Is Wraith still good case Law
Is Wraith still good case Law and should the Courts be taking into account the new guideline hourly rates that came into force on 01 October 2021 when looking at costs incurred before that date?
In Axnoller Events Limited -v- (1) Ninal Mohammed Kamal Brake (2) Andrew Young Brake and between (1) Nihal Mohammed Kamal Brake (2) Andrew Young Brake (3) Tom Conyers D’Arcy -v- The Cheddington Court Estate Limited [2021] EWHC 2362 (Ch) HHJ Matthews was asked by the Defendant these two to provide guidance which he duly did.
On 19.08.21, HHJ Matthews decided that the Brakes (Defendant’s) should pay 50% of the costs of the Guy parties (Claimant’s) application notice of 26.06.21, to be summarily assessed: see [2021] EWHC 2343 (Ch). This case was the assessment of those costs which was being conducted on the standard basis rather than the indemnity basis: see CPR rule 44.3 (4). Summary assessment is dealt in the procedural rules at CPR r 44.6(1) (a), and PD 44 para 9. Judgement was handed down on 23.08.21.
HHJ Matthews in the assessment of the Guy parties costs were asked by the Brakes to look at:
- Charging rates
- Hours charged
- Counsel
- Costs Budget Comparison
- The parties’ relative financial positions and the Brake’s health issues
Submissions
The Brakes
The Brakes challenged the charging rates for the solicitors, referring to the Senior Courts Costs Office guideline hourly rates for 2010. They also challenged the number of hours for which the solicitors had charged and had criticised the method of presentation of costs of dealing with documents. They also complained that the employment of both a silk and a junior barrister was disproportionate, and they compare the total sum claimed of £68,729 unfavourably with the agreed budget for the trial of the Possession Proceedings, at £61,000. Finally, they asked the court to take into account the parties’ relative financial positions and the Brakes’ health issues.
The Guy Parties
The Guy Parties refer HHJ Matthews to the new 2021 guideline hourly rates recently approved by the Master of the Rolls, which was due to come into force on 1 October 2021. They said that the present case was both legally and factually complex litigation, justifying the instruction of London solicitors. They referred his honour to the decision of the Court of Appeal in Wraith v Sheffield Forgemasters Ltd [1998] 1 WLR 132. They also submitted that this was a very document heavy application. In addition, they said they were justified in instructing both leading and junior counsel. They lastly criticised the Brakes’ comparison with the budget for the three-day trial of the Possession Claim as irrelevant.
Discussion
General
HHJ Matthews accepted that this litigation between the parties was peculiarly wide ranging, factually complex and, at least in part, legally difficult. He accepted that this particular application was a document heavy application, in large part because of the adduction of over a thousand pages of evidence by the Brakes. He also accepted that one of the applications involved a wholly new area of law, although the other was a fairly standard application of established principles. But otherwise, he does not consider that there was anything especially difficult about these applications.
London solicitors
The Guy Parties instructed London solicitors, who were inevitably more expensive than provincial solicitors. But Wraith v Sheffield Forgemasters Ltd shows that that by itself does not make their retainer unreasonable when it comes to assessing the costs as between the parties. In that case Mr Truscott had instructed a small firm of London solicitors (ATC) to act for him in a county court case after he became dissatisfied with his previous solicitors (MFC). The judge in the county court said it was unreasonable for him to do so because their charging rates were higher than those of local solicitors. The Court of Appeal allowed an appeal by Mr Truscott.
Kennedy LJ (with whom Waite and Auld LJJ agreed) said (at 141):
“The following are matters which, as it seems to me, the judge should have regarded as relevant when considering the reasonableness of Mr. Truscott’s decision to instruct A.T.C. (1) The importance of the matter to him. It was obviously of great importance. It threatened his home. (2) The legal and factual complexities, in so far as he might reasonably be expected to understand them. Due to the incompetence of M.F.C. the matter had taken on an appearance of some complexity. (3) The location of his home, his place of work and the location of the court in which the relevant proceedings had been commenced. (4) Mr. Truscott’s possibly well-founded dissatisfaction with the solicitors he had originally instructed, which may well have resulted in a natural desire to instruct solicitors further afield, who would not be inhibited in representing his interests. (5) The fact that he had sought advice as to whom to consult and had been recommended to consult A.T.C. (6) The location of A.T.C., including their accessibility to him, and their readiness to attend at the relevant court. (7) What, if anything, he might reasonably be expected to know of the fees likely to be charged by A.T.C. as compared with the fees of other solicitors whom he might reasonably be expected to have considered.”
