COSTS – SOLICITORS HOURLY FEES – WHAT IS REASONABLY INCURRED?

Catherine Duffy

JXA (By his mother and litigation friend VLA) v Kettering General Hospital NHS Foundation Trust [2018] EWHC 1747 (QB) 9th July 2018

Goss J gave judgement as follows:-

Although a master had erred in failing to decide whether a claimant had been reasonable to instruct a specific solicitor in a clinical negligence case, the appropriate hourly rates determined by the master within the costs assessment fell within the reasonable band of decisions open to him

Appeal

The claimant appealed against a costs decision in relation to a damages claim brought against the defendant hospital trust for clinical negligence.

The claimant had suffered quadriplegic cerebral palsy as a result of his birth in 2010. In 2013 the claimant’s mother selected a senior partner (M) in a City of London law firm to bring the claim.

Liability was settled and damages were expected to be in the region of £20 million.

When assessing costs the master determined the appropriate hourly rate for the claimant’s solicitors follows:-

(i) £350 – Grade A partner;

(ii) £200 – Grade C assistant solicitor;

(iii) £150 – Grade D trainee/paralegal.

The rates contended for had been:-

(i) £380 to 31/3/13 , then rising at £10 p.a up to £420 – Grade A partner;

(ii) £270 from 1/1/17 – Grade C assistant solicitor;

(iii) £150 to 31/3/13 , then rising at £10 p.a up to £190– Grade D trainee/paralegal.

The issue was whether the hourly rate cost was reasonably incurred and reasonable in amount, which had to be objectively reasonable in the circumstances.

Held:-

The law – Determining whether costs had been “reasonably incurred” was a two-stage process:-

(i) First the court had to determine, having regard to all relevant considerations, whether the successful party had acted reasonably in employing the solicitors instructed.

(ii) Second the court had to determine whether the costs charged were reasonable compared with the broad average of similar firms in the same area.

The availability of less expensive solicitors elsewhere may be relevant to the first question but it   had no relevance to the second question.

Was it reasonable to instruct M?

This question was not directly addressed by the master as it should have been. The master decided whether the choice of M was objectively reasonable in the circumstances. The master implied that it was an unreasonable choice, indicating that he took a theoretical Outer London locality, he went onto say that he could “take into account comparable firms doing comparable work” and that would account for firms around the country, including the location of M’s firm.

Reasonableness of hourly rates

Pursuant to CPR 44.3 any doubt as to the reasonableness of rates had to be resolved in favour of the defendant. It was not entirely clear how the master reached his decisions as to the appropriate hourly rates, but he appeared on the evidence before him, and applying his knowledge of the hourly rates charged and allowed in cases of such seriousness, carried out by firms around the country, including London, to have concluded that the rates claimed were too high. The master allowed rates that accorded with his knowledge and experience, he recognised the gravity and complexity of the case and allowed rates significantly higher than the rates for summary assessment.

Conclusion

The master erred in not directly answering the first question, “was it reasonable to instruct M?” His judgement lacked clarity as to why he considered Outer London rates to be appropriate, but he did take account of City rates. The master also recognised the complexity of the litigation and that was reflected in his determination of the rates.

The rates determined by the master fell within the reasonable band of decisions open to him, notwithstanding his failure to answer the first question in the two stage process.

Accordingly although the claimant technically succeeded in relation to the first ground of appeal, the appeal outcome was that the hourly rates found by the master were the appropriate rates for the claim.

No order as to costs.

Appeal dismissed.