£1m costs to fight strike-out application “will be found disproportionate”

“Eye-watering” costs of more than £1m to defeat a strike-out application will be found disproportionate or unreasonable, a High Court judge has ruled in ordering an interim payment on account of costs.

In BTI 2014 LLC v Pricewaterhousecoopers LLP and Anor [2019] EWHC 3219 (Ch), Mr Justice Fancourt was dealing with the costs after dismissing PwC’s application to strike out the claim form and for summary judgment.

The claim is that up to €443m (£380m) was wrongly paid out in dividends as a result of PwC’s allegedly negligent audits of the second defendant company in 2007 and 2008.

The judge rejected PwC’s submission that costs should be in the case, saying that while the accountancy firm may succeed at trial, “that is not a good reason to refuse BTI its costs of a substantial interlocutory application on which it has wholly succeeded”.

BTI sought an interim payment on account of the costs of £700,000. Its costs of the application were, the judge said, “the eye-watering sum of £1,015,722”, and a further £320,000 for an earlier strike-out application that PwC made in 2015 but was never heard because the parties agreed to stay it.

PwC did not dispute that it should make an interim payment, but the judge said it criticised, in particular, the “apparently substantial duplication in the number of fee-earners working on the case at BTI’s solicitors; the inordinate length of the evidence adduced on the application by BTI; the unnecessary use of two silks on the hearing and, in general terms, the disproportionate amount of fees in comparison with the issues raised by the application. PwC’s total costs, in comparison, were £276,385”.

Fancourt J said that, although the application raised complex matters of fact and law, he was satisfied that – even in the context of litigation about very large sums of money – “some of the costs incurred will be held to be disproportionate and/or unreasonable in amount or unreasonably incurred”.

It was impossible, with a short summary of the costs incurred, to make an accurate assessment, so the judge said he was taking “a conservative approach in the absence of any evidence or detailed explanation of why such large sums were incurred (in contradistinction to mere assertion that this was major commercial litigation with large sums at stake and a substantial matter)”.

He ordered PwC to pay £350,000 on account of costs.

Anneliese Day QC, Andrew Thompson QC and Ciaran Keller (instructed by Debevoise and Plimpton) for the claimant; Simon Salzedo QC, Tony Singla and Zahra Al-Rikabi (instructed by Reed Smith) for the first defendant.

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Costs News
Published date
27 Nov 2019

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