Cost News

Avi Dolties

Manek & Ors v 360 One WAM Ltd & Ors (Re Consequentials) [2023] EWHC 985 (Comm)

The matter related to an application made by the Defendant to set aside an order granting permission to serve out of the jurisdiction.  The judge dismissed the Defendant’s application and the matter proceeded on to how to deal with costs.  The Claimants’ costs were £209,244.50 (excluding VAT). The Defendants’ costs were sought in the sum of £651,027.98 (excluding VAT). The Defendants were ordered to pay the Claimants’ cost and made various submissions in relation to the amount claimed.

The main submission that appeared to have some force from the Defendant were the hourly rates claimed by the Claimants on the basis that these are far exceeded Guideline Rates for Grades A, C and D fee earners with the Grade A  and C being 88% and 117% higher respectively.

The Court referenced the cases of Samsung Electronics Co Ltd v LG Display Co Ltd [2022] EWCA Civ 466 and Athena Capital Fund SICAV-FIS SCA v Secretariat of State for the Holy See (Costs) [2022] EWCA Civ 1061 that if a rate in excess of the guideline rate is to be charged to the paying party, a clear and compelling justification must be provided.

The Court also referenced the fact that the updated Guideline Rates were meant to reflect heavy and complex Commercial Court and Chancery Division litigation. Once again reference was made to Athena Capital (supra) at [10] where the judge said  “In my experience there has been a view that the previous set of Guideline Hourly Rates (before 2021) were not directed to the heaviest work such as takes place in the Business and Property Courts. In part no doubt this was because they were so out of date. Whatever the position was or was thought to be, it changed in the current set of Guideline Hourly Rates, which were approved by the Master of the Rolls in August 2021. As my Lord pointed out in Samsung v LG, the current set includes a band called “London 1″ which is a set of rates directed expressly to very heavy commercial and corporate work by centrally London based firms. I would add that the London 1 rates band in the current Guideline Hourly Rates is based on evidence from the Business and Property Courts themselves (see the Civil Justice Council’s Final Report of April 2021). Therefore the London 1 band is directly applicable to this case and so a justification for the much higher rates was needed”

Ultimately, the justification put forward by the Claimants was that the case was complex and that the litigation was substantial and of high value, involving an alleged international fraud and that the overall level of costs shows that the Claimants conducted the litigation economically and efficiently in terms of partner time when compared with the Defendants.

The judge dismissed the same and took the view that no real justification or special reason had been made by the Claimants for allowing the recovery of costs from the Defendants at a level so far above the Guideline Rates.

Commentary – Another reminder that despite the level of value and complexity, parties need to provide a clear and compelling justification for rates in excess of the current guideline rates. Generic submissions in respect of value, complexity etc do not suffice. To attract such heavily enhanced rates, the receiving party needs to provide ironclad justification.