Expert Witness Fees – calculating the detail
Recovering the costs of Expert Witness fees – What level of detail is required to be provided by experts who were instructed during the case?
Linzi Walker looks at the case of Deutsche Bank AG v Sebastian Holdings Inc & Anor [2021] EWHC B4 (Costs).
Background to the case
The Claimant is an international bank. The First Defendant is a company registered in the Turks & Caicos Islands and was a personal investment vehicle of the Second Defendant. On the 8th of November 2013, following a Trial in the Commercial Court, judgment was given for the Claimant against the First Defendant in the sum of $243 and the Claimant successfully defended a counterclaim which initially exceeded £103bn. Costs sought amounted to £53m. Almost £23m plus VAT was in respect of the Claimant’s accountants, Deloitte.
Pursuant to the order dated 8th November 2013, the Claimant was entitled to 85% of its costs to be assessed on the indemnity basis.
Mr Vik (sole director and shareholder of the First Defendant) was added as a Defendant for costs purposes only on the 10th of October 2016 and was ordered to pay the Claimant’s costs awarded against the Defendant.
Mr Vik argued that he should not be liable to pay the fees of the Claimant’s accountants, Deloitte, stating that sufficient detail was not provided as to how the fees had been calculated.
Summary
CPR 47, paras 5.12 to 5.22 predominantly dictate what details are required for the detailed assessment of Solicitor’s fees. What level of detail is required to be provided by experts who were instructed during the case?
The level of detail required to be provided by experts has recently been addressed by Master Gordon-Saker in Deutsche Bank AG v Sebastian Holdings Inc & Anor [20201] EWHC B4 (Costs).
The judgement sets out Master Gordon-Saker’s decision on items 1707 to 1734 in the Claimant’s bill of costs. These items were the fees of Deloitte.
Master Gordon-Saker held that: “ CPR Practice Direction 47 provides guidance about the procedure for detailed assessment. Paragraphs 5.12 to 5.22 set out the requirements for the contents of a bill but relate largely to profit costs. There are no specific provisions as to the form or content of evidence in respect of disbursements apart from the requirement in paragraph 5.2(d) that written evidence must be served with the bill of any disbursement claimed which exceeds £500.”
“I cannot accept Mr Vik’s argument that there are special rules in relation to the fees of accountants. Mr Williams QC readily volunteered that Brook v Reed and Re Brilliant Independent Media Specialists Ltd related to the fees of office holders who owe particular fiduciary duties. In the present case Deloitte will owe the usual professional duties to the Claimant and both Deloitte and the Claimant will owe to Mr Vik the very limited duties owed to third parties. It seems to me that an expert accountant can owe no greater duties to his client’s opponent than any other expert witness. In my view there was no duty on Deloitte to record its time in any particular way, other than by reason of anything agreed with its client, and there is no duty on the Claimant to present Deloitte’s fees for assessment in any particular way, other than the obligation to provide the written evidence required by CPR PD47 paragraph 5.2(d).”
He did however state that more detail may be required to assess the reasonableness of expert fees in certain cases: “However, as I indicated in the June judgment, the assessment of the reasonableness of Deloitte’s fees cannot be conducted in a vacuum. There has to be sufficient detail provided to allow the court to carry out the task required by the rules and, in particular, CPR 44.3 and 44.4.”
The Master concluded that: “The assessment of costs is not of course as precise as many think and is a great deal less precise than many assessments of damages. While the results are expressed arithmetically, almost every decision on assessment involves a value judgment as to the amount of time reasonably spent. Because of the common ground between the parties, the main issue on this assessment, where there is sufficient detail to form a judgment, is the value judgment that the court should make as to the reasonableness of the time claimed. That is inevitably rough justice or as Russell LJ. explained, more elegantly, when describing the taxation of costs: “where justice is in any event rough justice, in the sense of being compounded of much sensible approximation””
In summary, on an assessment of costs, there is no obligation for an expert witness to record time in any particular way, other than anything agreed with the client and there is no obligation for the receiving party to present the expert fees in a particular way, other than as determined by CPR PD 47 para 5.2(d). However, there has to be sufficient information provided to allow the Court to carry out the task required by the rules. What constitutes as sufficient detail will vary on a case by case basis.
PIC have extensive knowledge and attend and advise on a number of costs hearings each month and specialise in disputes relating to costs for Solicitors. Please contact PIC if you need any assistance.
Linzi Walker
15.04.21