Are Costs Judges bound be hourly rate guidelines or can they round up or down at their discretion ?

Are Costs Judges bound be hourly rate guidelines or can they round up or down at their discretion ?

Notwithstanding the Claimant’s selection of a London City Solicitor was found to be reasonable, the hourly rates claimed were reduced significantly.

 

JXA v Kettering General Hospital NHS Foundation Trust [2018] EWHC 1747 (QB) (9 July 2018)

The High Court rejected an Appeal against a ruling that hourly rates of the Claimant’s Solicitors in a high value clinical negligence case were too high, despite accepting that the question of reasonableness of the choice of Solicitors was not fully addressed and that it was not entirely clear how the decision as to the appropriate hourly rates had been reached.

By way of background the Claimant had been seriously injured at birth. The Claimant’s mother and Litigation Friend selected Mr Paul McNeil a senior partner in Fieldfisher LLP, based in the City of London, as a result of a search on the internet and by reason of Mr McNeil’s highly regarded expertise in clinical negligence claims. There was in due course agreement that the Defendant would accept 90% liability. The question of damages cannot be resolved for many years. However, it was agreed that the claim had a value of, potentially, £20 million.

The Appeal related to the issue whether the hourly rates claimed by the Claimant’s Solicitors were reasonably incurred and reasonable in amount as they must be objectively reasonable in the circumstances of the particular case.

The rates contended for had been: £380 to 31 March 2013 then rising at the rate of £10 pa every 31 March up to £420 to 16 November for a Grade A partner; £150 rising at £10 pa to £190 over the same period for a Grade D trainee/paralegal and £270 for a Grade C solicitor from 1 January 2017.

At Assessment Master Nagalingam allowed £350 for a grade A partner; £200 for a grade C assistant solicitor and £150 for a grade D trainee/paralegal.

The grounds of Appeal were that the Master assessing the costs:

  1. Applied the wrong test and failed to have regard to any or any proper reasonable interest of the Claimant given the importance of the litigation to him.
  2. Failed to take into account or give sufficient weight to the relevant considerations as set out in the Bill of Costs and the replies and the submissions made orally at the hearing on 16 November 2017.
  3. Gave undue weight to less relevant factors including the theoretical availability of alternative and unnamed solicitors across a number of geographic locations, in particular outer London, Nottingham, Birmingham and Manchester.
  4. Failed to properly consider the effect of inflation on the claimed hourly rates between year ending 31 March 2013 and 16 November 2017.

The Claimant argued that Master Nagalingam did not answer the question as to whether it was reasonable to instruct Mr McNeil and so his decision as to whether the charging rate was reasonable was flawed.

Mr Justice Goss, who sat with Costs Judge Master James, held that Master Nagalingam did not “directly address”, as he should have done, the question of whether the Claimant acted reasonably in employing the solicitors who had been instructed. But Mr Justice Goss continued: However, that conclusion is not determinative of the appeal. The question then has to be addressed as to whether, in the final analysis, the hourly rates claimed by Mr McNeil were reasonable and that the Master was wrong not to allow them and to set the rates that he did.”

It was noted by the Court that the Master had no evidence as to what rates other firms engaged in this type of work charged or the level of expertise of such firms”. Further,  Mr Justice Goss said that “It is not entirely clear how the Master reached his decisions as to the appropriate hourly rate but he appears… to concluded that the claimed rates were too high and allowed rates that accorded with his knowledge and experience.”

Mr Justice Goss continued: “I find that the Master did err in not directly answering the…  question in relation to the reasonableness of the Claimant’s decision to instruct Mr McNeil and Fieldfisher LLP. Further, his judgment lacked clarity as to why he considered Outer London rates to be appropriate but, nevertheless, he did take account of City rates. He also clearly recognised the complexity of the litigation and reflected that in determining the rates that he did.”

However, Mr Justice Goss concluded: “I am satisfied on all relevant facts and applying appropriate considerations that the rates determined by the Master fell within the reasonable band of decisions open to him, notwithstanding his failure to answer clearly the first question in the required two stage process.”

He ruled that “although the Claimant technically succeeds in relation to the first ground of appeal, the outcome of the appeal is that the hourly rates found by the Master are, nevertheless, the appropriate rates for this claim and the appeal, in its result, is dismissed.” In other words, the rationale of the lower Court is unclear but the ultimate decision will be unchanged. Appeal rejected.

 

Tanya Bland

Law Costing Ltd

18th July 2018