Kelly v Hays Plc & Anor

On a costs assessment, the reasonable hourly rate must be determined by identifying the category of solicitor who should have been retained, assessed objectively. The claimant is not confined to the cheapest solicitor, but neither may a court select an expensive category without adequate reasons. Guideline rates are a starting point only. The court must consider the relevant factors, including the importance and complexity of the matter, geography, specialist advice, and the client’s knowledge of likely fees. Any enhancement should reflect the work required and may properly differ between fee-earner grades. An appellate court reviewing a costs discretion must avoid substituting its own view, but may intervene where the decision is inadequately reasoned or plainly unsupported by the material.

The claimant brought personal injury proceedings arising from her long employment with the defendants. The claim was settled by a Tomlin Order under which the defendants agreed to pay her costs, subject to detailed assessment.

Master Campbell determined a preliminary issue concerning reasonable hourly rates. He rejected the use of a City firm as objectively unreasonable, but selected central London guideline rates and uplifted them by 20 per cent. The defendants appealed, alleging that the Master had asked the wrong question, failed to give adequate reasons, and applied an impermissible uplift.

The central issues were the correct basis for selecting the solicitor category and the appropriate recoverable hourly rates.

1. Appeal and review. The appeal was by way of review, not rehearing. The court could intervene where the decision was plainly wrong, materially defective in reasoning, inadequately reasoned, or affected by serious procedural irregularity. The Master nevertheless had a wide costs discretion, and the appellate court should not substitute its own assessment without proper grounds.
2. Correct question. The relevant question was the category of solicitor who should have been retained when assessing the reasonable amount of costs. The claimant was not required to instruct the cheapest solicitor. The court rejected the suggestion that the Master faced a binary choice between City rates and national-firm rates.
3. Error in the Master’s decision. The Master did not explain why central London rates were selected or why the defendants’ primary submission that national band one rates should be used was rejected. The absence of reasons prevented the appellate court from being satisfied that the correct question had been asked and that the conclusion was justified.
4. Factors and guideline rates. Applying Wraith v Sheffield Forgemasters Limited and CPR 44.43, the relevant factors included the matter’s importance, its legal and factual complexity, the parties’ locations, dissatisfaction with previous solicitors, advice received, the prospective solicitors’ location, and the client’s knowledge of likely fees. The guidelines were only a starting point and did not determine the reasonable rate.
5. Determination. The claim was sufficiently straightforward that neither a City nor central London firm was justified. National band one was the appropriate category. Some enhancement was warranted for the limitation issue, prospective damages and surveillance evidence, but enhancement was less appropriate for lower grades. The reasonable rates were £295 for grade A, £230 for grade B, £175 for grade C and £120 for grade D. The parties could agree the remaining costs, failing which the matter would be remitted to the Senior Court Costs Office.

The judgment records an appeal from Master Campbell’s determination in the Senior Court Costs Office on 27 August 2014. This court reviewed the decision, substituted its own determination of the reasonable hourly rates, and provided for remission to the Senior Court Costs Office if the parties could not agree the overall costs.