the reasonable and proportionate figure for LCB’s costs is 50% of just over £175,000, a reduction of £40,000 on the sums claimed by LCB. The apparent concession that LCB’s reasonable and proportionate costs are as high as this is presumably informed by the assertion that Huntsworth’s reasonable and proportionate costs are at a similar level. In any event, this does not represent a proper basis on which to assess costs.

87. Had the assessment of these costs been subject to the test of proportionality, I would unquestionably have considered the figure to be disproportionate. For example, had the claim been brought under the now-defunct Capped Costs Pilot Scheme, the parties’ costs would have been limited (absent an effective Part 36 offer) to a total of £80,000. Whilst I would not have considered that to be a cap on the proportionate costs for these proceedings, it would have been of some assistance it deciding what was proportionate absent an effective Part 36 offer.

F2   PRE-ACTION COSTS

88. In dealing with the phases, I start by dealing which costs up to and including 13 September 2019. This is the period until expiry of the relevant period for the purpose of LCB’s Part 36 offer. LCB is entitled to its costs assessed on the standard basis.

89. LCB seek almost 40 hours of fee earner time. This is my judgement is both unreasonable and disproportionate to the amounts in issue. Doing the best I can on the limited material, I would estimate that a reasonable and proportionate figure for the totality of the work done on LCB’s side was 20 hours at £300 per hour plus counsel’s fees for advising of £1,800, a total of £7,800.

90. Beyond this first period, LCB’s costs are to be assessed on the indemnity basis with no deduction for Huntsworth’s costs.

F3   ISSUES/STATEMENTS OF CASE

91. The Issues/Statements of Case phase does not include the costs of and occasioned by amending the Particulars of Claim and the Defence (these are dealt with by the order of HHJ Pelling QC dated 16 July 2020 and are dealt with in either F12 or G1 below). Accordingly they are limited to dealing with the Particulars of Claim, the consequential Defence and Counterclaim, dealing with the Reply and Defence to Counterclaim and making Part 18 Requests.

92. I consider a reasonable amount of fee earner time in this respect to be 20 hours, which at £300 per hour totals £6,000. In addition, I allow counsel’s fees of £5,000 and the court fee of £205, a total of £11,205.

F4   CASE MANAGEMENT CONFERENCE

93. In dealing with issue G2 below, it will be noted that Huntsworth argue that the costs of the case management conference should be borne equally by the parties. In my judgment, that is wrong for reasons set out below. They are costs in the case and should be dealt with in the same way as other such costs, LCB recovering its costs on the indemnity basis.

94. The claimed figures of 46 hours of Grade A fee earner time are remarkably high and well above what I would consider capable of being reasonable. I allow a total of 20 hours, which at £300 per hour is £6,000. Counsel’s fee of £4,625 is reasonable. Hence in total I allow £10,625.

F5   DISCLOSURE

95. LCB claim 68.3 hours of fee earner time for disclosure. This is not a very document heavy case and again this figure appears unreasonably high. Huntsworth in contrast claim 37 hours (plus £1,100 for counsel).

96. I would expect a Grade A fee earner dealing with a case such as this to be efficient in identifying what documents are relevant and what are not. A reasonable amount of Grade A fee earner’s time is 30 hours, which at £300 per hour comes to £9,000. I see no reason to disallow the minimal time for assistance from a trainee of £132 and therefore allow in total £9,132.

F6   WITNESS STATEMENTS

97. LCB claim 37.5 hours of Grade A fee earner time plus £650 by way of counsel’s fee to deal with witness statements. In all, LCB called 8 witnesses. An average of just over 4.5 hours per witness does not appear excessive, even at Grade A rates. In this phase, a considerable amount to the fee earner time, though Grade A, is at a figure of £225 per hour, well below the average established above. To allow 37.5 hours at £300 per hour would lead to a higher figure than that claimed by LCB and would offend the indemnity principle. Accordingly I allow the fee earners’ time as claimed together with £650 for counsel’s input.

F7   PRE TRIAL REVIEW

98. For the Pre Trial Review, LCB claim 11.5 hours of fee earner time and £2,000 for counsel. I note that the fee earners’ time is less than that claimed by Huntsworth (12.5 hours) albeit that counsel’s fee is considerable higher on LCB’s side. The PTR itself was vacated by order of Judge Pelling QC dated 10 June 2021 (the day before the hearing). The minimal counsel’s fee on Huntsworth’s side probably reflects this event, but this does not necessarily mean that LCB were similarly able to avoid or reduce counsel’s fee where there was a late resolution of the issues for PTR. Given the burden on paying party to establish that claimed cost is unreasonable, and given the absence of information from which to judge this issue, I conclude that Huntsworth has not shown that it was unreasonable for LCB to incur this fee. I therefore allow the figure claimed of £2,000, which is not on the face of it unreasonable for a Pre Trial Review.

