COST BITES 121: SUMMARY ASSESSMENT OF COSTS: “TO AWARD A LOWER FIGURE JUST BECAUSE REDUCTIONS ARE OFTEN MADE WOULD BE WRONG”

One of the aims of the “Costs Bites” series is to look at those, apparently small, aspects of cases that have a major impact on the client.   Short passages in a judgment can have a major impact on whether a party has effectively “won” or “lost”. We see such a passage in the judgment of HHJ Johns KC in Next Generation Holdings Ltd & Anor v Finch & Ors [2023] EWHC 2925 (Ch), where a third party’s costs were allowed in full.

“Having decided that KD’s costs are reasonable and proportionate, there should be no reduction on summary assessment. To award a lower figure just because reductions are often made would be wrong.”

THE CASE

The judge had given judgment in a case where a third defendant “KD” was held not to be liable.  Her costs were to be paid by the defendants, the Finches.  She had acted by using a direct access basis.

THE SUMMARY ASSESSMENT OF COSTS:

Summary assessment

1. 1. I turn to summarily assess KD’s costs of the additional claim which are to be paid by the Finches.

1. 1. KD asks for the sum of £65,640 plus VAT for the advice and representation by Mr Somerville, a direct access barrister. That includes £52,500 for trial.

1. 1. Both Mr Kulkarni for the Finches and Mr Somerville for KD invited me to take a broad-brush approach to the summary assessment. Mr Kulkarni said that there should be some reduction as there is always a reduction. Further, he criticised the sum sought for trial preparation and trial; arguing that Mr Somerville’s hourly rate from March 2023 of £495 was too high and the time allowed for preparing for trial, being five days, was too long.

1. 1. In my judgment, the figure for KD’s representation at trial, being £52,500, is reasonable. It covers the cost of preparing for, and appearing at, a complex fraud trial heard over three weeks and which involved extensive documentation. It is true that Mr Somerville had a more limited role at trial than the other two teams, in large part because Mr Potts was also appearing against the Finches. But five days of preparation is not at all unreasonable for the role he did play. Nor is the hourly rate of £495 too high. Approached as a brief fee, the equivalent figure for preparation and the first day of trial is (using Mr Somerville’s assumption of seven-hour days) around £21,000. Not an unreasonable fee for such a trial. And I note the hourly rate is less than the guideline rate for an equivalent solicitor, being £512. The other costs making up the remainder of the sum sought are also reasonable.

1. 1. As to proportionality, this was complex and valuable litigation. In circumstances where the Finches were found liable for a sum, before adding interest, in excess of £6m, and were arguing that KD must make a contribution of over 50 percent of that liability, the value of the claim which KD was defending was greater than £3m. I consider the total costs sum of £65,640 is well within the range of proportionate figures for such a case.

1. 1. While only a factor, and acknowledging the more limited role played by Mr Somerville in the trial, the costs apparently incurred by the Finches for their own representation show just how reasonable and proportionate are KD’s costs. Those, according to the Finches’ Precedent H, total £525,425 before VAT for counsel’s fees alone.

1. Having decided that KD’s costs are reasonable and proportionate, there should be no reduction on summary assessment. To award a lower figure just because reductions are often made would be wrong. I therefore summarily assess KD’s costs of the additional claim in the sum of £65,640 plus VAT. Those will be payable in 14 days as usual. I do not see a justification for the forthwith order asked for by Mr Somerville and which would, in any event, be likely to make little practical difference to KD.