Costs Brief January 2017

A prestigious industry award, a brand new office, two costs seminars, our first exhibition and a team trip to Bruges - 2016 was a very busy year for Harmans, we're looking forward to seeing what 2017 will bring...

We hope you've had a good start to the year, welcome to the first Costs Brief of 2017. As usual we've covered the latest industry news including a look at one of the most common and strongest arguments used by a paying party on an assessment of costs - the 'local solicitor argument.'

We hope you find this latest instalment of Costs Brief useful. Do let us know if there's something in particular that you'd like us to cover in a future issue.

Many thanks, Harmans Costs

Home or Away?
Partner and Costs Lawyer John Moss looks at one of the most common and possibly one of the strongest arguments deployed by a paying party on an assessment of costs -
the 'local solicitor argument'

This is where a client chooses to instruct a firm of solicitors who are not in his locality. The difficulty arises if this firm of solicitors charges a higher hourly rate than that levied by a local firm.

The paying party will argue that it is not reasonable for them to have to pay this higher hourly rate or consequent travel costs. This argument can be difficult to rebut, however, all is not lost.

The leading authorities here are Truscott v Truscott and Wraith v Sheffield Forgemasters [1998] 1 All ER 532. The appeals in the two cases were heard together.

In the appeal it was held that the correct test is not a simple comparison of the two areas hourly rates but whether or not it was reasonable, in all the circumstances, for the client to instruct the firm that he or she did.

This test is also supported in the case of Carpenter v Mid Kent Healthcare Trust 2 August 2001 and Bensusan v Freedman 20 September 2001, the latter case being decided by the then Senior Costs Judge Peter Hurst.

The appeal identified several factors to be considered in deciding whether or not the instruction of a non local solicitor was reasonable or not:

The importance of the matter to the client.
The legal and factual complexities of the case.
The client’s possible dissatisfaction with previously instructed local solicitors (JM Ryan v Tretol Group Limited – SCCO Appeal 10 of 2002).
Had the client sought or been offered advice as to which solicitors to instruct?

This proposition is also supported in the cases of Patterson v Cape Darlington (2001) SCCO Review No.4 of 2001 and William Higgins v MOD [2010] EWHC 654 (QB) (see below).

The location of the client’s home or place of work and the location of the Court where proceedings were commenced.
The location of instructed solicitor’s offices, their accessibility to the client and their willingness to attend Court on his behalf.
What, if anything, the client would have been expected to know of the fee structures of instructed solicitors compared to local solicitors.

Click here for the argument conclusion.

Sony Communications International and SSH Communications Security Corporation [2016] EWHC 2985 (Pat)
Mr Roger Wyland QC sitting as a Deputy High Court Judge 24/11/2016

In this matter the court, when dealing with a summary assessment of costs, considered whether to depart from the court approved budget of a successful claimant where the claimant had failed to seek a variation of the budget on becoming aware of their overspend and where the claimant sought to combine two phases of trial preparation and Trial to take advantage of a significant underspend on the Trial phase. The Claimant also sought to change agreed apportionments within some phases where the court had approved the total for the phases and the Defendant had agreed the apportionment.

Judgment had been given on the determination of the order for costs following Trial of an action for revocation of the Patent with Part 20 claim for infringement of the Patent.

Costs budgets prepared, exchanged and agreed in writing and approved by the Court by a Costs Management Order 21 December 2015.

Judgment was given with the Patent held to be invalid but would have been infringed by one of its product ranges if it had been valid.

The parties agreed that as the Costs Budgets had been identified as reasonable and proportionate there was no need for a detailed assessment and the Deputy High Court Judge was invited to make a summary assessment of the relevant Costs Budget.

It was accepted by SSH that Sony was the commercial winner and was entitled to costs subject to a deduction in respect of certain issues where they lost.

The judge considered the first stage of the assessment was to assess Sony’s costs against its budget and that it was necessary to look at each phase and to compare that with Sony’s actual expenditure with Sony entitled to the lower of the two figures.

The approach was agreed by the parties however Sony sought to increase the budget figure for some of the phases in respect of which it had exceeded the budget by a relatively large margin. The request was opposed by SSH.

Consideration was given to Henry v New Group Newspapers Ltd from which the Judge took the following propositions.

Greig v Lauchlan & Anor - Ch D 07/12/16

Change of Counsel was not a significant development in an action that warranted the changing of a costs budget; so held Richard Millett QC when considering an application by the Defendant to increase a budget that had been approved in October 2015 shortly before a 10 day trial.

The matter involved a claim of more than £15 million representing the value of shares and assets allegedly held on the Claimant’s behalf.

Budgets had been approved by the court in respect of Counsel’s fees with Leading Counsel’s brief fee allowed at £100,000.00 with £49,000.00 for Junior Counsel; at the time of the approved budget Leading Counsel had not yet been retained. In September 2016, around the time of the exchange of witness statements, there was a change of Junior Counsel for the Defendant however there was no revision of the budget. The newly instructed junior returned the brief citing an increased workload on another Counsel; Leading Counsel was instructed in mid-November 2016; the Defendant notified the Claimant that there had been a change of Counsel and sought to revise the budget. The day before the pre-trial review the Defendant made its application, which was heard as part of the hearing. The Defendant sought to revise the budget for the Trial seeking £172,000.00 for Leading Counsel with £69,000.00 for the junior.

Click here for the conclusion and a word of advice!

Did you know that our award winning team can provide in-house training on areas where you or your team might need some extra input? Time recording and costs recovery are two areas we recently covered but we're open to requests! Or perhaps you'd benefit from a talk on costs budgets? Matt Harman covers any recent law changes giving practical points and references. If that sounds like it would be useful drop us a line.

Statutory Instrument

Our costs seminar at The Law Society in London at the end of last year featured Partners Mathew Knight, Steve Jones and Matthew Harman talking about Part 36 offers, recent case law and budgeting.

We are hoping to host another seminar in the spring, just email vikki@harmanscosts.com to get yourself added to the priority list.

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