Parties seeking security for costs “should put in detailed costs budget”

Bronfentrinker: no direction to update budgets prior to hearing

Bronfentrinker: no direction to update budgets prior to hearing

A party seeking an order for security for costs does not have to provide a costs budget in the precise form of Precedent H, but the court should expect a full schedule “showing how the sub-totals under the various specified heads were arrived at, including the rates being charged and hours estimated”, a High Court judge has said.

Mr Justice Roth, sitting as both a Chancery Division judge and president of the Competition Appeal Tribunal, was also critical of elements of the summary budget he was provided with for being disproportionate.

Agents’ Mutual Ltd v Gascoigne Halman Ltd (t/a Gascoigne Halman) [2016] EWHC 2315 (Ch) dealt with an application by the defendant for additional security for costs in an action which concerned the terms of membership of online property portal OnTheMarket.

The claimant had already given security of £500,000, but the defendant sought a further £1m; the claimant was only prepared to pay £500,000. The security related only the issues before the Competition Appeal Tribunal – the overall case remains in the Chancery Division, but the trial of other issues in the High Court have been stayed pending this ruling.

“Accordingly, it is necessary to look with some care at Gascoigne Halman’s estimate of its costs,” said Roth J. This was put at £2.54m, excluding VAT, by the company’s original solicitors, Hill Dickinson, although it covered the costs of the whole action.

The defendant changed solicitors in June and instructed Quinn Emanuel Urquhart & Sullivan. In support of the application for further security, Roth J observed, “Quinn Emanuel have chosen not to update or revise the costs budget produced by their predecessors, but instead served on 1 August 2016 a one-page summary schedule which, as subsequently corrected, shows the total costs estimated at just over £2.8m.

“Moreover, those costs, going forward, relate only to the trial of the competition issues in the tribunal.”

In his witness statement in support of the present application, Boris Bronfentrinker, Quinn Emmanuel’s London head of EU and competition litigation, said the firm had not produced a revised Precedent H because this would be “both unnecessary for the purposes of the security application and premature, given that the tribunal has made no order in respect of the claimant’s application for active costs management”.

Roth J said: “I have to say that, in reaching that view, Mr Bronfentrinker is labouring under a serious misapprehension. Gascoigne Halman is coming to the tribunal seeking an order for payment. The difference between what the claimant has been prepared to offer and the sum which Gascoigne Halman is seeking is very substantial, especially for a domestic start-up company…

“It is noticeable that Moginie James [the defendant in a similar case that is to be tried with this one], in connection with its independent application for security for costs, took the trouble to complete a detailed costs budget following Precedent H, to which a summary schedule of revisions was recently produced.

“By contrast, the one-page schedule served for Gascoigne Halman gives no indication of hourly rates used and time allocated between different fee-earners, although Quinn Emanuel no doubt had this information to produce the schedule of figures…

“In support of its application for security for costs a defendant is, of course, not obliged to present a costs budget in the precise form of Precedent H, but it can be expected, especially in view of the size of the sum being asked for here, to prepare a full schedule showing how the sub-totals under the various specified heads were arrived at, including the rates being charged and hours estimated.”

The judge went on to find that “for a case of this nature, having regard to the issues involved, with a trial over nine court days and a single expert, I consider total costs of £2.8m to be seriously disproportionate, and I have little doubt that they would be significantly reduced on standard assessment”.

While he said it was not appropriate to go into all aspects of the budget, he was critical of the amounts cited by Quinn Emmanuel for disclosure and the pre-trial review, with the former figure nearly three times more than that of the claimant, even though the judge considered that the disclosure burden fell more on the claimant.

He went on to compare it to the claimant’s costs budget of £1.86m. The judge concluded that, on a “rough and ready basis”, it was fair to proceed on the assumption that Gascoigne Halman’s costs on a standard basis would be a little more than the claimant’s budget, leading him to adopt a figure of £1.9m.

Ordering 70% of this figure as security was fair, meaning £1.33m, and the claimant paying an extra £830,000.

Mr Bronfentrinker told Litigation Futures: “We filed our summary updated budget ahead of the hearing. The tribunal was aware that the other side considered we needed to provide a more detailed budget summary, and we were told in writing by the tribunal that the president did not consider that he needed to direct that the parties provide updated budgets prior to the hearing. It was on this basis that we proceeded.

“The president acknowledged at the hearing that there was no obligation on the part of my client to prepare an updated Precedent H. That said, the president decided at the hearing that more detail was needed in order to make a proper assessment of my client’s costs for the purposes of determining the application for security, and in the absence of such detail, ordered a significant sum by way of security for costs in favour of my client on the basis of the other side’s Precedent H.

“The proceedings are now subject to costs management and the budgets going forward for both sides will be assessed in that process.”

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