Hughes Fowler Carruthers Ltd v Jacky Gubbay

On a summary assessment of inter partes costs on the standard basis, the court must undertake its own critical assessment, even where the paying party makes no submissions. Doubt about proportionality or reasonableness is resolved in favour of the paying party. Costs reasonably incurred between solicitor and client may nevertheless be irrecoverable between opposing parties. VAT is excluded where the receiving party can recover it as input tax. Hourly rates above guideline rates require a clear and compelling justification. Duplication, client-side work, unnecessary document work and unsupported disbursements may be disallowed.

The claimant sought summary assessment of costs payable by the defendant under an order made on 4 May 2023. The schedule was prepared on form N260. The claimant’s solicitor-and-client costs had previously been assessed on the indemnity basis under Civil Procedure Rules 1998 CPR 46.9(1). The present assessment concerned costs recoverable from the defendant on the standard basis under CPR 44.3.

The defendant made no submissions on the schedule. The central issues were the court’s duty to assess the costs independently, the applicable hourly rates, recoverability of duplicated and client-side work, treatment of VAT, and the recoverability of claimed disbursements.

1. Standard-basis assessment. The court must undertake its own critical assessment under CPR 44.3. It is not confined to objections made by the paying party. Any doubt about whether claimed costs are proportionate and reasonable must be exercised in favour of the paying party.
2. Hourly rates. Applying the Court of Appeal’s guidance in Samsung Electronics Co Ltd v LG Display Co Ltd [2022] EWCA Civ 466, rates above the 2021 guideline rates should be allowed only where there is a clear and compelling justification. The rate claimed for Mr Gibson was reduced from £325 to £280. The other solicitors’ rates were below the applicable National 1 guideline rates.
3. Work claimed. Duplicated attendance, most time recorded as attendance on others, duplicated or excessive document time, and research and file-review work were not recoverable on the standard basis absent particular justification. Only attendance by one solicitor at the hearing and preparation by one solicitor of the statement of costs were allowed from the specified document-schedule entries.
4. VAT and disbursements. VAT was disallowed because the claimant, as a substantial VAT-registered firm, could recover it as input tax and it therefore represented no real cost. The claimant’s own work in producing the Scott Schedule was not recoverable as an additional inter partes disbursement. Office copy entries were disallowed as unnecessary. Court fees alone remained recoverable as disbursements.
5. The costs payable by the defendant under paragraph 1 of the order of 4 May 2023 were summarily assessed at £19,563.49.