16 January 2015Print This Post

Proportionality rule bites as High Court slashes costs claim by more than half

Costs: judge takes knife to partner time

Costs: judge takes knife to partner time

The High Court has more than halved a successful party’s costs on summary assessment on the basis of proportionality, with the fees charged by the partner running the case hit particularly hard.

Mr Justice Akenhead’s ruling in Savoye and Savoye Ltd v Spicers Ltd [2015] EWHC 33 (TCC) is one of the clearest applications of the new proportionality rule to date.

Savoye sought costs of £201,790 after successfully enforcing an adjudicator’s decision worth nearly £900,000 in its favour. The only issue at trial revolved around the proper meaning of a term in the Housing Grants, Construction and Regeneration Act 1996.

There were in total four hearings – three of which concerned a claimant application for summary judgment – lasting seven hours in total. The main elements of the costs claim by Savoye’s solicitors, Reed Smith, were 111 hours of partner time at £520, 223 hours of associate time at £370, and counsel’s fees of £27,800.

Deciding that while useful to others, the case could not be considered a test case, the judge said the court proceedings involved a re-run of the same arguments and evidence as in the arbitration, “albeit I do accept that the later proceedings went into somewhat greater detail and in some respects had a different emphasis”.

He continued: “This context would lead to the inference that the costs of the court proceedings could have been relatively modest, taking into account that the legal team knew exactly what the issue was about and what evidence needed to be deployed in the court proceedings to counter the likely jurisdictional challenge.

“In the light of the foregoing, I am led to the inevitable conclusion that a costs bill of over £200,000, albeit in relation to a claim worth just under £900,000, must be considered to be disproportionate.”

Akenhead J said that if only the headline costs figure had been available, he would have been minded to rule that half of the costs claimed as proportionate.

But on a summary assessment he took into account other factors “which should reduce the figure claimed very substantially in any event”.

He said it was clear that the partner did “much more than simply supervise a competent associate and liaise with the client; he got involved in drafting pleadings and witness statements. It cannot be reasonable or proportionate for Spicers to have to pay anything like 111 hours’ worth of partner’s time at partners’ rates. I would have thought that something like 20 hours was justifiable at that rate”.

The total amount of solicitors’ time equated to about nine weeks. “It is not reasonable or proportionate for anything like that to be payable by Spicers, particularly when the basic issue had already been ventilated and investigated in the adjudication,” he said.

The judge continued: “Just on time alone, I would have assessed as reasonable and proportionate a total of about half of this. For instance, the spending of up to about 150 hours on witness statement evidence seems to be excessive (particularly, when one looks at the relatively short witness statements and the fact that the ground covered was not new); it is not reasonable to expect Spicers to have to pay for the attendance at all four hearings of both partner and associate solicitor; the spending of some 43 hours preparing the claim form, particulars of claim, summary judgment application and witness evidence can properly be said not to be reasonable and proportionate particularly for experienced construction lawyers who seek to justify large hourly rates.”

He also thought counsel Anneliese Day QC’s £12,000 brief fee for the final trial, “given her extensive involvement beforehand”, could well be considered as too high for it to be reasonable and proportionate for the defendant to have to pay, and said half would be reasonable.

Akenhead J reduced the recoverable partner time to 20 hours, the associate time to 160 hours and counsel’s fees to £18,800, with the total coming in at £96,465.

By Neil Rose


One Response to “Proportionality rule bites as High Court slashes costs claim by more than half”

  1. Will arbitrators follow the guidance of Mr Justice Akenhead? There’s always s.65 AA 1996 but one must apply that in advance!

  2. Geoffrey Beresford Hartwell on January 16th, 2015 at 12:44 pm

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