A master was right to take an initial overall view that costs were disproportionate without having to decide which party was to blame, a High Court judge has ruled.
Bloomsbury Law Solicitor v Macpherson [2017] EWHC 2708 (QB) was the third appeal from decisions made by Master Simons when resolving what Mr Justice Warby, sitting with Master Leonard as an assessor, called “hard-fought costs disputes” between the solicitors and a former client.
Bloomsbury issued part 7 proceedings against Mr Macpherson in April 2012 for billed and outstanding costs and disbursements of around £270,000. This was the net unpaid sum allegedly due under a large number of invoices, the total sum of which was £416,000.
Master Leslie entered default judgment on the part 7 claim for £6,600 and damages to be assessed. He also awarded Bloomsbury the costs of the claim, to be assessed. Pending the assessment, Mr Macpherson was ordered to make an interim payment on account of £176,250.
By the same order, at the request of Mr Macpherson, and to avoid the need to issue formal part 8 proceedings, Master Leslie transferred the assessment to the Senior Courts Costs Office (SCCO), to proceed by way of a non-statutory assessment of costs (nonetheless called the part 8 claim in the ruling). The dispute was compromised during the assessment and an order was made for the assessment of Bloomsbury’s bills for £323,000, with interest of £7,000.
Argument on costs followed. In this latest chapter of the saga, Bloomsbury was appealing Master Simons’ decision in the assessment of Bloomsbury’s costs of the part 7 and part 8 claims.
The bill in respect of the part 7 claim was £48,557 and £183,996 for the part 8 claim. The old proportionality test applied and, having reached the initial global view that both bills appeared to be disproportionate, he went on to apply the necessity test to individual disputed items. Master Simons held that the parties’ conduct had increased the overall costs but declined to make any positive findings as to whether either or both were at fault for bringing about what he found to be a disproportionate level of costs.
Bloomsbury submitted that this was an error of principle. Warby J explained: “The argument is that the conduct of the other party is highly relevant, and must be taken into account at this first stage; it should have been assessed; Mr Macpherson’s conduct was highly unreasonable, and led to an increase in the level of costs incurred; accordingly, the costs should not have been held to be disproportionate.”
Warby J did not accept this, saying it was not supported by Lord Woolf in Lownds, when he said: “In deciding what is necessary, the conduct of the other party is highly relevant. The other party by co-operation can reduce costs, by being unco-operative he can increase costs. If he is uncooperative, that may render necessary costs which would otherwise be unnecessary and that he should pay the costs for the expense which he has made necessary is perfectly acceptable.”
Warby J continued: “As its opening words make clear, however, this passage is directed to the second stage of the two-stage process, at which the court (having reached the preliminary view that the costs are disproportionate) is applying the test of necessity. The passage offers no support for the submission that it was wrong for the master to reach his preliminary global view without deciding whether the paying party was at fault for driving up the costs by unreasonable behaviour. On the contrary…
“The criticism is the much narrower one; that he was duty bound to make findings as to fault. In my judgment, no such hard and fast rule can be laid down. The extent to which and the way in which conduct falls to be taken into account at the first stage will be fact-sensitive… The initial global view should be taken without recourse to excessively detailed examination of the available material.”
He said that to approach the matter in the way advocated by Bloomsbury would risk the first stage becoming, in itself, a disproportionate exercise. “Here, Master Simons was right to reach his preliminary view without conducting any detailed investigation of the procedural squabbles and mutual recrimination which riddle the parties’ points of dispute and replies.
“Looked at overall, this is a practical and fair approach. A party which has been forced by its opponent’s conduct to incur disproportionate costs will not lose out. Such a party will be able to show at the second stage that individual items in its bill were necessitated by the conduct of the other side.”
Warby J added that Master Simons’ initial global views on proportionality were “undoubtedly right”. He said: “Costs of nearly £50,000 reflecting (for instance) more than 99 hours work on documents alone are, on the face of it, grossly disproportionate to the nature, complexity and value of the part 7 claim, its importance to the parties, and all the other factors listed in CPR 44.5(3).
“This was properly assessed as an essentially straightforward debt-collection exercise involving a substantial but not enormous sum. It was hard fought, but it was not legally or procedurally complex, and had no truly exceptional features.
“The figure of £183,996.43 for the part 8 proceedings is equally startling. The attempt to justify costs on this scale on the basis that this costs assessment was comparable to a seven-day trial fails utterly, for the reasons given by the master. Even if that were a reasonable comparison, the time and costs claimed would still be substantially over the top, in my judgment.
“The tasks involved should not have been complex or particularly time-consuming, if reasonable records had been maintained. Yet here, the receiving party’s solicitor claims remuneration for no less than 489 hours, in addition to the costs of costs lawyers, and counsel. The claim includes as much as 131 hours on drafting and checking the breakdowns of the solicitor’s own bills.”
With one minor exception, Warby J rejected all the other challenges to the master’s decision.
Robert Marven (instructed by Bloomsbury Law Solicitors) acted for the appellant and Roger Mallalieu (instructed by TM Costings) for the respondent.