Costs News

08 November 2018
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News in brief - 08.11.2018

Judge: I would have summarily assessed costs if they weren’t so extraordinarily high

A High Court judge has said he would have summarily assessed the costs in an arbitration dispute – had they been 70% lower.

Mr Justice Andrew Baker said the challenge to an arbitration award in RJ and Anor v HB [2018] EWHC 2958 (Comm) “was not very complex, factually or legally”. He granted the claimants some of what they sought.

But ruling on the costs, he said: “The total costs are a staggering £1.2m, split very close to 50:50. In defending that total, Mr Quirk for the claimants emphasised the importance of the claim to the parties, the sums at stake in the underlying arbitration, the fact that section 68 claims rarely succeed and are often hard fought, and the fact that… the defendant contested every aspect of the claim.

“Even allowing fully for those fair points, I regard the level of costs incurred as quite extraordinary. It seems to me explicable only by a willingness, as it happens on both sides, to incur cost effectively without limit, and certainly without any regard for what might be a reasonably sufficient and proportionate work effort for advising upon, preparing and presenting the case.”

He declined to attempt a summary assessment of the costs, but on the amount to be paid on account – while stressing that he did not intend to “tie the hands of any costs judge conducting a detailed assessment” – he said it was “prima facie surprising that the costs claimed should be more than c.30% of the actual totals (say, £180,000 on each side)”.

Had the costs been of that order, the judge said he would “most probably” have assessed them summarily “in an amount equal to a high percentage, perhaps 75%, of the sum claimed”.

He continued: “If the order were for either side to recover costs in full (subject to detailed assessment), the payment on account I would order would therefore be £135,000.”

Estimating that the unsuccessful elements of the claim generated 15-20% of the costs, Baker J ordered that the defendant pay 80% of the claimants’ costs, and payment on account of £110,000, being roughly 80% of £135,000.

David Joseph QC and Iain Quirk (instructed by Baker and McKenzie) for the claimants; Charles Kimmins QC and Belinda McRae (instructed by Freshfields Bruckhaus Deringer) for the defendant.

 

Oversight regulator eyes wider separation between ACL and CLSB

New rules governing the relationship between the ACL and Costs Lawyer Standards Board (CLSB) are set to put even more clear water between the two.

The Legal Services Board (LSB) – which oversees the regulation of lawyers – has issued a final consultation on changes to its internal governance rules (IGR), which set the parameters of the relationship between the bodies listed in the Legal Services Act 2007 as the approved regulators – the ACL, Law Society, Bar Council and others – who then delegate their regulatory obligations to operationally independent arms – the CLSB, Solicitors Regulation Authority and Bar Standards Board respectively.

The requirements tighten up the existing provisions significantly. They introduce a duty of candour under which an approved regulator must “proactively inform the LSB of any issue with compliance which cannot be resolved or has not been resolved in a reasonable time”.

Approved regulators can no longer have a role in approving their regulatory body’s budget or the appointment of any of its board members.

Though there will be some initial costs to comply with the rules, the LSB said: “We are of the opinion that the ongoing cost of compliance to regulators and regulatory bodies would be reduced as a result of the proposed IGR.

“This is based on our assessment that the proposed IGR set a clearer framework which should be straightforward to comply with and enable effective enforcement by the LSB.

“This takes account of the net effect of what should be a reduction in the number of issues and disputes that approved regulators and regulatory bodies deal with and which have been historically brought to the LSB.”

LSB chief executive Neil Buckley (pictured) said: “We believe that regulation which is, and is seen to be, independent is central to maintaining confidence in legal services…

“The proposals reflect the LSB’s approach to regulation – they are principled and outcomes-focused. The rules are targeted at the areas where experience has taught us that action is needed.”

The consultation closes on 21 January 2019. Any ACL member who has a view should contact enquiries@costslawyer.co.uk.

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