A High Court judge has more than halved a firm’s costs application after ruling the claim was disproportionate.
International firm Reed Smith last month secured a judgment in favour of its client Savoye and Savoye Ltd in a construction work dispute with developers Spicers. The claim was worth almost £900,000.
The firm claimed costs on an indemnity basis of more than £200,000, which included charges for 111 partner hours charged at £520 an hour, 223 associate hours charged at £370 and counsel fees of £27,800.
Spicers, represented by Olswang, argued that the bill was ‘excessive, unreasonable and disproportionate’. Its lawyers said this was not a case for indemnity costs as there was always a genuine area of factual dispute between the parties which could only be resolved by a trial rather than a summary judgment application.
Mr Justice Akenhead, sitting in the Technology and Construction Court, said it was not reasonable to expect Spicers to have to pay for the attendance at all four hearings of both partner and associate solicitor.
He noted that the costs bill amounted to 364 hours of solicitors’ time, which equated to eight or nine weeks of time. His assessment was that half that time was reasonable and proportionate.
The judge said the spending of 43 hours preparing the claim form, particulars of claim, summary judgment application and witness evidence was neither reasonable nor proportionate ‘particularly for experienced construction lawyers who seek to justify large hourly rates'.
He added: ‘I am led to the inevitable conclusion that a costs bill of over £200,000, albeit in relation to a claim worth just under £900,000, must be considered to be disproportionate.'
‘Savoye was dealing with an issue in the court proceedings which it had addressed (at its own cost) in detail in the adjudication; it was deploying the same solicitors and principal factual witness as it had deployed in the adjudication. The issues raised in the court proceedings were not complex, as is at least partly evidenced by the fact that the overall hearings ran to less than two court days.’
The costs payable were reduced to £96,465, taking into account 20 hours of partners' time, 160 hours of associates' time and £18,800 counsel fees.
The ruling will act as another reminder to litigants of the court’s new approach to proportionality, which was a central theme of the Jackson reforms and subsequent new Civil Procedure Rules.
Reed Smith declined to comment.