COST BITES 91: CONVERSION OF CURRENCY WHEN A RECEIVING PARTY HAS PAID ITS LAWYERS IN EUROS

We have looked before at the case helpfully sent by   Nicholas Lee Paragon of Costs Solutions , in Micula and others v Romania [2023] UKSC 2018/0177 (23 May 2023). Here we look at that part of the judgment that deals with issues relating to conversion rates. The receiving party paid its own lawyers in a foreign currency.  In this case it was determined that the appropriate date for conversion of the currency was the date of payment by the receiving party to its own lawyers.  The practical consequences of that had to be worked out, hopefully on a pragmatic basis.

” we have concluded that the appropriate date of conversion for sums paid by the Receiving Parties in a currency other than Sterling is the date of payment.”

THE CASE

The court was considering several preliminary issues following a win in the Supreme Court by the receiving parties.   Some of those parties had paid their own lawyers in Euros. An issue arose as to the basis on which the court, on assessment, should consider the date of conversion of the currency.  It was held that the appropriate date was the date that the invoice should be paid.

JUDGMENT ON THIS ISSUE

Conclusions on currency
144. In our view, Deutsche Bank AG v Sebastian Holdings Inc, and the authorities
referred to by the Senior Costs Judge, are much more on point for present purposes
than is Cathay Pacific Airlines Ltd v Lufthansa Technik AG. That case concerned a
summary assessment undertaken, as a summary assessment should be, in a quick and
pragmatic fashion. Mr Kimbell KC’s conclusion as to the appropriate date for
conversion (which does not appear to have been argued before him) reads less as a
statement of principle than as a direction for the best way of dealing with a small and
(for the purposes of his decision) anomalous part of the receiving party’s costs, which
were assessed in total at €25,000.

145. This is a detailed assessment in which the total costs claimed in the Supreme
Court and below exceed £2 million. The Receiving Parties, as Mr Carpenter says,
instructed English solicitors to bring proceedings before the English courts. They might
have been expected to have billed their clients in Sterling, and the Receiving Parties’
choice to pay in another currency is outside the control of Romania, which should not
have to bear the consequences. The Receiving Parties are entitled to statutory interest
from 11 November 2020 at a statutory rate which far exceeds any commercial rate and
which, as in MacInnes, could be regarded as sufficiently compensating them for any
losses resulting from currency fluctuations.

146. For those reasons, we have concluded that the appropriate date of conversion
for sums paid by the Receiving Parties in a currency other than Sterling is the date of
payment. We believe that Mr Carpenter is also justified in saying that it is not
appropriate to defer the conversion exercise until the assessment of the bills has been
completed. The Sterling entries in the bills themselves should reflect the appropriate
conversion date as at the time that the items in question were paid for by the
Receiving Parties.

147. Whether that requires a very detailed and burdensome exercise is another
question. It has occurred to us that the process of conversion may largely involve
adjusting hourly rates, which might not in itself be particularly difficult. Alternatively it
may be that the parties can agree a pragmatic and cost-effective approach based on,
for example, a weighted average. We would be open to submissions on the best way
of achieving a fair and cost-effective resolution of the currency conversion problem.

Summary of conclusions

150. Within the Receiving Parties’ bills the appropriate date of conversion into
Sterling, for sums paid by the Receiving Parties in a currency other than Sterling, is the
date of payment. We accept that it is not appropriate to defer the conversion exercise
until the assessment of the bills has been completed, but we would hope that the
exercise can be approached in a cost-effective and pragmatic fashion.