A party which instructs a City firm and is entitled to costs on taxation should be prepared to submit on taxation the reasonableness of instructing the City firm over any other firm offering the same services outside the City.To date, there is uncertainty as to the factors to apply in assessing the reasonableness, although one would hope that commercial common sense will prevail.

The burden of proof on this point falls upon the receiving party.There is little doubt that the calculation of solicitors' hourly expense rates on inter partes taxation is based upon the broad average direct costs of the work done by the particular partner, assistant solicitor or trainee in the relevant area in which the work was done.However, what has been far from clear until recently is the relevance of properly conducted surveys which purport to reflect the broad average direct costs for the particular area concerned.In Johnson v Reed Corrugated Cases Ltd [1992] All ER 169, it was held that the Law Society's survey, 'The expense of time', should not be regarded as forming the basis or even the starting point for assessing the average solicitor's average costs.Instead, Evans J placed far greater emphasis on the registrar's general knowledge and experience in assessing expense rates.

He stressed that the registrar's daily experience of the sums being claimed by local firms is an efficient way of giving him the same information as that contained in such surveys, although indirectly.

However, he could see no objection to consultations between local law societies and local registrars taking place.In Re A Company case No.

4081 (unreported, 26 July 1993) the court went a stage further.

In that case, the defendants relied upon the results of the central London law societies survey (1992) to justify their expense rates claimed.Lindsay J upheld the validity and usefulness of the survey and relied upon its results as a guide to what were the average costs of the average solicitor employed in the particular area.In KPMG Peat Marwick McLintock (a firm) v The HLT Group Ltd [1994] 14 March, Auld J sitting with chief taxing master Hurst and T Girling £as assessors, set the relevance of properly conducted surveys onto a higher pedestal than had been done before.Master Ellis, who sat on the review of the initial taxation in the court below, placed emphasis on his own extensive experience as a solicitor and partner in a large City firm.

Although he recognised the survey's relevance and usefulness, he declined to apply its results.

It would seem that he was reluctant to do so because the figures in the survey had not been subject to any rigorous examination by way of contested taxations, and they were considerably higher than those which he had previously allowed on taxation.Auld J, however, sitting on the review, applied the results of the survey and found it to be a valuable aid and important factor to take into account by taxing officers when considering what the appropriate broad average direct costs in a particular area were.He recognised that if taxing officers simply relied upon amounts previously allowed on taxation and applied their own general experience, then the process of taxation would set, or freeze, so called reasonable levels of costs which bear no relation to the general levels of cos ts actually incurred.The above are all High Court authorities, but of significance to the county court are two cases which were heard on 15 November 1994 at the Central London County Court before HHJ Hallgarten QC sitting with two assessors.In Edwin Pierce Brown II v Scott & Thompson, the court was asked to review the decision of the district judge on taxation who had only allowed an expense rate of £80 per hour for a partner practising in the Park Lane area of Central London.The district judge had dismissed the relevance of the results of the survey produced by the central London law societies, which had found the average expense rates for a partner in the City of Westminster area to be £108.74.HHJ Hallgarten QC adopted the dictum of Auld J in KPMG and was concerned that the district judge had set rather than reflected the true broad average direct costs for the area concerned.

Indeed, he found no good reason for not applying the results of the survey and allowed an expense rate of £100 for the partner for work carried out in 1991/92, and an hourly rate of £80 for work carried out in 1989/90.The plaintiff's solicitors, Edmonds Bowen & Co, had claimed £125 and argued that since their premises were situated just off Park Lane, they ought to be have been allowed a higher than average expense rate for the City of Westminster area.

However, although HHJ Hallgarten QC took judicial notice that the firm was located in an expensive area, he declined to apply a higher than average expense rate.

Geography it seems is the crucial factor!In NSP Catalogue Holdings plc v Truebell Marketing plc, Gouldens, acting for the plaintiff, had claimed expense rates for a partner at £140 and £60 for a trainee, for a period covered by the survey - 1992.At the initial taxation and reconsideration the district judge had only allowed £70 for the partner and £50 for the trainee and had refused to take into account the results of the survey.

Gouldens was, in fact, claiming less than the average found in the survey - £171.26 for a partner and £62.04 for a trainee in the City of London area.When the matter came before HHJ Hallgarten QC, he again adopted the dictum of Auld J in KPMG and upheld the rates as claimed by the plaintiff's solicitors.

He disagreed with the district judge's conclusions that reference to the relevance of the survey in Re A Company was obiter dictum, and he declined to distinguish it on its facts.

Further, he had the benefit of the KPMG judgment, which had not been decided at the time of the district judge's reconsideration.It was claimed by the defendant's solicitors that the matter could have been conducted by solicitors outside the City, where lower expense rates prevailed, and therefore the allowable expense rates should be less than those in the City.Auld J, in KPMG, ££found himself able to refer to the survey's results in respect of the City once he was satisfied that it was reasonable for the plaintiffs to have instructed a City firm.In NSP, the judge found that it had been reasonable for the plaintiffs to have instructed a City firm in light of the particular facts and issues involved; it was a case of breach of contract and breach of confidentiality.