Costs News

14 November 2019
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Lack of explanation for costs budget decision not enough to overturn it, High Court rules

The High Court has rejected an appeal against a costs budget decision that said “instruction of leading counsel is not approved” without explaining further.

Easteye Ltd v Malhotra Property Investments Ltd and Ors [2019] EWHC 2820 (Ch) concerns two disputed rights of way in Newcastle city centre and specifically a costs budget decision made on the papers by Deputy District Judge Pescod.

The claimant’s Precedent H sought £210,020 for the trial phase, made up of £24,640 for a grade A fee-earner and £10,560 for a grade D fee-earner, £3,840 for experts' costs, £1,480 in court fees, £139,000 for leading counsel and £30,500 for junior counsel.

The defendants offered £120,000 for the phase without breaking down the figure although, using the submissions, DDJ Pescod estimated that the defendant was offering £90,000 for counsel’s fees. The main area of contention was the need to instruct leading counsel.

Most of the argument before Mr Justice Nugee focused on whether the reasons given by the judge were adequate. He found that although they were “briefly expressed”, they were given. He noted the comment of the Court of Appeal in English v Emery Reimbold and Strick Ltd [2002] EWCA Civ 605, the authority on inadequate reasons, that decisions were “often expressed summarily” in costs matters.

It was “not irrelevant”, Nugee J said, that the DDJ had previously been a full-time district judge and was now retired, and “I was told an experienced judge”. It was also “not irrelevant that he himself had seen this case twice before, both for case management and costs management purposes and that as the Court of Appeal say in English v Emery, judges should be assumed to know what they are doing unless it can be shown that they have gone wrong”.

The DDJ faced a “stark choice” between the two sides’ positions and Nugee J said: “I think that, on the material that I have been shown, it is possible to discern from the deputy district judge's very briefly expressed reasons that he preferred the submissions of the defendants as to the appropriateness of employing leading counsel and that that can only have been because he was not persuaded that the value, complexity and heaviness of the case justified leading counsel.

“As I have suggested, that is ultimately a question of judgment or assessment and, even if he had spelled out at great lengths what the factors were, I rather doubt that at the end he would have said more than having regard to the perceived complexity, length, heaviness, importance and value of the case he was not satisfied that it was reasonable and proportionate to engage leading counsel.

“I take the point that the claimant is left not knowing precisely whether he thought it was not reasonable, or although reasonable was not proportionate, but the overall message is clear that he was not satisfied that this was a case that justified leading counsel.”

That was sufficient to satisfy the requirements laid down by the Court of Appeal in English v Emery, Nugee J said. “It is not, in general, conducive to the efficient and cost-effective dispatch of costs management decisions if every part of those decisions has to be justified with extensive reasons like a judgment after trial.”

He went on to reject the claimant’s argument that DDJ Pescod had made the wrong decision. “In order to find that the decision is wrong, there does have to be a degree of wrongness which can be characterised as one which is perverse or could not be reasonably reached by the court below. I find it impossible to conclude, despite what I might or might not have done had it been a matter for me, that the deputy district judge has gone wrong in deciding that the case would not have justified the employment of leading counsel.”

Refusing the appeal, Nugee J noted that it would be open to the claimant, if successful, to seek to persuade the judge conducting the detailed assessment to depart from £120,000 for the trial phase by showing good reason to do so.

C Morgan (instructed by Square One Law) appeared on behalf of the claimant, and M Pryor and F Banning (instructed by Clarke Mairs) on behalf of the defendants.

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