High Court rejects attack on costs judge’s decision to dispense with GHR

22 March 2023

The High Court has rejected a wide-ranging attack on a costs judge’s ruling on hourly rates, finding that he was entitled to dispense with the guideline hourly rates (GHR) as the starting point.

Mr Justice Choudhury, sitting with Costs Judge Rowley as assessor, said that, in any case, London 1 rates were not reserved “exclusively” for very heavy commercial or corporate work.

Harlow District Council v Powerrapid Limited (Rev1) [2023] EWHC 586 (KB) followed the claimant Powerrapid’s successful challenge to a compulsory purchase order. Its costs were £489,000 and assessed by Costs Judge Leonard.

The appeal concerned the claimant’s entitlement to costs for various parts of the litigation – none of which succeeded – and the judge’s decision on hourly rates.

Rupert Cohen for the defendant argued that the High Court was in “just as good a position to make a decision on the issue of hourly rates” as the costs judge as neither had heard the substantive case.

Choudhury J disagreed: “Parliament has entrusted costs judges with the specialist, and often difficult, task of assessing what costs and hourly rates are appropriate. In my view, it would be to usurp the role of the costs judge if the appellate court were to consider that it was in an equivalent position to the costs judge and/or had some greater right to interfere with a judgment merely because the judge below (like the appellate court) had not heard the substantive matter.”

Mr Cohen also asserted that the assessment of costs in planning matters was a “rare event” and costs judges would not be familiar what was paid in that market.

“There is no evidence to support those assertions, whether generally or in respect of this particular judge,” the judge said. “But in any event, familiarity with an area of law is not a pre-requisite to reaching decisions on the costs arising in that area…

“The fact that a particular costs judge does not possess, or indeed that costs judges generally do not possess, detailed knowledge or experience of a particular specialist jurisdiction affords no basis, in my view, for treating the judgment below with any less deference than would normally be the case.”

The council argued that Judge Leonard wrongly departed from the guideline hourly rates (GHR), allowing between 8% to 41% higher than the London 2 rates applicable. He said that, in the circumstances, the GHR were not particularly useful, but if he was to use them as a starting point, London 1 rates would be a more useful reference point.

Choudury J held that this conclusion was open to the judge: “In any application of the Guide [to the Summary Assessment of Costs] and the GHR there will be a degree of judgment involved. That is because the category definitions are very broad. London 1 is for ‘very heavy commercial and corporate work by Central London firms’, whereas London 2 is for ‘all other work’. London 2 therefore encompasses all manner of work from the most straightforward and simple of cases to work that is legally highly specialised and difficult.

“Some work fitting the latter description might well be considered by a costs judge to warrant a considerable uplift from the London 2 starting point notwithstanding the fact that it does not amount (in terms of volume or value) to ‘very heavy commercial or corporate’ work. In other words, the GHR do not dictate that London 1 rates are reserved exclusively for very heavy commercial or corporate work.

“The judge in the present case concluded that whilst this was ‘not massively heavyweight litigation’ (which would probably be London 1), it was: ‘certainly not routine’; ‘a very specific sort of work’; and ‘quite difficult and specialised’. In my judgment, there is nothing that precluded the judge from making those judgments in the present case.”

Moreover, the judge’s conclusion was also based on the value of the dispute, the importance of it to the parties and the specific skills required to undertake the work.

Choudhury J also rejected the council’s challenge to Judge Leonard’s findings on complexity; it argued that the case was more straightforward than he concluded.

He said it was clear that the costs judge “gave careful consideration” to this and his conclusions did not exceed “the generous ambit within which reasonable disagreement is possible”.

It was not necessary for the judge to set out in detail, in the course of his oral judgment, “the precise nature of the complexity under each topic in order to justify his conclusion”, Choudhury J went on.

“To require that degree of granularity would be to impose an excessive burden on costs judges and would be likely to encourage parties to bring to costs hearings the same level of detailed evidence and argument that ought to be the province of the underlying substantive dispute.”

He added that complexity was “not necessarily synonymous with being fact heavy” – or the number of counsel instructed to represent a party.

Most of the work was done by the solicitors’ planning team but a little was handled by their litigators and Choudhury J said he had “considerable sympathy” with the argument that the work they did was not difficult and should not be paid the same hourly rates.

“However, I am aware (with the benefit of my learned assessor) that the general position is that rates are assessed for a firm and are not reassessed for different stages of litigation. Furthermore, there is, as the judge in the present case found, no expectation that a litigant should change firms and use a different (cheaper) firm for a smaller and simpler aspect of the work.

“That is not to say that different rates might not be awarded within the same firm in an appropriate case. In this case, however, where the costs sought in respect of the litigation team (£7,233) comprised a very small proportion (1.5%) of the total bill, it is perhaps somewhat unrealistic to expect a costs judge to go through a full-blown ‘seven pillars of wisdom’ analysis in respect of that amount in order to reach a significantly different rate in the course of a concise oral judgment.”

In any case, Judge Leonard did not award the rates without scrutiny or without an eye on proportionality, so although permission to appeal on this was granted, the appeal failed on the merits.

Rupert Cohen (instructed by Trowers & Hamlins) for the appellant/defendant. Jamie Carpenter KC and Nick Grant (instructed by BDB Pitmans) for the respondent/claimant.

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22 Mar 2023

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