COST BITES 127: DO THE GUIDELINE HOURLY RATES APPLY IN FAMILY PROCEEDINGS?

In H v GH [2023] EWFC 235 Simon Kolton KC (sitting as a Deputy High Court Judge) considered the question of whether the guideline hourly rates applied in family proceedings.  He held that whilst, strictly, the rates may not apply there were good reasons for using them.

 

“… it would be a very odd result if hourly rates which, in civil proceedings, could not be recovered absent a “clear and compelling justification”, can readily be recovered in family proceedings. It is also undesirable that the benefits of guideline hourly rates (consistency, proportionality, and predictability) should be lost in the assessment of costs in family proceedings.”

WEBINAR ON THE SUMMARY ASSESSMENT OF COSTS

I am presenting a webinar on the summary assessment of costs on the 18th March 2024 (this may now be of interest to some family practitioners…).  Booking details are available here.

 

THE CASE

The judge was carrying out a summary assessment of costs after dismissing an application by the husband. The question arose as to whether the court should apply the guideline hourly rates.

THE JUDGMENT ON COSTS

The judge decided that although the guideline rates did not, strictly, apply in family proceedings there were sensible grounds for using them as the basis for assessment.

    1. The first costs issue I had to consider was the relevant FPR to apply in the present case.
    1. FPR 28.1 provides that “The court may at any time make such order as to costs as it thinks just“. FPR 28.2 provides that, subject to certain modifications which are not relevant here, “Subject to rule 28.3, Parts 44 (except rules 44.2(2) and (3) and 44.10(2) and (3), 46 and 47 and rule 45.8 of the CPR apply to costs in proceedings…“.
    1. FPR 28.3 sets out a particular regime “in relation to financial remedy proceedings“. ‘Financial remedy proceedings’ mean proceedings for “a financial order“, subject to certain exceptions. A ‘financial order’ is defined in FPR 2.3 as including, relevantly for present purposes, “a variation order“. A ‘variation order’ is defined in FPR 9.3 as: “in proceedings under the 1973 Act, an order under section 31 of that Act“.
    1. In the present case, I considered that although Mr Collins sought, on his feet, to treat the Variation Application as an application under section 31(2)(dd) of the 1973 Act, and relied on the inherent jurisdiction only in the alternative, the Variation Application was not under the 1973 Act, and so was not a ‘financial remedy proceeding’. Nor, of course, was the Strike Out Application. Accordingly, FPR 28.3 does not apply, and I approached the question of liability for costs in accordance with FPR 28.2.
    1. For reasons I gave orally, I ordered costs to be paid by the Husband on the standard basis. I proceeded summarily to assess these costs, in accordance with paragraph 9.2(a) of Practice Direction supplementing Part 44 of the CPR.
    1. In the course of this assessment, I raised the question as to the relevance, or not, in the Family Court, of the guideline hourly rates published as part of the ‘Guide to the Summary Assessment of Costs’.
    1. In Samsung Electronics Co Ltd v LG Display Ltd (Costs) [2022] EWCA Civ 466[2022] Costs LR 627 Males LJ (with whom Snowden and Lewison LJJ agreed) held at [6]:
“If a rate in excess of the guideline rate is to be charged to the paying party, a clear and compelling justification must be provided. It is not enough to say that the case is a commercial case, or a competition case, or that it has an international element, unless there is something about these factors in the case in question which justifies exceeding the guideline rate.”
    1. In Athena Capital Fund SICAV-FIS S.C.A. v Secretariat of State for the Holy See [2022] EWCA Civ 1061[2022] Costs LR 1119, Males LJ (with whom Birss and Peter Jackson LJJ agreed) held:
“6. This court has recently held that, in the case of solicitors’ fees, if a rate in excess of the guideline rate is to be charged to the paying party, a clear and compelling justification must be provided: Samsung Electronics Co Ltd v LG Display Co Ltd [2022] EWCA Civ 466. No such justification has been advanced in this case.
7. Counsel’s fees are not subject to guideline rates in the same way that solicitors’ fees are, but it is nevertheless important to stress that, whatever clients may be prepared to pay their own counsel, only a reasonable and proportionate fee may be recovered from the other side…”
    1. In May 2023, the Civil Justice Council published a report on costs, which considered (among other matters) the question of guideline hourly rates. It recorded that the majority of the respondents took the view that guideline hourly rates had a useful role as a starting point for both summary and detailed assessment, and in indicating to the market generally the rates that would be considered reasonable by the courts. Commercial Court judges considered that the use of these rates also send a helpful message to court users that expenditure must be proportionate. There was no real appetite among respondents to abandon guideline hourly rates. On 1 December 2023, it was announced that the Master of the Rolls has accepted the recommendations of the Civil Justice Council, and revised hourly rates, uplifted for inflation, will apply from 1 January 2024.
    1. Counsel were unable to assist me with the question whether these guideline hourly rates apply in family proceedings, although I think their consensus view was that they did not, and they had never heard of the rates being applied in family proceedings. It seems to me that, strictly speaking, the guideline rates do not apply in the Family Court: the ‘Guide to the Summary Assessment of Costs’ is promulgated by the Master of the Rolls, and does not form part of those Civil Procedure Rules which, by FPR 28.2, apply to family proceedings, nor part of the Practice Directions supplementing those rules. Nonetheless, it would be a very odd result if hourly rates which, in civil proceedings, could not be recovered absent a “clear and compelling justification”, can readily be recovered in family proceedings. It is also undesirable that the benefits of guideline hourly rates (consistency, proportionality, and predictability) should be lost in the assessment of costs in family proceedings.
  1. For these reasons, I conducted the summary assessment of costs on the basis that, while I was not bound by the guideline hourly rates, the level of those rates provide a good indicator of what costs were proportionate for the receiving party (the Wife) to recover, in the absence of some clear or compelling justification why those rates should be exceeded.