Voltaire Capital Holdings Limited & Ors v Eric Watson & Ors

A disclosure guidance hearing will ordinarily attract costs in the case under Practice Direction 57AD. The court may depart from that default where the application, although labelled as disclosure guidance, has been conducted as a heavily contested disclosure application and one party has achieved substantially greater success. The assessment should consider the relative importance and duration of the issues, the practical effect of the guidance given, and the extent of each party’s success. Guideline hourly rates are a starting point rather than a cap, but substantial and complex litigation does not alone justify rates materially above them. A summary assessment may also reduce costs to reflect limited success and unnecessary duplication of legal representation.

The judgment concerned the Claimants’ application for the costs of a disclosure guidance hearing sought by the Second Defendant under paragraph 11 of Practice Direction 57AD. The hearing addressed disputed search terms, custodians, and disclosure concerning costs said to have been incurred in funding Deloitte’s investigations. The court had given guidance on the disputed issues and subsequently dealt with costs on paper.

The central questions were whether the ordinary costs rule applied, whether the conduct and outcome of the hearing justified a different order, and what sum should be summarily assessed.

1. The ordinary position under paragraph 11.5 of Practice Direction 57AD is that the costs of a disclosure guidance application are costs in the case. That reflects the intended informal and cooperative nature of the procedure.

2. The court may depart from that position where the application has in substance been conducted as a heavily contested disclosure application. The relevant circumstances included the use of leading and junior counsel, a substantial hearing bundle, extensive skeleton arguments, and a hearing exceeding the ordinary time envisaged for guidance. The reasoning in London & Quadrant Housing Trust & Ors v WPHV Ltd & Ors [2024] EWHC 1122 (TCC) supported that distinction.

3. The Claimants were substantially more successful. Most hearing time concerned issues on which they succeeded, the searches directed generated significantly fewer documents than those sought, and the Second Defendant’s success was narrow. The court rejected the contention that delay by the Claimants caused the application or that earlier hit counts would materially have changed the Second Defendant’s position.

4. The Second Defendant was therefore ordered to pay the Claimants’ costs, summarily assessed. The claimed fee-earner costs were reduced because the rates exceeded guideline rates and preparation time was excessive. Guideline rates were treated as a starting point, not a cap. Counsel’s fees were reduced because leading counsel was not necessary. A further 10% reduction reflected the Second Defendant’s limited success.

5. The final sum payable was £63,267.00.

First-instance decision. The application was determined on paper following an earlier disclosure guidance hearing.