The recent judgment in Fuseon Ltd, R provides a reminder of a number of established principles in respect of recoverability of various heads of costs between the parties.
The costs claim arose from a private prosecution by Fuseon Ltd, a Lancashire based letting agency, against a Director of the business who had committed fraud and theft of over £100,000 relating to tenancy deposits, personal expenses and false invoices. The police were unable to investigate and therefore the company brought a private prosecution using Central London firm, Edmonds Marshall McMahon Limited, having failed to find a local firm to take the case. The Director was ultimately convicted and an order was made for a payment of costs to the prosecution out of central funds including costs of the investigation.
Costs were submitted in the sum of £427,909.00 to the Criminal Cases Unit of the Legal Aid Agency and were initially determined by the case manager in the sum of £180,000.00. The key decisions being a reduction from London hourly rates to Preston guidelines, a reduction in travel time to what would have been reasonable for a local firm, removal of duplication between fee earners, non-fee earner work, and a Singh reduction for proportionality.
Fuseon requested a redetermination and costs were increased to £240,000.00, a subsequent appeal was then dismissed by Master Rowley. In August 2019 Fuseon commenced judicial review proceedings and the decision of Master Rowley was quashed. It was directed that the assessment of the Claimant’s costs be remitted to the Senior Costs Master for further directions. The matter came before Master Gordon-Saker who re-heard the appeal from the determination of the case manager. This was dealt with on the papers at the Claimant’s request.
Hourly rates – At the initial assessment, it was not accepted that there was no choice but to instruct a central London firm. Rates for a local firm were therefore applied based on guideline rates for Preston. Master Gordon-Saker, guided by the comments of Lane J. in the judicial review judgment, found the use of a Central London firm to be reasonable on the facts. The Claimant had carried out suitable research and contacted firms but could not find anyone offering private prosecutions for fraud. It was reasonable to use London solicitors due to the specialism required. The hourly rates claimed were therefore reviewed against the guidelines for central London. The rates were allowed save for reductions to the Grade C and D handlers. It is worth noting that Master Gordon-Saker commented at paragraph 30 that ‘the guideline rates are of course just that. They are fairly blunt instruments designed to assist judges in the summary assessment of costs. The passage of time since 2010 means that they tend now to be used as a starting position rather than as carved in stone.’
Travel time – Additional travel was allowed in light of the permitted use of London Solicitors, however, travel to attend the client was disallowed as a client is generally expected to travel to attend their solicitor.
Inter-fee earner discussions / duplication – Detailed guidance was provided in respect of what is and is not recoverable in this regard in paragraphs 42 through 44. Master Gordon-Saker confirmed that ‘reasonable time spent in inter-fee earner discussions is properly allowable. It is difficult to delegate tasks to junior fee earners without instructing them what to do and the reasonable time of the delegator and delegate is usually now considered to be recoverable. […] On the other hand, two fee earners attending on a witness or the client will rarely be reasonable, unless there is a specific reason. Lawyers should be reasonably adept, like most people, at speaking or listening and writing at the same time. For similar reasons I cannot see that more than one fee earner attending trial, together with Counsel, was reasonably required.’ For example, additional time was allowed for the Partner reviewing documents such as witness statements prepared by others but time spent for an additional fee earner to prepare for attendance at the trial was removed.
Non-fee earner work – Researching social media, contacting witnesses about the trial and preparing bundles were allowed as work normally carried out by fee earners. Items that were disallowed included photocopying (described in the bill as ‘collating extra copies’ and ‘preparing copies’), printing, posting, booking flights, and elements of the bundle preparation such as scanning.
Proportionality – Following from the judicial review judgment, it was found that the initial use of the CPS as a comparator to find the costs disproportionate was not legitimate. The Claimant had tried his best to get the police to take the case and his decision to institute the private prosecution was a last resort. The hours spent by each fee earner were considered and reductions were made to the principal handler and the Grade D assistants.
Points to take away
- Use of a London firm may be reasonable for a particular specialism and if the client has made such enquiries as can reasonably be expected of a person in their position.
- Travel to attend the client is not generally recoverable, I would suggest that this would turn on the facts and would be recoverable if there was a particular reason such as incapacity or the need for a site inspection.
- Multiple fee earners attending meetings and hearings will be vulnerable at assessment. The context of the meeting should be considered.
- Inter fee earner discussions are recoverable where it is necessary for delegation purposes. Again, consider the context of the meeting.
- Care should be taken when describing tasks associated with preparing bundles to show legitimate fee earning work rather than scanning and copying.
Helen Spalding is an Associate in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact her at firstname.lastname@example.org or on 0113 288 5639.