Costs News

18 April 2019
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Issues need to stand out “starkly” to justify issues-based costs order, says High Court

A High Court judge has ruled that he should not make an issues-based costs order – despite their growing popularity – unless there is an issue “which so starkly stands out as being separate” on which the successful claimant lost.

Canary Wharf (BP4) T1 Ltd and Ors v European Medicines Agency and Anor [2019] EWHC 921 (Ch) dealt with consequential matters, including costs, following Mr Justice Marcus Smith’s high-profile ruling that Brexit would not frustrate the defendant’s lease.

He said: “Increasingly, these days there is debate about whether the successful party, instead of simply having an order for its costs, should have those costs cut-back in one of two related ways. The first way is by way of what is described as an ‘issues-based’ approach… so as to reflect more accurately or in a more nuanced way who really has won in relation to what issues…

“This approach unsurprisingly causes considerable difficulties in relation to the assessment of costs. As a shortcut, what often occurs is that the issues-based order is translated into a ‘proportional’ costs order, whereby the winning party, instead of recovering all of its costs on the standard basis, recovers a percentage of those costs.”

Marcus Smith J emphasised that such an order should only be made where an issues-based costs order would be appropriate.

He continued that in the case before him, however the issues were parsed, EMA was the loser. This provided him “with a very helpful indicator that this is not, so far as most of the issues are concerned, a case where an issues-based approach is appropriate”.

“I note the point at point (5) on p1,358 of the 2018 edition of Civil Procedure that the courts recognise that in any litigation, especially complex commercial litigation but including personal injury litigation, any winning party is likely to fail on one or more issues in the case. That is particularly true in a case such as this where the issues were significantly intertwined.

“My prima facie view is that unless there is an issue which so starkly stands out as being separate and on which CW lost, I should not make an issues-based costs order. It does seem to me, however, that the question of expert evidence is such a ‘stand-out’ point.”

As a result, the judge reduced the recoverable costs by 15%. He was also asked to order a payment on account of costs, with the claimant’s schedule topping £2m; the defendant’s was £1.2m.

“It seems to me that I need to make a deduction, first, to take account of the assessment process. The extent to which costs are reduced on a standard assessment varies, but I do not consider that a deduction of 50% is appropriate. Normally, a recovery of somewhere between 65% and 70% is applied, which would imply a deduction of 30-35%. In this case, I am going to apply a discount of 40% and allow assumed recovery of 60%.

“The reason I am deducting more than usual is because it does seem to me that quite a lot of time has been spent on the case. Just doing a quick addition of the hourly time billed by some of the lawyers, not counsel, one gets to something like 225 ten-hour days having been spent in preparing this case, which does seem to me a lot.”

Applying a 40% discount meant £1.2m, less £180,000 to represent the 15% deduction. Marcus Smith J ordered payment on account of £1m.

Joanne Wicks QC, Lord Anderson of Ipswich KBE QC, Mr Jonathan Chew and Zahra Al-Rikabi (instructed by Clifford Chance) for the claimants, Jonathan Seitler QC, Thomas De La Mare QC, Emer Murphy an James Segan (Instructed By DLA Piper) for the defendant.

 

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