The Applicability Of The Guideline Hourly Rates On A Detailed Assessment

HARLOW DISTRICT COUNCIL V POWERRAPID LIMITED (REV1) | GUIDELINE HOURLY RATES | FULL SUMMARY AND DECISION

MR JUSTICE CHOUDHURY:

Introduction

Powerrapid Limited (“the Claimant”) is the owner of a piece of land in Harlow. Harlow District Council (“the Defendant”) made a Compulsory Purchase Order (“CPO”) in respect of the land (“the Order Land”). The Claimant successfully resisted the CPO and sought its costs. On 16 October 2019 the Secretary of State made that award of costs, which was made as an Order of the High Court on 3 March 2020. By an ex-tempore judgment dated 6 October 2021 (“the October 2021 judgment”) and a reserved written judgment dated 7 December 2021 (“the December 2021 judgment”), Costs Judge Leonard (“the Judge”) decided which categories of costs, in principle, fell within the scope of that award and made a preliminary assessment as to the applicable hourly rates. This is the Defendant’s appeal against those two judgments. There are two grounds of appeal, although Ground 1 comprises four sub-grounds, (i) to (iv). Permission to appeal was granted by the Judge in respect of Grounds 1(i) to (iii) but refused in respect of Grounds 1(iv) and 2. The Defendant pursues all grounds of appeal, seeking permission to do so in respect of Grounds 1(iv) and 2.

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Ground 2 – Hourly Rates

66. This Ground concerns the hourly rates awarded by the Judge in the ex-tempore October 2021 judgment. There is a “heavy burden” on parties who seek to challenge such decisions. As stated by Wilson LJ in SCT Finance v Bolton [2002] EWCA Civ 56 (also cited above at [55]):

“2. This is an appeal brought with leave of the single Lord Justice from the county court in relation to costs. As such, it is overcast, from start to finish, by the heavy burden faced by any appellant in establishing that the judge’s decision falls outside the discretion in relation to costs conferred upon him under rule 44.3(1) of the Civil Procedure Rules 1998. For reasons of general policy, namely that it is undesirable for further costs to be incurred in arguing about costs, this court discourages such appeals by interpreting such discretion very widely.”

67. Mr Cohen does not dispute that burden but submits that it is discharged in this case because there is a “clear and sensible complaint” that amounts to more than “add[ing] a little here and knock[ing] off a little there”. Those quotes are taken from the judgment of Buckley J in Mealing McLeod v Common Professional Examination Board [2000] 2 Costs LR 223, the full extract from which reads:

“Broadly speaking a judge will allow an appeal … if satisfied that the decision of the Costs Judge was wrong … that is easy to apply to matters of principle or construction. However, where the appeal includes challenges to the details of the assessment, such as hours allowed in respect of a particular item, the task in hand is one of assessment or judgment, rather than principle. There is no absolute answer. Notwithstanding that the judge to whom the appeal is made may sit with assessors … the appeal is not a re-hearing and, given the nature of the Costs Judge’s task and his expertise, I would usually regard it as undesirable for it to be so … [S]ince the appeal is not a re-hearing I would regard it as inappropriate for the judge on appeal to be drawn into an exercise calculated to add a little here or knock off a little there. If the judge’s attention is drawn to items which, with the advice of his assessors, he feels should in fairness be altered, doubtless he will act. That is a matter for his good judgment. Permission to appeal should not be granted simply to allow yet another trawl through the bill, in the absence of some sensible and significant complaint. If an appeal turns out to be no more than such an exercise the sanction of costs may be used.” (Emphasis added by Mr Justice Choudhury)

68. It is well-established, therefore, that the role of the Appellate Court in this context is a limited one, that it should be slow to interfere with the exercise of judgment by a specialist costs judge, and that it should only do so where the conclusions of the judge below exceed the generous ambit within which reasonable disagreement is possible.

69. Mr Cohen submits that the Court should also have regard to the fact that the Judge did not preside over the substantive matter giving rise to the costs application, which means that this Court is (as asserted in the Defendant’s skeleton argument) in “just as good a position to make a decision on the issue of hourly rates“. However, specialist costs judges almost invariably will not have heard the substantive matter. Notwithstanding that, Parliament has entrusted costs judges with the specialist, and often difficult, task of assessing what costs and hourly rates are appropriate. In my view, it would be to usurp the role of the costs judge if the appellate court were to consider that it was in an equivalent position to the costs judge and/or had some greater right to interfere with a judgment merely because the judge below (like the appellate court) had not heard the substantive matter.

