Ohpen Operations Ltd v Invesco Fund Managers Ltd
O’Farrell J described the lack of change to hourly rates since 2010 as “unsatisfactory” when summarily assessing costs in an application in the case of Ohpen Operations Ltd v Invesco Fund Managers Ltd [2019] EWHC 2504 (TCC). An increase to Senior Courts Costs Office guideline rates would be welcomed by many but will they undergo revision any time soon? After all, they have remained stagnant for almost 10 years now, and not risen with inflation. This has meant that the relevance and the bearing guideline rates have on costs assessments is diminishing allowing for greater inconsistencies in outcomes.
In an era where streamlining court processes is pertinent it seems strange that a change to rates has been overlooked. A review did take place in 2014 but no increase to rates resulted. Such low guideline rates makes a costs representative’s job more varied but can arguably lead to some quite unfair results, particularly when a fee earner’s work is complex and specialist, and more so when a matter is conducted outside of London and the rate charged is modest.
The receiving party in the Ohpen assessment advanced a costs schedule of £52,152.48 following success in obtaining a Stay. Although the paying party accepted that no issue of proportionality arose they did submit that the schedule was unreasonably high and/or unreasonably incurred in respect of hourly rates when compared to guideline rates and time spent on documents. Hourly rates claimed by the Defendant for a Grade A were £786, a considerable step up from the current guideline City of London rate of £409. The Court noted this rate as high, but as Grade A time was limited and an appropriate level of Grade D input was acknowledged, the rate charged was allowed. Reductions were primarily applied to Grade B work at £655 per hour and C time at approximately £436 per hour on the basis that work done on documents by these grades of fee earner was excessive. The overall result was a healthy recovery of £46,000.
Entitlement to the market hourly rate was justified by the Judge with reference to the technical nature of the dispute and the engagement of solicitors with appropriate skill and expertise for their area of practice. O’Farrell J explained:
“It may be reasonable for a party to pay higher rates to secure the necessary level of legal expertise, if that ensures appropriate direction in a case, including settlement strategy, with the effect of avoiding wasted costs and providing overall value”.
The Judge indicated it was unhelpful that rates were based on those fixed in 2010 and went so far as to say “updated guidelines would be very welcome”.
Usefully, Dr Mark Friston has published the increase in Consumer Price Index since 2010 and if this were to be applied to the current SCCO guideline rates plus a reasonable 12.5% uplift, a City of London Grade A rate would transpose as approximately £553 per hour. Taking the same approach a National Band 2/3 Grade A would be somewhere in the region of £272 per hour. More realistic rates would narrow the scope for difference and help clarify the intention of the courts. It seems that a review to rates is much needed and the acknowledgement by the High Court in this case is a positive step in the right direction.
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