Manchester Messenger – June 2023
In the June 2023 edition of The Messenger; the monthly magazine of The Manchester Law Society, Nick McDonnell and Colin Campbell provide a legal costs update.
After the rash of relief from sanctions cases a decade ago, it is relatively rare to see a reported decision involving costs budgets. However, this month we have K/S Mountain Invest v Ducat Maritime Ltd [2023] EWHC 939 (Comm) in which HHJ Keyser gave the defendant relief under CPR 3.9 where no costs budget had been filed under CPR 3.12. The breach had been serious (14 days late with the budget) and there had been no good reason for the failure, but the justice of the matter required relief to be granted. The application had been prompt, the budgets agreed with exchange being delayed only by one day, and a substantial uncontested budget would otherwise have been wiped out. No doubt the defendant would have been mightily relieved, even though it was ordered to pay the costs!
The Part 36 case this month is Mate v Mate [2023] EWHC 806 (Ch). The judge held that the fact that a claimant’s Part 36 offer had been addressed to the second and third defendants, but not to the first defendant, had not rendered it invalid. In calculating the period of 21 days for acceptance, a judicial pre-reading day was not the first day of trial, and there was nothing unjust in permitting the claimant to recover the CPR 36.17(4) benefits including an additional sum of £57,625.
The difficulties in obtaining hourly expense rates in excess of the Guideline Hourly Ratessince the new GHR were introduced in October 2021, have had further exposure in Manek v 360 Wam Ltd [2023] EWHC 985 (Comm). The successful claimants had been awarded their costs of defeating the defendants’ application to set aside an order permitting the service of “New” proceedings out of the jurisdiction. Their schedule of costs sought £195,107.00 together with additional costs of £14,137.50 in respect of dealing with post-judgment and consequential submissions. The application had raised a large of number of issues and given rise to a very extensive body of supporting documentation, both in the form of witness statements and exhibits. The judge allowed the hours claimed, but refused to uplift the GHR, holding that the justification put forward (complex, substantial, high value litigation) could be made equally in many other jurisdictional challenges involving fraud and in much higher value claims. A bit harsh? Note that the just published CJC Report has recommended “…the test to be applied when considering a departure from the GHR should be clearly stated”. Watch this space!
Next a salutary lesson about misconduct under CPR 44.11 in detailed assessment proceedings. In Ikin v Shawbrook Bank Ltd [2023] EWHC 1075 (Costs), Senior Costs Judge Gordon-Saker found that the claimants had served bills which had been intentionally misleading in that time had been claimed for work, which was not done, and for which there was nothing that could have led to a reasonable inference that it had been done. The bills had been certified for accuracy, but had the checking been done sufficiently, the solicitors would have known that they contained entries for which there was no basis on the files. The solicitors had acted both improperly and unreasonably, meriting a disallowance of 40% of the assessed bills, with 75% of the defendant’s costs of the assessment to be paid by the claimants on the indemnity basis. Although no finding of dishonesty was made, the likelihood is that the SRA will take a second look from a disciplinary standpoint.
Finally, for an excellent and concise summary of the factors to apply when considering an uplift in the amount of security for costs under CPR 25 (a mere £31,743,883 sought!), see Steenbok Newco 10 Sarl v Formal Holdings Ltd [2023] EWHC 1112 (Comm). The application succeeded in a lesser sum, but the defendant’s costs of making it had a sting in the tail with the judge reducing them by 10% because the hearing could have been “…concluded more rapidly had it been argued more economically”. Never heard that one before!
As always, these are a selection of the principal recent cases which are likely to be of use to practitioners and if any further information is required, please contact either Nick McDonnell or Colin Campbell at Nick.McDonnell@kain-knight.co.uk or Colin.Campbell@kain-knight.co.uk