99. As with the fee earners time for the witness statements phase dealt with above, the use of a Grade A fee earner for whom £225 per hour is charged reduces the total claim for fee earner’s time to below the £300 per hour rate that I allow as an average for Grade A fee earners’ time. Therefore I allow that figure as claimed.

F8.  TRIAL PREPARATION

100. The trial preparation costs claimed by LCB are:

100.1        Fee earners’ time – £23,773.50

100.2        Counsel’s fee – £20,000

101. As to fee earner’s time, LCB’s figure is based on 92.7 hours. In comparison, Huntsworth claim 32.5 hours. Whilst I consider 32.5 hours to be on the low side for a trial of this nature, 92.7 hours is some way above that which is reasonable. I allow 50 hours of Grade A fee earner time at £300 per hour, a total of £15,000.

102. In looking at counsel’s fees, I compare the sum claimed by LCB with the figure from Huntsworth’s schedule., this is set out in slightly different form, counsel’s brief fee being included in the trial phase. If instead one transfers it to the trial preparation phase, as LCB have done in accordance with PD3E, the total claim for counsel’s fees in the lead up to trial, including the brief fee, on Huntsworth’s part is £20,845.

103. The trial was listed for 3 days. A brief fee of £25,000, including a pre trial conference, would be beyond that which is reasonable. I accept the brief fee of £20,000 claimed on Huntsworth’s part to be in the range of that which is reasonable and would allow that.

F9.  TRIAL

104. In terms of the trial itself, LCB claim 71.9 hours of fee earner time. In contrast, Huntsworth claim 40.75 hours. Whilst I consider it reasonable to allow 10 hours per day for grade A fee earner time during trial, together with some supervision time of say 4 hours per day, that is to say 42 hours across 3 days, I consider the claim by LCB to be beyond that which is reasonable. On the basis of 42 hours at £300 per hour, I allow £12,600 for fee earner time.

105. As regards counsel’s fees, the figure of £14,975 might imply refreshers of £7,500 (though the precise figure is somewhat hard to understand). In contrast, Huntsworth claim refreshers of £1,800 per day. In my judgment, Huntsworth’s figures are very low, whereas LCB’s, if purely referrable to refreshers, are very high. I consider refreshers of £4,000 to be reasonable, a total of £8,000 for two days.

F10.         ADR/SETTLEMENT DISCUSSIONS

106. In the ADR/settlement phase, LCB claim 18.1 hours, a total of £5,957 at their rates, with a disbursement of £540. For their part, Huntsworth claim 16.5 hours of fee earner’s time and disbursements of £450, stating that to be the mediator’s fee. In neither respect do I consider LCB’s costs to be unreasonable, though I limit the hourly rate for fee earner’s time to £300, giving a total under that heading of £5,430.

F11.          POST TRIAL COSTS

107. Under the heading “Post Trial Costs”, LCB seek to claim costs for preparing the costs schedule, the costs submissions and its reply to Huntsworth’s costs submissions. The amount claimed is £12,707 for fee earner’s time and £6,500 for counsel.

108. The schedule, costs submissions and submissions in reply are in the name of LCB’s solicitors not counsel. The original costs submissions from LCB exceeded the length permitted by the order of 22 October 2021 but this was put right by the filing of further submissions that comply with the limit of 8 pages. (LCB pointed out at the time that there was an error in the order of 22 October 2021. It is correct that there was an error but it was not material to this point, the meaning of the order being both clear and reflecting a consent order lodged by the parties.) Clearly LCB is not entitled to costs occasioned by the need to redraft the submissions so as to make them compliant with the order. Whilst there may have been some input from counsel, I would not consider a total of £19,207, as claimed by LCB, to justify a test of reasonableness regardless of who drafted or had input into them. This is a summary of assessment of costs not a detailed assessment. The submissions therefore need to be targeted to the main issues. Costs of this level are way beyond what is reasonable. It may however be that the costs in this phase are intended to include the closing submissions

