Reducing hourly rates for incurred costs is “good reason” to do the same to budgeted costs

Campbell: proportionality test would lead to same outcome

A deputy master who reduced hourly rates for incurred costs on detailed assessment ruled last week that he had “good reason” to do the same for the budgeted costs.

To do otherwise would mean that the claimant would recover an hourly rate as set out in Precedent H for the budgeted stage “at a level that significantly exceeds the figure I consider to be reasonable and proportionate for the pre-budget stage”.

Ruling in RNB v London Borough of Newham [2017] EWHC B15 (Costs), Deputy Master Campbell said: “If (as it is the case) the hourly rate is a mandatory component in Precedent H which is not and cannot be subjected to the rigours of detailed assessment at the CCMC, it makes no sense if it is automatically left untouched when the rates for the incurred work are scrutinised at the ‘conventional’ assessment.

“Such an approach would offend against the guidance given in Harrison at paragraph 44. Indeed, as [counsel for the defendant] points out, it is only on that occasion that a paying party has an opportunity to challenge the rate.”

This was therefore a “good reason” to depart from the costs allowed in the claimant’s last approved budget.”

This situation would be different if the court at the case and costs management hearing (CCMC) approved hourly rates “in terms”, as happened in the cases of Stocker and Group Seven.

Deputy Master Campbell said further binding authority was to be found in Merrix, where Mrs Justice Carr said: “As the notes to CPR 3.18 in the White Book reflect, the fact that hourly rates at the detailed assessment stage may be different to those of the budget may be a good reason for allowing less or more, then the phase totals in the budget.”

The master said that even if he was wrong on this, the same conclusion could be reached by a different route by applying the proportionality test.

In the case before him, the budgeted rates were: partner £355 to £375, senior solicitors £235 to £280, associate £295, solicitors £215 to £225, legal assistants £145 to £150.

On detailed assessment, he reduced the rates to: partners £340, senior solicitors £275, solicitors £180 and legal assistants £135.

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