One rate does not fit all!
In the case of Brierley v Howe & Anor (Re Costs – 36 Bourne Street Ltd) [2024] EWHC 2983 (Ch) the court allowed a London 1 rate, but made it clear that this may not be the case for all elements of the same case.
The Petitioner brought an action against the Respondent seeking a transfer of shares in the company owned by the Respondent in which she was a minority shareholder and holding the role of Managing Director. The Respondent made a partially successful application which led to striking out of substantial elements of the case. The court then had to deal with the matter of costs, and having found that the Respondent was the successful party and that the Petitioner should pay costs, Judge Barber went on to summarily assess the costs.
An interesting issue which arose in relation to that Summary Assessment was the question of whether the Respondent’s Solicitors should be entitled to the rates for London 1 or London 2. In determining the amount of costs to allow the court commented that, “this highly technical strike out application does warrant London grade 1 treatment, even if other aspects of the case, as the matter progresses on to trial, may warrant only London grade 2.”
On Summary Assessment one can easily imagine how such an approach may raise in practice, the court is unlikely to spend too much time hearing very lengthy submissions as to what rates it should apply nor considering at too much length the factors in issue in the case as a whole, rather than those relating to the matters which had arisen in the particular hearing in respect of which the costs were then being summarily assessed.
However, the extent to which the idea that different rates should apply to different elements of the case, where that work is done by the same fee earners, might extend to the assessment of rates on Detailed Assessment seems less clear. On Detailed Assessment, where rates may well be a key issue, the approach of the court is to consider whether a reasonable choice of Solicitor was made and if so, what it is reasonable for that firm to charge. Usual practice is that rates are then set for each fee earner with any variation to rates over the lifetime of the case likely to reflect the passage of time rather than a change to the appropriate rate due to developments in the case or in respect of work done on a particular aspect of the case. Rather any rate adjustment flows from a determination on delegation or Grading, and thus usually downwards.
How then may the arguments justifying the higher rates for some parts of the case in Brierley be employed on Detailed Assessment where the court adopts the usual practice of allowing a rate for each fee earner? Is it the case that receiving parties could in fact argue against the traditional approach, instead seeking to ringfence certain areas of work that did include technical, legally complex or particularly contested elements and seek a higher rate accordingly, subject to the indemnity principle? Or is this adding a layer of costs complexity that no one would have the appetite for?
It may be the case that this could drive down rates in those areas not ringfenced, and receiving parties will rather want to argue against such an approach, relying on the more traditional method of using CPR 44.4 to justify a higher rate throughout.
Ultimately, there may well be situations where following Brierley might make sense, for example if you have a case where the landscape suggests your standard rates might by vulnerable on assessment but there may be elements of the case which do justify your higher rates, where matters of complexity, novelty or where technical issues are raised. It is something to bear in mind when your costs fall to be dealt with.
How can PIC help?
It is important that consideration is given to the appropriate rates to charge in any case and that there may be scope to focus your rates on key elements, in the right circumstances. It is also useful to bear these points in mind when considering offers on costs to make an informed assessment on rates, including whether the court is likely to apply different rates for the various elements of the case. PIC are always happy to provide full advice on the presentation of your costs and recoveries.
Emma Ganley, Costs Consultant
09.01.2025