Cost News

Various Claimants v News Group Newspapers Ltd [2023] EWHC 827 (SCCO) and Manek & Ors v 360 One WAM Ltd & Ors (Re Consequentials) [2023] EWHC 985 (Comm)

Lindsay Woolford

As has been well documented, there have been a number of recent decisions concerning the issue of Guideline Hourly Rates and the application of the same. Per the case of Samsung Electronics Co Ltd –v- LG Display Co Ltd [2022] EWCA Civ 466 the Court of Appeal made it clear that even in very heavy Commercial work, a party must provide “clear and compelling justification to depart upwards from London 1 Guideline Hourly Rates as those rates “already assume that the litigation in question qualifies as “very heavy commercial work.”

We have seen the application of Guideline Hourly Rates per the above decision in the recent cases of Athena Capital Fund SICAV-FIS SCA & Ors –v- Secretariat of State for the Holy See (Costs) [2022] EWCA Civ 1061 and highlight the following comments that were made when Guideline Hourly Rates were also awarded: It may be worth emphasising one aspect. 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 In part no doubt this was because they were so out of date.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.” (MRN’s commentary specific to both of these cases can be found here.)

Further, in summarily assessing the costs in Rushbrooke UK Ltd –v- 4 Designs Concept Ltd [2022] EWHC 1416 (Ch) a matter heard in the Chancery Division of the High Court, the Hourly Rates were also reduced to Guidelines and in doing so the following comments were made: “13. In my judgment, both criticisms of the respondent’s costs schedules by the applicant have some force. The new costs guideline hourly rates came into force in October 2021. They are of course merely guidelines, but they represent a consensus view of what average work should cost in particular areas of the country (so taking into account regional variations) and the experience and expertise of the relevant fee-earner. I see nothing in the present case to suggest that the work done here was above average either in difficulty, or in complexity, or in novelty, or in importance to the client, or in some other way. This was, if I may respectfully say so, typical business work. A figure slightly above the guideline, so to say, within touching distance of it, would not be too high.”

Again, more recently in the case of Manek & Ors –v- 360 One WAM Ltd & Ors (Re Consequentials) [2023] EWHC 985 (Comm) Simon Rainey KC (sitting as a Judge in the High Court) also awarded Guideline Hourly Rates in a large commercial matter, applying the Samsung case referred to above in doing so.

The matter related to an Application served by the Defendants to set aside an Order granting permission to serve out of Jurisdiction, which was dismissed, with the Defendants being Order to pay the Claimants’ costs. The Claimants claimed costs of £195,107.00 (excluding VAT) plus £14,137.50 relating to post-Judgment matters. The Defendants’ costs were claimed at £651,027.98 (excluding VAT). The Hourly Rates sought by the Claimants were between 88% and 117% higher than the Guideline Hourly Rates for Grades A, C and D Fee Earners.

In awarding Guideline Hourly Rates, Simon Rainey KC made the following observations and comments:

“VI. Standing back, the Defendants’ application, while disposed of in a one day hearing due to the economic and efficient way in which it was argued by both Counsel, nevertheless raised a large of number of issues and gave rise to a very extensive body of supporting documentation, both in the form of witness statements and exhibits. I note that the Defendants’ costs were £651,027.98 (exclusive of VAT), with solicitor hours charged at £349,995.00 of which £178,041.00 was work on documents. Just balancing the respective costs levels and while of course taking account of the fact that, as the applicant, the Defendants would have carried a larger proportion of the work in formulating the application, its grounds and supporting materials, than the Claimants as respondent, there is no obvious or glaring disparity in costs levels which would suggest that the Claimants’ costs are per se unreasonable or disproportionate.”

In support of the Hourly Rates claimed, the Claimants stated that the matter was complex and of a substantial high value involving an alleged international fraud and that the costs claimed evidenced the fact that the Claimants had conducted the litigation economically and efficiently and referred to the times claimed by the Defendants in comparison.