109. Huntsworth claim costs relating to the costs issue in paragraph 19 of their submissions, though they are not referred to in their costs summary. This figure does not include costs for drafting closing submissions on liability and quantum, these being referred to by Huntsworth in the trial phase. LCB take the point that Huntsworth’s costs referred to in the written submissions cannot be recovered if they are not in the schedule. This point is of course academic because Huntsworth is not recovering these costs pursuant to my order (and is probably rather ambitious in any event), but as a valuation of what work involved I would consider that the figure that Huntsworth claims, a total of £8,200, to be closer to what is reasonable (whether the work relating to costs submissions was done by solicitors, counsel or a combination of the two) though still on the high side. In my judgment, the costs submission and the submissions in reply each justify 8 hours of work at £300 per hour, a total of £2,400 for each. In addition, I would allow a figure for dealing with consequential matters including dealing with the draft judgement and consequential orders. I allow 3 hours at £900 for this.

110. LCB is entitled to payment for closing submissions. The closing submissions of both parties were helpful and I note that Huntsworth claims £6,000 in this respect. I consider that to be high and a reasonable figure for counsel’s closing submission for each side to be £5,000. LCB are entitled to some solicitor time for input into these submissions. I allow 5 hours at £300 per hour, a total of £1,500.

111. Accordingly I allow costs for the period after trial, including both closing submission and costs submission as follows:

111.1        Fee earners’ time: £7,200

111.2        Counsel’s fees: £5,000

F12.            COSTS OF AND OCCASIONED BY AMENDMENT AND RE-AMENDMENT OF THE PARTICULARS OF CLAIM

112. The schedule from LCB states this in respect of Contingency B: “Assumptions: Relates to time spend dealing with the amendments and re-amendments to the Particulars of Claim (though excludes any time dealing with the applications for the same which has been dealt with separately) and amending and re-amending the Defence for which there are already costs orders for the Claimant’s to pay the costs of and incidental to the Amendments and Re-Amendments.” This appears to reflect the following costs orders:

112.1        The order of Judge Pelling QC made by consent and in the absence of the parties on 16 July 2020 by which he ordered amongst other things:

“2. Permission shall be granted to the parties as follows:

(a) The Claimant may amend the Particulars of Claim in the form signed by the Claimant and appended to this Order, with service dispensed with.

(b) The Defendant may file and serve an Amended Defence by 4pm on 7 August 2020.

(c) The Claimant may file and serve an Amended Reply by 4pm on 21 August 2020.

(d) Each of the Amended Particulars of Claim, the Amended Defence and the Amended Reply may exceed the limit of 20 pages.

3. The reasonable costs of and occasioned by amending the Particulars of Claim shall be paid by the Claimant.

4. The reasonable costs of and occasioned by amending the Defence which are not occasioned by responding to the amendments to the Particulars of Claim shall be paid by the Defendant.”

112.2        The order of Judge Bird dated 17 March 2021 by which he ordered amongst other things:

“1. The Claimant has permission to re-amend the Amended Particulars of Claim in the form signed by the Claimant and appended to this Order, with service dispensed with.

2. The Defendant may file and serve a re-amended Amended Defence by 4pm on 14 April 2021, strictly limited to responding to the matters re-amended by the Claimant in the re-amended Amended Particulars of Claim (and for the avoidance of doubt, this includes responding to the matters re-amended by the Claimant which concern the burglar alarm and fire alarm at the Warehouse).

3. The Claimant may file and serve a re-amended Amended Reply by 4pm on 28 April 2021, strictly limited to replying to the matters re-amended by the Defendant in the re-amended Amended Defence.

…

6. The Claimant do pay the Defendant’s costs of and occasioned by paragraphs 2-5 above (to be assessed if not agreed).

7. The Claimant do pay the Defendant’s costs of the hearing of the Amendment Application, summarily assessed in the sum of the Defendant’s Statement of Costs save to the extent that such costs concern the costs of the case management conference held on 30 October 2020. [Pursuant to this Order, the Claimant do pay the Defendant’s costs of the hearing of the Amendment Application in the sum of £[X](sic)by 4.30pm on 31 March 2021.”

8. Thus LCB is entitled in this phase to:

113.1        The costs of and occasioned by the amended to the Particulars of Claim, including any consequential amendments to the Defence and Counterclaim; and

113.2        The costs of and occasioned by the re-amendments to the Particulars of Claim; but not

113.3        The costs of the hearing of the application to re-amend the Particulars of Claim which, it is said have been separately dealt with. As I note above, the order of Judge Bird does not in fact include a figure for the costs of the hearing of the amendment application. I assume for the purpose of this judgment that, notwithstanding this, he in fact dealt with that issue in his order. If he did not, the parties should seek to agree that figure and, if they cannot do so, propose a mechanism for me to resolve the issue.

