Costs News

02 December 2020
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High Court recommends 35% inflation uplift in guideline hourly rates pending review

The guideline hourly rates should at least be increased to take account of inflation while they are being reviewed, meaning an increase of 35%, the High Court ruled this week.

His Honour Judge Hodge QC, sitting as a High Court judge in Manchester, also issued guidance on conducting summary assessments to avoid them being unduly rushed but still in line with the overriding objective.

Cohen v Fine and Ors [2020] EWHC 3278 (Ch) concerned the costs of the claimant professional executor after having to bring part 8 proceedings to force the sale of the estate’s main asset, a property, which was the subject of dispute between the three beneficiaries, the deceased’s children.

District Judge Matharu ordered the sale but said she was “appalled” by the £48,000 (including VAT) in costs sought by the executor, awarding £27,000 instead. Though she cited some of the items claimed as examples of what she considered unreasonable claims, she said she was “considering matters in the round”.

HHJ Hodge ruled that she “erred” in her approach to the conduct of the summary assessment. “While summary assessment can be ‘broad brush’, a judge still has to consider the individual elements of the bill item by item,” he said, citing binding authority.

“What is meant by ‘broad brush’, in the present context, is that, unlike the detailed assessment procedure under CPR 47, there is no need for any formal notice of commencement of the assessment, or any detailed bill of costs, or any points of dispute, or any points of reply. But the court must nevertheless address individually each separate objection that may be taken to particular items in the N260 statement of costs.”

Rather than directing a detailed assessment, as the claimant’s Costs Lawyer, Michael Fletcher, had proposed, HHJ Hodge decided to undertake a summary assessment himself. He gave several reasons for this, including putting an end to the whole case and furthering the overriding objective of dealing with the case justly and at proportionate cost.

He said was also worried about the ability of the defendants, as litigants in person, to properly address the requirements of a detailed assessment and as a result it could produce a “less just outcome”.

Further, without conducting a summary assessment, he would not be able to deal justly with the costs of the appeal: “If a detailed assessment were to result in an award of less than £27,000, it would be difficult to characterise the claimant as the ultimately successful, and the defendants as the ultimately unsuccessful, parties to the appeal.”

As a result, the judge “reluctantly” embarked on a two-hour, line-by-line assessment of the 13-page N260 – which comprised some 130 separate items in the schedule of work done on documents – and finished with a figure of £35,703. He then spent a further 30 minutes summarily assessing the costs of the appeal at £8,298, against a claim for £9,972.

In doing so, HHJ Hodge – who sat on the Foskett committee that last reviewed the GHR in 2014 – addressed the issue of the hourly rates; the current Civil Justice Council committee headed by Mr Justice Stewart is set to issue an interim report shortly, ahead of a final report next summer.

“In the meantime, what is to happen as regards hourly rates?” the judge asked. “In my experience of sitting in the Business and Property Courts, both in the North-West and in the Rolls Building, the present GHR are considerably below the rates actually being charged by the solicitors who practise in those courts. Likewise, the table of counsel's fees bears no relationship to the fees which the courts see being charged for counsel appearing in the Business and Property Courts.

“In my judgment, pending the outcome of the present review, the GHR should be the subject of, at least, an increase that takes due account of inflation. Using the Bank of England Inflation Calculator, it seems to me that an increase in the (band one) figures for Manchester and Liverpool broadly in the order of 35% would be justified as a starting point (appropriately rounded-up for ease of calculation).”

This meant £295 for grade A, against a present rate of £217, £260 (£192) for grade B, £220 (£161) for grade C and £160 (£118) for grade D. The judge adopted the higher rates subject to the indemnity principle. He rejected the argument that the case justified rates higher than the GHR.

HHJ Hodge said he had “every sympathy for the difficult position” in which the district judge found herself, having just five minutes at the end of an hour-long telephone hearing to deal with costs, with no suggestion from the claimant that she re-list the matter.

She wanted to protect the defendants from what she regarded as an unreasonable claim for costs, he went on, and was constrained by her inability to rely upon proportionality because of the indemnity basis of assessment.

“The approach which she proceeded to adopt was a realistic and pragmatic one that I have frequently adopted, without objection from the relevant parties. The only alternative available to her would have been to have adjourned the costs assessment, which would have led to still further costs being incurred; and these would probably have fallen to be visited upon the defendants. Unfortunately, the claimant has objected to the district judge's approach to the summary assessment; and that objection is supported and justified by binding authority.”

That led the judge to issue guidance on conduct summary assessments consistent with the need to further the overriding objective.

He said: “First, the court should establish from the paying party how many, and which, individual elements of the statement of costs are subject to challenge. If there is simply no time available to undertake an item-by-item consideration of those elements, the court should make this clear; and it should ask whether all relevant parties expressly consent to the court adopting a broad brush, and global, approach to these disputed items, without minutely examining them in any detail.

“If such consent is forthcoming from all relevant parties, it should be expressly recorded in the court's order.”

In the absence of such consent, he said, the court could order that the assessment (and, if not previously determined, the incidence and/or the basis) be determined on paper after an exchange of “short, sequential written submissions”; re-list the matter for a summary assessment; or direct a detailed assessment, with a payment on account of costs unless there is good reason not to do so.

“This salutary power should always be borne firmly in mind as an alternative to a rushed, and procedurally improper, summary assessment,” HHJ Hodge concluded.

Michael Fletcher (instructed by Glaisyers Solicitors) appeared for the claimant. At the request of the first defendant, and with the agreement of the court and the other parties, Sholom Fine represented the first defendant, his wife. The second and third defendants appeared in person.

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