Tag: Law

Departure from Guideline Rates not justified (even on the indemnity basis)

Joanne ChaseLeave a comment

In Eurohome UK Mortgages 2007 1 Plc & Ors -v- Deutsche Bank AG, London Branch & Anor [2022] EWHC 2408 (Ch) the court ordered the Third Claimant (‘C3‘) to pay the Defendants’ costs on the indemnity basis. The judge summarily assessed the costs.

The costs related to an application by the Defendants to strike out the claim. The basis of the application was that, in part, that C3 had no standing in the proceedings. C3 did not engage with the application, serve evidence, or attend the hearing. Accordingly, the court ordered that C3 pay the Defendants’ costs on the indemnity basis.

The Defendants claimed costs of £72,287 for the application. The Defendants’ solicitor claimed an hourly rate of £710 per hour as against a guideline rate of £512. Considering the rates Mr Justice Miles held that:-

These are guidelines and are not fixed but they are an important starting point. I do not think this is a case of such complexity to justify a departure from the guideline rates.

Para 49

Following the increase to the guideline hourly rates in 1 October 2021, courts have been much less willing to allow uplifted rates. Solicitors should be prepared to factor this into their advice to their clients.

Should you have any questions, you can contact the team at civilandcommercialcosts@clarionsolicitors.com.

High Court gives guidance on delegation and recovery of costs

Joanne ChaseLeave a comment

In Rushbrooke UK Ltd -v- 4 Designs Concept Ltd [2022] EWHC 1416 (Ch) the Court gave guidance in relation to the principle of delegation when considering the reasonableness of costs. Where there has been insufficient delegation, it is likely the court will find costs are unreasonable. The key findings are at paragraph 14.

The Judgment

The starting point is that solicitors should delegate work:

I am unhappy with the notion that everything here has been done by a single Grade A fee-earner. One of the important skills of a solicitor is to know how to delegate.

Drawing on his 30 years’ experience in practice HHJ Paul Matthews went on to say:

In my experience as a commercial litigation solicitor, there were no cases in which no work could have been delegated.

In his judgment, whether or not there was a junior fee earner to delegate the was not relevant:

Sometimes it is said that, well, there was no one else to delegate to… the answer to that plea is of course that, as between himself and his solicitor the client is quite entitled to insist on a grade A fee earner doing everything. On the other hand, they are not entitled to require the opponent to pay for it. The question is whether the costs are reasonably incurred and reasonable in amount. Reasonableness takes into account of potential delegation.

In relation to the burden of proof the judge held:

It is not for the paying party to have to identify work which could have been done by a more junior fee earner.

Summary

Delegation should be the rule not the exception. The receiving party will have to justify a decision not to delegate. The test of whether an item could have been delegated is objective; if it was suitable for delegation then it should be allowed at a lower rate even if there was no fee earner to delegate to.

Should you have any questions, you can contact the team at civilandcommercialcosts@clarionsolicitors.com.

Solicitors Hourly Rates: Shulman -v- Bogolyubov

Joanne ChaseLeave a comment

In Shulman -v- Kolomoisky & Bogolyubov, Senior Courts Costs Office (24/06/20) the Second Defendant (Bogolyubov) had instructed solicitors in Canary Wharf (postcode E14), which would place it within London Band 3 of the Solicitors Guideline Rates. The Claimant, who was liable to pay the Second Defendant’s costs, argued that the court should allow rates falling between the guideline rates for London 1 and London 3, taking into account the nature of the work.

Referring to the judgment of Mrs Justice O’Farrell in Ophen -v- Invesco [2019] EWHC 2504 (TCC) that “the guideline rates are based on rates fixed in 2010 and reviewed in 2014… they are not helpful in determining reasonable rates in 2019”, Master Rowley of the Senior Courts Costs Office considered the Claimant’s proposed starting point to be “entirely opportunistic”. The Master went on to point out that “the Guideline Rates were originally provided to judges when the Civil Procedure Rules arrived in April 1999 and the concept of summary assessment of costs first came into being. Many judges had little or no experience of costs and the guideline rates were there to provide assistance on summary assessment. They were not intended to replace a more thorough consideration of appropriate hourly rates in detailed assessments… it is something of an indictment on the evidence usually provided at detailed assessment hearings that the Guideline Rates have often been used… without variation.“ Although Master Rowley did point out that the Second Defendant had provided no explanation as to how the level of the hourly rates had been arrived at, he commented that the guideline rates re “is really the roughest of rough guides as to what might be allowed”.

In light of these comments, Master Rowley considered that in the absence of any evidence, the Court is required to consider the “pillars of wisdom” at CPR 44.4(3) in order to arrive at a conclusion as to whether the rates claimed are reasonable.

One further comment of note is that Master Rowley pointed out that “there is a very fluid market in terms of what hourly rates can be obtained” and that there are many factors which affect this which fall outside the remit of CPR 44.4(3), such as the solicitor’s appetite for such work or the potential for future work to be obtained from the same client.

Based upon the above, Master Rowley allowed rates of £750 for Grade A, £400 for Grade C, and £200 for Grade D.

It is important to note that this case related to firms practicing in London, which paying parties (and some judges) in regional courts consider to be a “special case” with no application outside the M25. It therefore adds to a growing volume of case law that the Guideline Rates are no longer suitable as a starting point, but until there is guidance from a higher court this should be treated as supportive but not a guarantee for receiving parties outside London.

Should you have any questions, you can contact the team at CivilCosts@clarionsolicitors.com