70. Mr Cohen also asserts, by way of introduction to this part of his skeleton argument, that “the assessment of costs in planning matters is, by its nature a rare event” and that “the issues in planning inquiries will not be familiar to costs judges nor will the conventional rates paid across the market“. There is no evidence to support those assertions, whether generally or in respect of this particular Judge. But in any event, familiarity with an area of law is not a pre-requisite to reaching decisions on the costs arising in that area. Costs judges are relied upon to exercise their skill, knowledge and experience of costs generally, irrespective of whether they have knowledge of a particular area. The fact that a particular costs judge does not possess, or indeed that costs judges generally do not possess, detailed knowledge or experience of a particular specialist jurisdiction affords no basis, in my view, for treating the judgment below with any less deference than would normally be the case.

71. There is no dispute between the parties as to factors to be taken into account when assessing the amount of costs. CPR 44.4(3) provides:

“(3) The court will also have regard to –

(a) the conduct of all the parties, including in particular –

(i) conduct before, as well as during, the proceedings; and

(ii) the efforts made, if any, before and during the proceedings in order to try to resolve the dispute;

(b) the amount or value of any money or property involved;

(c) the importance of the matter to all the parties;

(d) the particular complexity of the matter or the difficulty or novelty of the questions raised;

(e) the skill, effort, specialised knowledge and responsibility involved;

(f) the time spent on the case;

(g) the place where and the circumstances in which work or any part of it was done; and

(h) the receiving party’s last approved or agreed budget.”

72. The first seven of these at (a) to (g) are often referred to as the “seven pillars of wisdom”.

73. When applying the seven pillars of wisdom, “the court should not be seen to be endorsing disproportionate and unreasonable costs…”: per Fulford J (as he then was) in Higgs v Camden & Islington Health Authority [2003] 2 Costs LR 211[1]. Mr Cohen takes issue with the Judge’s approach to the fourth pillar, namely the particular complexity of the matter or novelty of the questions raised.

74. Issue is also taken with the application (or non-application) by the Judge of the Guideline Hourly Rates (“GHR”) contained in the 2021 edition of the Guide to the Summary Assessment of Costs (“the Guide”). In the Foreword to the Guide, the Master of the Rolls states:

“I am acutely conscious that questions have again been raised about the Guide itself and the methods and analysis that go into its production. In response, I would emphasise that the Guide is, as it has always been, no more than a guide and a starting point for judges carrying out summary assessment. This Guide is no different to its predecessors in that it continues to offer assistance to Judges. In every case, a proper exercise of judicial discretion has still to be made, after argument on the issues has been heard.”

75. The Master of the Rolls’ emphasis on the Guide being “no more than a guide and a starting point for judges carrying out summary assessment” is important to bear in mind. I note that the Judge in the present case was not conducting a summary assessment, for which the Guide is principally intended, but was identifying, as a preliminary issue in a detailed assessment, the hourly rates that would apply. Mr Cohen drew my attention to paragraph 9 of the Guide, which provides that, “The general principles applying to summary and detailed assessment are the same“. That does not mean, however, that the Guide and, in particular the GHR, are as central to a detailed assessment as they are to a summary assessment. That is made clear by the following paragraphs of the Guide:

“27. Guideline figures for solicitors’ charges are published in Appendix 2 to this Guide, which also contains some explanatory notes. The guideline rates are not scale figures: they are broad approximations only.

28. The guideline figures are intended to provide a starting point for those faced with summary assessment. They may also be a helpful starting point on detailed assessment.

29. In substantial and complex litigation an hourly rate in excess of the guideline figures may be appropriate for grade A, B and C fee earners where other factors, for example the value of the litigation, the level of the complexity, the urgency or importance of the matter, as well as any international element, would justify a significantly higher rate. It is important to note (a) that these are only examples and (b) they are not restricted to high level commercial work, but may apply, for example, to large and complex personal injury work. Further, London 1 is defined in Appendix 2 as ‘very heavy commercial and corporate work by centrally based London firms’. Within that pool of work there will be degrees of complexity and this paragraph will still be relevant.” (Emphasis added)

76. Thus, whilst the GHR are intended to provide a starting point in a summary assessment, they may also be a helpful starting point on detailed assessment. Whether or not they are in fact considered to be such will be a matter for the costs judge having regard to all the circumstances of the case.