114. LCB claims 33.3 hours of fee earners’ time and counsel’s fees of £1,865 for dealing with these matters. As regards fee earners’ time, the amounts claimed are unreasonably high. I would consider a reasonable amount to be 20 hours at £300 per hour. Counsel’s fees appear reasonable and I allow them as claimed.

115. INTERLOCUTORY COSTS ORDERS

G1. ORDER OF 16 JULY 2020 – COSTS OF AND OCCASIONED BY AMENDMENTS TO THE DEFENCE WHICH ARE NOT OCCASIONED BY RESPONDING TO AMENDMENTS TO THE PARTICULARS OF CLAIM

115. The Order of 16 July 2020 made by Judge Pelling QC required that LCB pay the reasonable costs of and occasioned by amending the defence which are not occasioned by responding to amendments to the Particulars of Claim. These costs are recoverable pursuant to the order of Judge Pelling QC in spite of the general order for costs in the litigation.

116. The costs schedule of Huntsworth does not include figures in this respect. However, its costs submissions refer to a claim for £325 in time costs and £450 in counsel’s costs. These figures are both reasonable and proportionate.

G2. ORDER OF 30 OCTOBER 2020 – APPLICATION TO TRANSFER TO THE SHORTER TRIALS SCHEME AND CASE MANAGEMENT

117. The Order of 30 October 2020 required that LCB pay the Huntsworth’s costs of and occasioned by the application to transfer the claim to the Shorter Trials Scheme. In its written submissions, LCB contends that Huntsworth should be limited to recovering the only the court fee for issue of the application for transfer to the Shorter Trials Scheme. Its reasoning is that, whilst at the time the case was transferred to the Shorter Trials Scheme, there was no pleading in dishonesty/deceit. Had such a case been pleaded prior to the application for transfer, it is unlikely that transfer would have taken place, given the terms of paragraph 2.2(a) of PD57AB that states that “the Shorter Trials Scheme will not normally be suitable for (a) cases including an allegation of fraud or dishonesty”

118. Whilst I accept LCB’s argument that transfer to the Shorter Trials Scheme may well not have occurred had Huntsworth already pleaded dishonesty, that is not a ground to disregard the order of Mr Philip Marshall QC. Doubtless the fact that the case was already proceeding in the Shorter Trials Scheme was a factor considered when permission was given to amend the claim to plead dishonesty, since the corollary of paragraph 2.2(a) of PD57AB is that it will not normally be appropriate to grant permission to plead dishonesty in a case which proceeds in that scheme.

119. However Mr Marshall QC’s order has not been appealed and to disregard it by simply allowing the issue fee would be tantamount to reversing its effect. It is true that the conduct of Huntsworth might be relevant to the quantification of costs under that order, but I struggle to see that just because subsequent events might lead to a conclusion that the order arguably ought not to have been made, the order should in effect be set aside.

120. In truth, the effect of this case proceeding in the Shorter Trials Scheme has gone some way to limit the costs incurred on both sides, even if for reasons set out above it has not contained those costs with the bounds of what is proportionate. That is of benefit to the litigation generally (including LCB) and the mere fact that, with the benefit of hindsight the order might not have been made does not undermine that value. Accordingly, I give effect to the order of Mr Marshall QC by assessing Huntsworth’s costs on the standard basis.

121. Huntsworth seeks £16,428.27 for the costs of this application. That is an absurdly high amount. Whilst counsel’s fee of £1,225 is perfectly proportionate and reasonable (indeed is modest), the cost attendances and work done is ridiculous, in particular where the very purpose of the application was to keep the trial, including its costs, within manageable bounds.

122. In my judgment, a proportionate figure for the fee earners’ costs of such an application could not exceed £6,000. I allow this figure together with counsel’s fees and the application fee. I do not see that a transcript is justified, therefore I allow in total £7,480.

123. Mr Marshall QC ordered that the costs of case management be costs in the case. Huntsworth contends that, since both parties have achieved a judgment on their claim, the reasonable and proportionate costs pursuant to this order should be borne equally. That is incorrect. These costs fall within the costs of the case which have otherwise been ordered in favour of LCB. There is no principled basis for making a separate order in respect of particular case management costs and I decline to do so.

