FAKE NEWS ALERT: ‘Hourly Rate of £550 Approved in Sir Philip Green v Telegraph Media case’
Michelle Walton – Solicitor Advocate – Partners in Costs
After seeing an increasing number of headlines and articles on how in the Sir Philip Green v Telegraph Media litigationthe court has approved an hourly rate of £550, I thought I would prepare a short article myself setting out how all these headlines and articles are wrong, for a number of reasons.
The actual quote by Mr Justice Warby, which has been jumped on by the general media, and also, more concerningly, in a number of legal articles, is this short statement:
“I do not consider that hourly rates in excess of £550 can be justified”.
The reasons why these headlines and articles are wrong can be seen by a simple reading of the costs management rules as set out in CPR 3 and PD 3E.
Firstly, and most fatal, the court simply does not have the power to approve hourly rates at a CCMC. PD 3E 7.10 clearly provides “it is not the role of the court in the cost management hearing to fix or approve the hourly rates claimed in the budget”. That in itself is a slam dunk in proving the headlines wrong, however I’ll continue, just to embed how wrong the headlines are.
Secondly, in relation to the incurred costs, PD 3E 7.4 provides “as part of the costs management process the court may not approve costs incurred before the date of any costs management hearing”. This includes any component of the incurred costs – disbursements, number of hours and, you guessed it, hourly rates. This does therefore also overlap with 7.10 as above. As such, the hourly rate for incurred costs is still up for grabs at detailed assessment, along with all other component parts.
Thirdly, in relation to the estimated costs, PD 3E 7.10 provides “the making of a costs management order under rule 3.15 concerns the totals allowed for each phase of the budget”. Just as the Court does not approve how much can be spent on experts and counsel in relation to estimated costs, it also does not approve the hourly rate – see the recent case of Yirenki v Ministry of Defence [2018] EWHC 3102 (QB). In relation to estimated costs therefore, hourly rates are irrelevant and any statement to the effect that hourly rates have been approved for estimated costs is a nonsense.
Fourthly, Warby J did not even attempt to approve a rate of £550. He simply gave his opinion that a higher rate could not be justified. He did not say a rate of £550 could be justified or was reasonable, and rightly so. Warby J had not heard sufficient submissions to enable him to categorically state what hourly rate would be reasonable for this case – the reason being a costs management hearing is not the correct venue for such submissions – the correct venue is detailed assessment, hence why PD 3E 7.10 specifically prohibits the court approving rates at a CMC.
At the very most the Defendant can argue that the judge’s comments be taken into account by the assessing judge at detailed assessment, and if it has any sense the Defendant will argue that £550 is simply the ceiling, and the Claimants must still show justification as to why a rate of up to £550 is reasonable.
Therefore in simple conclusion, there has been no approval of an hourly rate in this highly publicised case, and it is wide open for each party at detailed assessment to argue that a higher or lower rate than £550 should apply. The ‘shocker’ headlines asserting there has been approval therefore are at best misleading, but in the main entirely incorrect.
Michelle Walton – Solicitor Advocate at Partners in Costs
28.01.2019
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