Criticism of the way that litigation is pursued today
In Crypto Open Patent Alliance v Wright [2022] EWHC 242 (Ch) (09 February 2022 HHJ Matthews addressed various failings in the way the parties pursued the litigation, which resulted in a 33% reduction to the costs claimed
This article looks at the outcome of two applications made in the ongoing dispute between Crypto Open Patent Alliance and Dr Craig Wright, who challenge Dr Wright’s copyright in the Bitcoin white paper.
On 22 December 2021 HHJ Matthews handed down judgment on two applications that had been heard on 10 December 2021. The first application made by the defendant sought orders (i) to strike out parts of the claimant’s Amended Particulars of Claim and (ii) to exclude certain evidence at the trial of the claim, as well as ancillary orders. The second application made by the claimant sought an order permitting the claimant to amend the Amended Particulars of Claim and for consequential directions.
HHJ Matthews found that the defendant had been partly successful and partly unsuccessful in respect of (i) and wholly unsuccessful in respect of (ii). The claimant’s application had been wholly successful. The parties were directed to provide their written submissions on costs by mid January 2022. The claimant sought its costs of both applications. The defendant opposed this.
On 9 February 2022 HHJ Matthews provided his judgment on the question of costs. Breaking down the judgment:
The “successful party”
Although there had been partial victories on both sides, taking the hearing as a whole the claimant was the more successful party.
Undesirable costs arguments
It was the defendant’s position that a multi-issue based order was appropriate given they had been partly successful, as was a detailed assessment of costs rather than a summary assessment. HHJ Matthews took exception to the way in which parties were raising costs arguments and stated “It is a recurring, but highly undesirable, feature of modern litigation that litigants are willing to argue costs issues: not only the principle (usually the unsuccessful party), but the basis of assessment (usually the successful), and also the actual assessment itself (both sides), as if they were the main issue itself. This frequently creates satellite litigation that consumes even more time and emotional energy, and costs even more money on top of the vast sums that have already been spent on the substantive issues.”
Benefits of Summary Assessment
HHJ Matthews stated that summary assessment was intended to save “both time and costs by enabling the judge who dealt with the substantive issues summarily to assess the costs of the hearing which he or she conducted”. This would ultimately benefit the receiving party in that they recovered costs at a far earlier stage. HHJ Matthews took exception to parties who “persist in arguing minor costs assessment issues, seeking to claw back this or that fraction of costs or small expenditure. This is not cost effective. It is merely disruptive. The costs of the argument must often outweigh even the value of what is in issue.”
Type of order
HHJ Matthews stated that multi-issue based orders were to be “avoided as far as possible” as they created unnecessary complexity and added to the “cost in time and therefore money to be worked out”. A percentage costs order was favoured and the defendant was to “pay 95% of the claimant’s costs of both applications” as the “defendant was in the wrong more or less throughout”.
Basis of Assessment
The claimant had advanced detailed submissions as to why they should be awarded costs on the indemnity basis. HHJ Matthews looked at the conduct of the parties and considered there had been “mudslinging” by both sides. HHJ Matthew stated that “the conduct of this litigation is, most regrettably, not out of the norm for these days. Both sides are behaving in an ultra-aggressive and unco-operative way towards each other, which is certainly not conducive to the efficient conduct of the litigation. In all the circumstances of this case, I do not think that it is appropriate to award indemnity costs to one of these two sides against the other. To do so would be to encourage similar behaviour in future”.
Assessment of Costs
The claimant had submitted two Schedules of Costs which totalled £122,834.78, VAT not being claimed. The claimant sought a summary assessment of the costs, the defendant did not. HHJ Matthews stated he would summarily assess the costs as there was no good reason not to do so and “the least service I can do to the parties in the present case is to deal with the assessment of costs now, not allowing the litigation to drag out, and saving them time and further costs later”.
The defendant did not challenge the hourly rates applied, even though those in the second schedule exceeded the guideline hourly rates. The defendant submitted there had been excessive use of Grade A fee earners and insufficient delegation to more junior fee earners. In circumstances where specialist counsel had been instructed, excessive time had been spent on the evidence (15.8 hours), on preparing the skeleton argument (14.7 hours), on research and investigation (32.4 hours), on preparing the costs schedules (21.1 hours) and only one fee earner was required at the hearing rather than five.
HHJ Matthews stated the costs claimed for a one day hearing were “extraordinarily high”. HHJ Matthews was unimpressed by the tenor of the litigation to this point and described the proceedings as “bad tempered” which had also contributed to the level of costs claimed. Whether or not the costs claimed were proportionate, given the value and importance of the dispute, they were not reasonably incurred or reasonable in amount.
- There had been insufficient delegation of work to more junior fee earners, particularly in light of the instruction of specialist counsel.
- The solicitors had spent too long on the evidence and reviewing this was Counsel’s job. 10 hours was allowed.
- The solicitors had spent too long on the skeleton argument. 5 hours was allowed.
- Too long had been spent on research and investigation. 5 hours was allowed.
- Five fee earners had attended the hearing. One fee earner was sufficient.
- The time spent on the costs schedules, whilst extensive, was not justified. 5 hours was allowed.
HHJ Matthews stated the “solicitors’ costs claimed are way out of the norm”. Ultimately, this resulted in a vastly reduced award of costs for the claimant of £70,000.00, just 66% of the sum originally claimed.
This judgment gives many useful pointers on how not to conduct litigation, however deep your pockets (electronic or otherwise) may be. If you have any costs queries arising from this article, or any other costs queries, do get in touch with Partners in Costs.
Caroline Brook, Senior Costs Consultant and Chartered Legal Executive
14.04.22