In awarding Guideline Hourly Rates, again referring to the decisions in Samsung and Athena Capital, Simon Rainey QC further commented that “XVI. I bear in mind that the updated Guideline Rates are meant to reflect heavy and complex Commercial Court and Chancery Division litigation…XVII. I do not consider that any real justification or special reason has been made out by the Claimants for allowing the recovery of costs from the Defendants at a level so far above the Guideline Rates.”

In the Samsung Electronics Co Ltd –v- LG Display Co Ltd decision, Lord Justice Males therefore made it clear that it is not enough for the Receiving Party to simply point to the nature of the case in support of the Hourly Rates claimed, which as we have seen above, is being applied by the Courts in heavyweight commercial matters. This was clearly a complex commercial matter, however, are all Courts adopting the same approach for all claims?

In Various Claimants –v- News Group Newspapers Ltd [2023] EWHC 827 (SCCO), which is part of the ‘phone hacking litigation’ Costs Judge Rowley stated that the Guideline Hourly Rates should be used as a starting point, and not therefore the finishing point, in determining the applicable Hourly Rates at Assessment.

The Master considered a number of preliminary issues, and, made a number of observations as to the issue of proportionality now being considered at the end of an Assessment albeit that it could have an impact in determining the issue of the Hourly Rates to apply; “42. With the move of the test of proportionality to the end of proceedings as confirmed by the case of West v Stockport NHS Foundation Trust [2019] EWCA Civ 1220, the advocates’ opportunity to roam over the terrain of the substantive case has to some extent been stymied. However, the factors in CPR 44.4 which related to the Lownds test, also apply to the question of the appropriate level of hourly rates. Consequently, submissions on hourly rates now tend to take considerably longer than they did in order for each advocate to describe the nature of the case in addition to any specific points regarding the hourly rates claimed.”

In further consideration of the Hourly Rates, the Master considered the ‘seven pillars of wisdom’ per CPR 44.4(3); when it came to the issue of complexity, at para’s 52 to 54 the Master commented that: “The parties’ submissions on the particular complexity of the matter and the difficulty or novelty of the questions raised reflected the fundamental differences in viewpoint which they hold. Ms Reffin summarised the nature of this litigation after 10 years as being “mature” and which by T4 was now industrialised but without any apparent economy of scale in the repetitive processes involved…The claimants’ advocates describe the litigation as being extremely complex and bespoke…The parties’ advocates were agreed that the group of solicitors bringing these cases on behalf of the claimants were specialists and used that knowledge and skill on behalf of their clients. There was also agreement that the position of lead solicitor attracted greater responsibility.” Comment was also passed at para 56 that “I am well aware that even “Magic Circle” firms vary their hourly rates considerably depending upon their interest in acting for particular clients in particular matters.”

The Defendants also relied on the matter of Samsung to reduce the Hourly Rates claimed; in considering the application of the same, Master Rowley determined that: I also accept the argument that the GHR may be a useful starting point in a detailed assessment as well as in a summary assessment. I do not, however, consider that the guidance given by Males LJ regarding the need for a “clear and compelling justification” for exceeding the GHR extends with any great force to this particular situation. The GHR are provided predominantly to assist judges who do not specialise in costs cases to deal with a summary assessment of costs when faced with the successful party’s summary assessment schedule and competing arguments from the advocates. The relevance to the GHR being a starting point in detailed assessments is no more than a reflection of the scarcity of any other starting point. Expense of time calculations or other potential starting points, as is demonstrated here, are invariably absent. But a starting point by its very name does not suggest it is the finishing point and that is particularly so where the court has the opportunity for the parties to address it in detail in respect of the CPR 44.4 factors.” (para’s 70 to 72.)

However, the above case is distinguishable from the Samsung matter as the Claimants’ Solicitors were not based in a London 1 locality, and therefore, could not have benefited from the use of those Rates.

It therefore remains of vital importance that if you are seeking to recover Hourly Rates in excess of Guidelines, it is not simply enough to state that the matter was a commercial matter and therefore was complex as a result; when submitting claims for costs, consideration should be given to need for information to be claimed therein in support of the Hourly Rates claimed, containing a “clear and compelling justification.”