G3. ORDER OF 23 MARCH 2021 – APPLICATION FOR SPECIFIC DISCLOSURE

124. The order of 23 March 2021 reserved to the Trial Judge the costs of Huntsworth’s application for specific disclosure made by application notice dated 8 January 2021.

125. Huntsworth seeks its costs of the application. In essence, its case is that the application for specific disclosure was made because there was an obvious lacuna in LCB’s disclosure about the circumstances of the theft and that, prior to the application, LCB had not filed a statement for an appropriately responsible person verifying the search that had occurred.

126. LCB responds that the application made by Huntsworth was for specific disclosure not an order verifying the disclosure already given. In the event, HHJ Pelling QC simply made an order that LCB verify the searches already made. Accordingly Huntsworth did not obtain what it sought on the application and in any event at trial nothing turned on the disclosure issue,

127. In my judgment, Huntsworth was clearly entitled to know what search had been carried out on this issue, which was important to its case, even if issues as to disclosure were not significant at the trial itself. If it had simply sought such a statement, it ought to have recovered its costs of doing so had LCB not consented to the making of an order. However, it sought a broader order. LCB might have been able to resolve the issue by proffering a statement of the kind later made by Mr Allington in order to verify the searches, but it cannot be said to be clear that this would have satisfied what Huntsworth were seeking, at least until LCB had sight of Huntsworth’s skeleton argument (which is dated 2 days before the hearing), by when it could be seen that Huntsworth probably would have been satisfied simply with a statement of the kind that Mr Allington later made. In those circumstances, this was an application that was not justified in the form originally sought but which could and should have been satisfied by LCB agreeing to Mr Allington or someone similar providing a statement of the kind that he subsequently did. Neither party is in the right on this issue and in my judgment, it is not appropriate to make any order for costs relating to this application.

THE PART 36 ISSUES

The judge then considered the Part 36 consequences.

124. OTHER MATTERS ARISING FROM CPR 36.17

125. The remaining matters relating to the Part 36 offer are:

128.1        Whether the court should order Huntsworth to pay interest on the whole or any part of the sum of money awarded at a rate not exceeding 10% above base rate for some or all of the period staring with the date on which the relevant period expired;

128.2        Whether Huntsworth should be ordered to pay interest on costs at a rate not exceeding 10% above base rate;

128.3        Whether Huntsworth should pay an additional amount calculated in accordance with the table to CPR36.17(4).

129. In each case, the award specified must be made unless the court considers it unjust to make the award. In my judgment none of the factors that have been drawn to my attention on costs issues would make it unjust to give effect to the other effects of CPR36.17, any more than they might make it unjust to order costs on the indemnity basis. Hence, LCB should recover interest on its costs and the principal award in accordance with CPR36.17 and should recover the enhanced amount on the principal award.

130. The question of the period over which interest on some or all of the money awarded is subject to interest at the enhanced rate, the amount or the sum of money subject to that interest and the rate are not determined by the terms of CPR 36.17.

131. In OMV Petrom SA v Glencore International AG [2017] EWCA Civ 195, Sir Geoffrey Vos, then Chancellor of the High Court, said of the power to award enhanced interest under what is now CPR36.17:

132. This is not a case in which the conduct of Huntsworth leads to the particular need to emphasise the importance of Part 36 as an incentive to negotiate. Huntsworth was agreeable to mediation even though that process was unsuccessful and they subsequently took issues to trial on which they were unsuccessful. Further, whilst I have been critical of some of the attitude demonstrated by Huntsworth in correspondence, it should be noted that I have already been taken this into account in declining to make an issues based costs order prior to the expiry of the relevant period.

133. I conclude that this is not an appropriate case to award a rate of interest, either on the judgement sum or on costs, which is more than compensatory in nature. It is of course well established that the rate of 10% above base rate is not a staring point but merely a maximum (per Chamberlain J in BXB v Watch Tower & Bible Tract Society of Pennsylvania [2020] Costs LR 341). In McPhilemy v Times Newspapers Limited (No. 2) [2001] EWCA Civ 933, Chadwick LJ awarded 4% over base, a figure which the White Book describes in paragraph 36.17.4.3 as subsequently becoming “the conventional rate”. In Crema v Cenkos Securities plc (Costs) [2011] 4 Costs LR552, Aikens LJ awarded 5% over base on the ground that this was probably the rate at which the receiving party would have borrowed money at the relevant time.

