Summary assessment of costs; always file a schedule of costs, even if not anticipating a costs recovery.
Scenic International Group Ltd v Adenaike & Ors (Re Costs) [2024] EWHC 1178 (Ch).
The Claimant had made an application for continuation by way of post-judgment orders following on from pre-judgment freezing orders granted against the First, Fourth, Fifth and Sixth Defendants. The application was granted, and the Court held that the relevant Defendants should pay the Claimant’s costs. The Claimant had sought an order for costs, however, when the Judge asked for their Schedule of Costs of the application in order to undertake a Summary Assessment of those costs, the Claimant advised that they had not prepared one. The Claimant’s explanation for this course of action was that they felt it disproportionate to incur the expense of preparing this document, on the basis that it was unlikely they would recover their costs. Instead, they sought a direction that the costs be subject to Detailed Assessment if not agreed.
Mr Justice Roth found that this was a mistaken approach. Pursuant to Practice Direction 44, Paragraph 9.2 (b), as follows: –
9.2
The general rule is that the court should make a summary assessment of the costs –
(b) at the conclusion of any other hearing, which has lasted not more than one day, in which case the order will deal with the costs of the application or matter to which the hearing related. If this hearing disposes of the claim, the order may deal with the costs of the whole claim,
unless there is good reason not to do so, for example where the paying party shows substantial grounds for disputing the sum claimed for costs that cannot be dealt with summarily.
Under these circumstances, the provisions of Practice Direction 44, Paragraph 9.5 applies, as follows: –
9.5
(1) It is the duty of the parties and their legal representatives to assist the judge in making a summary assessment of costs in any case to which paragraph 9.2 above applies, in accordance with the following subparagraphs.
(2) Each party who intends to claim costs must prepare a written statement of those costs showing separately in the form of a schedule –
(a) the number of hours to be claimed;
(b) the hourly rate to be claimed;
(c) the grade of fee earner;
(d) the amount and nature of any disbursement to be claimed, other than counsel’s fee for appearing at the hearing;
(e) the amount of legal representative’s costs to be claimed for attending or appearing at the hearing;
(f) counsel’s fees; and
(g) any VAT to be claimed on these amounts.
(3) The statement of costs should follow as closely as possible Form N260 and must be signed by the party or the party’s legal representative.
(4) The statement of costs must be filed at court and copies of it must be served on any party against whom an order for payment of those costs is intended to be sought as soon as possible and in any event –
(a) for a fast track trial, not less than 2 days before the trial; and
(b) for all other hearings, not less than 24 hours before the time fixed for the hearing.
The possible sanction for failure to comply falls within Para 9.6 of the aforementioned Practice Direction: –
9.6
The failure by a party, without reasonable excuse, to comply with paragraph 9.5 will be taken into account by the court in deciding what order to make about the costs of the claim, hearing or application, and about the costs of any further hearing or detailed assessment hearing that may be necessary as a result of that failure.
The Judge refused to direct a Detailed Assessment. He found that the request for a Detailed Assessment was inappropriate and contrary to the overriding objective, as the whole premise of Summary Assessment was to facilitate a prompt and efficient resolution to costs recovery. Instead, he directed that if the Claimant sought to recover costs, they must file a Schedule of Costs and the Court would then undertake a Summary Assessment.
The Claimant then prepared a Schedule of Costs, with costs claimed in excess of £36,000.00 net of VAT, and the costs of preparing the Schedule were £1,615.00.
The Court then undertook a Summary Assessment of the Claimant’s costs and was concerned at the level of hourly rates and time spent, particularly on documents. Further, the Court took into account the provisions of Para 9.6 as set out above. On the basis that there was no reasonable excuse for the failure to file the Schedule of Costs in the first instance, the Court assessed the Solicitors’ costs on a broad-brush basis at £12,000.00, plus Counsel’s fees of £10,960.00, which the Court considered to be reasonable, and the Court fee of £275.00, making an overall total of £23,235.00 for the Claimant’s costs.
The Judge also found that the failure was more serious in a case where the Claimant knew that the Defendants were unrepresented, the First Defendant having appeared in person at the previous hearing, and whilst they had the assistance of a CLIPS barrister on the day of the hearing, this would not be the case when dealing with costs, therefore, the Defendants were put at a disadvantage by the Claimant’s conduct.
Summary
The Rules on Summary Assessment are quite clear, and the potential sanction for failing to provide the necessary information under Para 9.5 to assist the Court is also clear. In this case, whilst it is not specified exactly how much in monetary terms was forfeited by the Claimant’s failure to file the Schedule of Costs in accordance with Para 9.5 (4) (b) as set out above, the Court did take the provisions of Para 9.6 into account and reduced the costs accordingly.
Regardless of whether or not you consider you are likely to recover costs from your opponent(s), you must comply with the provisions of the Practice Direction as set out above. The Court could have taken a draconian approach and potentially disallowed the Claimant’s costs in their entirety. The Rules are there to assist the parties, and the Court, and Court time is incredibly valuable, therefore, it is no surprise that the Claimant’s proposed course of action, to circumvent the provisions of Summary Assessment, which are designed to simplify the costs process where appropriate, and request a Detailed Assessment, which would take up additional Court time and incur additional unnecessary costs, did not find favour with the Court.
How can PIC help?
PIC are costs specialists, and deal with matters from cradle to grave. We can provide advice and assistance on all aspects of costs, plus we can prepare Schedules of Costs in the correct format for Summary Assessment, in addition to Bills of Costs for Detailed Assessment, Costs Budgets, budget negotiations and revisions (Precedent T), attend CCMCs, deal with costs negotiations, and prepare for and attend upon, Detailed Assessment hearings.
Jackie Woods, Legal Costs Consultant
06.06.2024