AB v Michelle Spicer

On an indemnity costs assessment, the court must disallow costs that were unreasonably incurred or unreasonable in amount. Any doubt is resolved in favour of the receiving party. The court must consider all the circumstances, including the parties’ conduct, the value and importance of the matter, complexity, skill and responsibility, time spent, location of the work and any approved or agreed budget. Guideline hourly rates are not automatically recoverable at higher levels. A clear and compelling justification is required for charging rates above the applicable guideline rate.

The judgment assessed the Claimant’s costs following a suspended committal order made against the Defendant for breach of an earlier order. The court had previously ordered indemnity costs but directed that an updated composite costs statement be served and determined on written submissions.

The Defendant challenged the hourly rates and several categories of work as excessive or unreasonable. The central issues were the appropriate guideline hourly-rate band and the reasonableness of the individual items claimed.

1. Indemnity basis. Under CPR44.3 and CPR44.4, the Claimant’s costs were to be assessed on the indemnity basis. Costs unreasonably incurred or unreasonable in amount were disallowed, with any doubt resolved in favour of the Claimant. The court considered all the circumstances, including the parties’ conduct, the importance and complexity of the matter, the work required, time spent and the applicable guideline rates.
2. Hourly rates. Following the approach stated by Males LJ in Samsung Electronics v LG Display [2022] EWCA Civ 466, a clear and compelling justification was required for rates exceeding the guideline rate. No such justification had been provided. The recoverable inter partes costs were therefore limited to the National 2 guideline-rate band. Where the amount actually charged was below the guideline rate, the lower figure was used in accordance with the indemnity principle.
3. Individual items. Personal attendances, attendances on the Defendant, undisputed work, counsel’s fees, court fees and process-server fees were allowed in whole or substantially as claimed. The court reduced the time claimed for attendances on others, allowed only the Grade B fee earner at hearings, reduced witness-statement work from 25.5 hours to 18 hours, allowed the incident log separately, and reduced bundle preparation to three hours shared between the two fee earners.
4. Assessment. The net costs allowed were £28,839.80. Assuming VAT at 20 per cent except on court fees, the total allowed was £34,454.56.