134. In its submissions, Huntsworth contends that any enhanced rate of interest should be in the range 4% to 5%. LCB contends for a figure of 10.01% (10% over base rate at the time that the calculation was made). Given the current cost of money, I agree that a total figure of 4.5% (4.25% over current base rate but 4.4% over the base rate for most of the period of interest) is an appropriate figure both for interest on the sum awarded and for interest on costs.

135. Huntsworth contends that that interest is incorrectly calculated on damages in LCB’s draft order. I agree, but the reasoning of Huntsworth is itself incorrect. The interest on damages should not be calculated on the sum awarded plus interest, but rather on the sum awarded alone, as is made clear in CPR36.17(4)(a). An additional point is as to how interest that has already been taken into account should be dealt with.CPR36.17 does not allow the court to make two awards of interest. However, my judgment of 22 October 2021 already allows for interest on LCB’s claim in the sum of £243.07. Of that award of interest, the interest for the period 13 September 2019 to 22 October 2021 overlaps with the period of enhanced interest allowed below. That is approximately 83% of the total period, or £201.75 of the interest awarded by the order of 22 October 2021. Accordingly this sum should be deducted from the enhanced interest allowed under CPR36.17

136. As to the calculation of the enhanced figure of interest, LCB should recover:

136.1        Interest on the award of £2,662.34 (being the net sum pursuant to the judgment exclusive of interest) at the rate of 4.5% from 13 September 2019 to the date of the judgment of 22 October 2021, that is £252.12 less the interest of £201.75 already awarded for this period in respect of LCB’s claim, a net sum of £50.37, and thereafter at the judgment rate. (It should be noted that the interest awarded at the rate of 4.5% is not very much greater than the interest already awarded in respect of LCB’s claim. That is because the interest pursuant to CPR Part 36 is calculated not on the gross amount of LCB’s claim, but on the net amount of its recovery.)

136.2        Interest on the costs subject to the award on an indemnity basis (in other words all costs save those incurred pre-issue) at 4.5% per annum from the time that those costs which are subject to the enhanced rate of interest were incurred until the date of this judgment (22 October 2021) and thereafter at the judgment rate under Section 17 of the Judgments Act 1838 (as ordered in McPhilemy – see paragraph 25). It is almost impossible for anyone to calculate the time at which the relevant costs were incurred, given that they have been subject to summary assessment in a manner that does not enable the parties to identity the relevant dates. In order to reach a fair but proportionate answer to this, I have noted that, of the costs subject to the indemnity costs order, in the phases from issue to the start of trial preparation but including ADR and settlement and amendments to the Particulars of Claim, just under,£55,000 of costs are allowed; in the stages of trial preparation and trial, just over £60,000 in costs are allowed; and £12,200 for the post trial period. This suggests that nearly one half of the costs were incurred by 19 June 2021 (3 months before trial, by when some of the trial preparation costs would have been incurred but the majority not), with one half of the costs thereafter. It is reasonable then to calculate interest assuming all costs to have been incurred at this point, any under compensation because the costs were incurred earlier being matched by some overcompensation for a cost that was incurred later. This rough and ready approach would give an award of £3,216.93.

137. As for the award of an enhanced amount pursuant to CPR36.17(4)(d), the correct calculation is 10% of the principal sum £2,837.53) that is £283.75.

CONCLUSION

138. For the reasons set out above, the following sums are recoverable by LCB in addition to those sums awarded by the judgement of:

138.1        £7,800 by way of costs on the standard basis for the period up until the expiry of the relevant period;

138.2        £128,202.50 by way of costs on the indemnity period for the period from the end of the relevant period;

138.3        £50.37 by way of interest on the sum awarded in the judgment of 22 October 2021 from the period from the expiry of the relevant period to the date of that judgment:

138.4        £3,216.93 by way of interest on the costs referred to at paragraph ‎138.2 above to the date of this judgment;

138.5        £283.75 by way of additional amount under CPR36.17(4)(d).

139. These figures total £139,553.55.

140. Huntsworth is entitled to:

140.1        £775 in respect of the costs of and occasioned by amendments to the Defence pursuant to the order of 16 July 2020;

140.2        £7,480 in respect of the costs of the application to transfer to the Shorter Trials Scheme pursuant to the order of 30 October 2020.

141. These figures total £8,255.

142. The Defendant is entitled to payment of the balance of £131,298.55. I have made an order of today’s date giving effect to this judgment