A winning party’s interim costs have been slashed after the Court of Appeal found its lawyers' breakdown of charges to be 'inadequate'. 

The successful appellant in Petrofac Ltd (Costs), Re had claimed a total of £6.23 million from the other party in a dispute over company restructuring plans. Around £3.75m (60%) was sought as an interim payment.

The initial breakdown of costs had simply listed the total amounts of billed by solicitors Mayer Brown as well as counsel fees and costs claimed by financial advisers Alvarez & Marsal. The paying party objected on the basis this was not a proper explanation or particularisation of the fees claimed and demanded a detailed schedule of costs.

Appeal judges Lord Justice Snowden, Lord Justice Zacaroli and Sir Christopher Lloyd said that Mayer Brown then served two tables summarising invoices, along with copies of those invoices. But no further detail was given breaking down the firm’s profit costs, with the majority of the invoices simply referring to the provision of ‘professional services'. Where charging rates were provided, the highest was £1,096 per hour.

The paying party said the total costs were ‘excessive and wholly disproportionate’ for litigation that involved only eight days in court, including the appeal. The information provided to make a judgement on costs was said to be ‘wholly inadequate’.

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The firm said significantly higher figures than the guideline rates were appropriate for substantial and complex litigation involving factors such as high value, urgency, importance, or an international element. But the judges said this submission did not explain how those factors applied to Mayer Brown’s work.

They rejected the argument that the litigation costs claimed were reasonable when compared to what the other side had spent on legal fees. The possibility that a paying party may have paid its own lawyers and advisers disproportionately high fees does not make the fees claimed by a receiving party reasonable and proportionate,’ they added.

Information provided to explain the costs was deemed to be ‘inadequate’ for what was being claimed. ‘No effort’ had been made to break down how Mayer Brown's costs had been incurred and the firm had chosen not to provide a complete set of non-privileged logs from its timekeeping system which would have shown what fee earners were working on.

Interim costs of £2m were ordered to reflect continued uncertainty about what the final bill should be.