COST BITES 117: THE COURT CAN ORDER A PAYMENT ON ACCOUNT OF COSTS WHERE THE SCHEDULE IS HIGH BUT NOT EXCESSIVE
In South Tees Development Corporation & Anor v PD Teesport Ltd & Anor (Re Costs)  EWHC 2270 (Ch) Mr Justice Trower rejected an argument that a payment of account should not be made because the schedule in support was excessive. Although the costs set out in the schedule were high they were not excessive. The judge made an order that 50% of the costs claimed be paid as an interim payment of costs.
“The defendant’s costs statement is substantial, but I do not think that this principle applies in the present case. Although I have no doubt that the amounts certified by the defendant’s solicitors will be cut down materially on a detailed assessment, the amounts come nowhere near the “enormous” and “staggering” figures referred to by Joanna Smith J.”
The summary assessment of costs: Webinar 18th March 2024
This case involved the court looking closely at a costs schedule produced, initially, for the purpose of a summary assessment. A detailed knowledge of law and practice relating to summary assessment is essential for every litigator. A webinar on the 18th March 2024 looks at this in detail.
This webinar looks at rules in detail and the practical steps that practitioners should take to maximise recovery and pitfalls that should be avoided. Booking details are available here.
- 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
- Hourly rates
- 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
- What happens when time is short or the Schedule is served late?
The webinar also looks at those cases where the courts have provided guidance for parties undertaking a summary assessment.
The judge had rejected the claimants’ application for permission to amend the pleadings and ordered that the claimants pay the costs of the application and an associated application for an adjournment. He ordered that the claimants pay the costs and there be a detailed assessment. The claimants objected to an interim order for costs on the basis that the schedule put forward was excessive.
THE JUDGMENT ON THIS ISSUE
Payment on account
The appeal and the adjournment application took a full day of oral argument. Taking into account pre-reading and the judgment (delivered orally two days later), it falls outside the category of case in respect of which summary assessment would normally be considered appropriate (CPR PD 44 para 9.1). The defendant does not ask for a summary assessment, but instead seeks a detailed assessment with a payment on account. In all the circumstances, I think that a detailed assessment is the just order to make.
Where the court orders a detailed assessment, it is required by CPR 44.2(8) to order the paying parties to pay a reasonable sum on account of costs unless there is good reason not to do so. The claimants submitted that I should not make such an order because “an overinflated statement of costs on which it is difficult to place any reliance” provides a good reason not to do so (per Joanna Smith J in FCA v Papdimitrakopoulos  EWHC 3048 (Ch)) and this is one such case.
I agree with Joanna Smith J that, where the court cannot place any reliance on the costs statement (I pause to note that in Papdimitrakopoulos the amounts claimed for a one day hearing were of a wholly different order from the amounts claimed by the defendant in this case), there will be good reason not make an interim order. One reason for this is that the court will normally seek to identify a reasonable sum by make an estimate based on the likely level of recovery subject to an appropriate margin to allow for error in the estimation (Excalibur Ventures LLC v Texas Keystone Inc  EWHC 566 (Comm) at -. This is an exercise that the court will have great difficulty in carrying out where no reliance can be placed on the statement as the only material on which it can base that estimate.
The defendant’s costs statement is substantial, but I do not think that this principle applies in the present case. Although I have no doubt that the amounts certified by the defendant’s solicitors will be cut down materially on a detailed assessment, the amounts come nowhere near the “enormous” and “staggering” figures referred to by Joanna Smith J.
The total sums certified in the defendant’s statements are £66,184 for the appeal and £31,728 for the adjournment application This is to be compared to the claimants’ statements certifying £24,762 for the appeal and £28,287 for the adjournment application and the third party’s statement certifying £21,032.24 for the appeal and £36,644.16 for the adjournment application. Taken individually, each statement was materially less than the defendant’s, but taken together they exceeded the defendant’s statement by more than £10,000, a factor of some relevance given the fact that their arguments on both appeal and application were in substance the same and their positions in the litigation generally appear to be closely aligned.
The most significant difference between the parties’ statements relates to counsel’s fees which were described by both the claimant and the third party as excessive and duplicative. I agree that there is likely to be a significant reduction in the aggregate amount to which the defendant will be entitled on a detailed assessment. Doing the best I can based on the principles explained in Excalibur, I think that a reduction of a little in excess of 50% leads to the right figure. I will therefore direct an interim payment of £45,000 in aggregate, to be apportioned if necessary as to £30,000 for the appeal and £15,000 for the adjournment application.