In the present case HHJ Matthews considered that the retainer of the London solicitors was reasonable. The property the subject of the Possession Claim was worth several million pounds, and the Guy Parties had been kept out of possession for the best part of three years. The facts of the case were complex, and parts at least of the claim were legally complex. The matter was being tried in the High Court rather than the county court, albeit in Bristol rather than London. This is the regional centre for High Court work relating to the location of the properties concerned.
Charging rates
As to the charging rates for the solicitors in the present case, the rates claimed were £695 for grade A, £525 and £445 for grade B, £370 and £325 for grade C and £210 for grade D. HHJ Matthews readily accepted that the 2010 summary assessment guidelines were now well out of date and that in a case like this he was prepared to simply put them on one side as of little assistance. HHJ Matthews went on to comments that although they were strictly speaking not yet in force, the new 2021 guidelines (which have been approved by the Master of the Rolls) have already been used in summary assessment in the High Court: see eg ECU Group plc v Deutsche Bank [2021] EWHC 2083 (Ch), [25]. He therefore considered that he should take these guidelines into account.
HHJ Matthews however said that even so, he considered that the rates claimed here were well over the top, even for London firms. All the fee earners except the trainee solicitor and the costs draughtsman were charged at more than £100 an hour in excess of the new top guideline rate (for “very heavy commercial and corporate work by centrally based London firms”). HHJ Matthews however was prepared to accept that it was only a guideline, and there will be cases which justify an even higher rate, but he did not think that the work done on this application justifies anything in excess of that rate. If anything, it justifies less.
Hours charged
As to the number of hours charged, HHJ Matthews saw nothing wrong with the attendances upon the applicants, the respondents and others. He agreed however with the Brakes that it is not right to charge for the attendance at Court of both Mr Gatt QC and Mr Spendlove. He was also concerned that the statement of work done on documents did not break down the work into its component parts, but simply gave an omnibus description in the left-hand column. This did not in the Judge’s opinion enable him to see whether particular areas of the work done on documents may have been excessive commenting that the total number of hours recorded as appearing surprisingly high, even for a document heavy application.
Counsel
HHJ Matthews commented that he did not consider that there was anything unreasonable or disproportionate in the employment of both leading and junior counsel in an application of this kind in this particular litigation. But he was concerned that the fees charged should be reasonable and proportionate, taken together. A total of £20,000 for these applications, taking just less than one day to deal with, was in his judgment too high.
Costs budget comparison
HHJ Matthews did not think that there was any helpful comparison to be made with the costs budget for the trial of the Possession Claim which was completely irrelevant to the issues at hand. It may seem surprising at first sight that the costs of a three-day trial should be less than the costs of these applications, but the main problem is that the Court was not comparing like with like. In relation to the trial, that is only one phase in the litigation budget.
Here there is not only the cost of being in court, but the costs of all the preparation as well. (As it happens, the budget concerned has since been revised anyway, because the needs of the trial were now different.)
Other matters
Finally, HHJ Matthews made it clear that, in his judgment, on a summary assessment of costs, the relative financial strength of the parties as between each other, and the state of health of one or other of them, are irrelevant and that it was for him to decide what was reasonable and proportionate for the Guy Parties to spend on this application.
Decision
Summary assessment of costs is not expected to be a line-by-line billing exercise, like detailed assessment. It is intended to be a broad brush approach: see eg Football Association Premier League v The Lord Chancellor [2021] EWHC 1001 (QB), [20]. Here the Judge was satisfied that the amounts to be charged for the solicitors was excessive, in the sense that (i) the hourly charging rates should be rather lower, (ii) the work done on documents was significantly more than it should be, and (iii) the attendance at the hearing of one or other of Mr Gatt QC and Mr Spendlove should not be charged for. Accordingly, instead of £47,789, the sum of £25,000.00 was allowed.
So far as the fees for counsel are concerned, HHJ Matthews considered that the reasonable and proportionate figure was £15,000 in total, instead of £20,000 as proposed. Added to the £25,000 for the solicitors, and the £940 for court fees and the cost of the transcript, which makes a total of £40,940. One half of that is £20,470 (no VAT). Accordingly, that was the figure which would be inserted into the Court order.
It is clear from this judgement that the Courts are minded to looking to base any decisions as to what the correct level of hourly rate is to be applied in costs proceedings on the new guideline hourly rates that came into forced on 01.10.21 rather than the rates as set down as long ago as April 2010.
It is also clear that Wraith -v- Sheffield Forgemasters Ltd [1998] I WLR 132 is still regarded by the Courts as good case law and that if the instructions of London based Solicitors who will usually charge a higher hourly rate is warranted then the same should be allowed. This being said, the Courts will require justification upon costs assessment that the instructions of London