The relevant GHR are set out at Appendix 2 to the Guide:

London

78. The core of Mr Cohen’s submission under this Ground is that the Judge wrongly departed from the “London 2” rates above and instead permitted hourly rates that ranged from 8% to 41% higher than those rates for the various fee-earners from BDB Pitmans, a firm that is located in St James’ Park.

79. The bill of costs included claims in respect of fee earners from the Planning Team (in respect of the core work of resisting the CPO) and the Litigation Team (in respect of the work done in registering the costs award as an order of the High Court and instructing a costs lawyer to prepare a formal bill). Mr Cohen challenges the Judge’s decisions as to the hourly rates permitted for each team.

Planning Team

80. As to the Planning Team hourly rates, Mr Cohen attacks the October 2021 judgment on two principal bases: the first is that the Judge was wrong to conclude that the matter was “neither simple or straightforward” and that it required “skill, effort and responsibility“; the second is that the Judge erred in concluding that the Guide was not a useful starting point or that it was useful only to a very limited extent.

81. As to the first of these lines of attack, Mr Cohen submits that the Inspector’s decision, which only ran to 6½ pages, demonstrates the lack of complexity and that the Inquiry was not fact heavy. He also highlights the fact that both sides were only represented by one barrister, that the Inquiry only lasted for two days and that there was limited documentation.

82. The Judge commenced the October 2021 judgment by focusing on the pillars of wisdom. He went through each of first three pillars concluding that there was no issue as to conduct in this case, that the amount at stake was substantial and that the matter involved an important dispute for both parties. He then turned to the fourth pillar, namely complexity, and the transcript shows that he held as follows:

“10. That takes me to the complexity point. It is common ground, as far as I know, that this is not a question of legal complexity. The question is whether this case was factually complex. The Defendant’s point there, as made by Mr. Cohen, is there was a two-day hearing, of which the evidence probably took a little over a day, with a half day site inspection. From that, we have a fairly brief and succinct judgment of which most, he is suggesting, is just background and about three pages is the actual meat of the issues upon which the decision turns. He also refers me to the fact that each party has one Q.C., no junior supporting them, and to the relative brevity of the parties’ (if I may describe them in this way) Statements of Case and written submissions.

11. The point, according to the Defendant, was simply this. Was there a compelling case for a compulsory purchase order? Was it really the last resort? That is a relatively straightforward question, turning on fairly narrowly defined issues, focusing particularly upon whether the Claimant intended to develop the property when demand justified it and just what that demand, at the time, was. The rest is described as more or less background or potential rather than actual issues between the parties.

12. It did occur to me that saying that whether there is a compelling case for a compulsory purchase order is a relatively straightforward question, is like saying that whether a party’s costs are reasonably incurred and reasonable in amount is a relatively straightforward question. It may sound straightforward but, as we know, in practice, it may not be. Sometimes it is simple to decide and sometimes we can spend several days arguing about it and looking at some quite complicated issues when we do so. The decisions are always fact sensitive. As Mr. Grant says, so are compulsory purchase orders. It is all going to depend on the situation.

13. I like Mr Cohen’s creative distinction between potential issues and real issues, but I do not think that it is a valid distinction for present purposes. The Defendant had a number of reasons, very carefully thought through, for believing that it was right to proceed with this compulsory purchase order. They involved, obviously, considerations of planning policy, development potential, demand, the benefits for the local community, valuation and so on. That was the Defendant’s case as put.

14. It seems to me that the Claimant was perfectly entitled to look at all of those reasons critically and to examine them critically and to take issue with such of them as the Claimant thought appropriate. If that was, as it would appear, distilled down to very succinct key points and put in writing, that is appropriate. One might say that that is the legal representatives’ job to do that, to put it to the planning inspector in as clear and succinct a way as possible, though the devil may be, to a certain extent, in the detail. As for having one Q.C. backed by a team of solicitors on each side, that just strikes me as an example of how to do the job properly. It does not seem to me to follow that one should conclude that the work itself is necessarily simple or straightforward. To my mind, it was not.

15. As we are looking at the Q.C.s, purely as background (as we are yet to consider counsel’s fees in this case) I am aware that planning disputes can command very high fees. In my own personal experience of assessing costs, the highest hourly rate ever conceded by a paying party to a Q.C. (as opposed to determined by me) was, in fact, in a rather difficult planning case. That is the nature of the beast: it is going to depend upon the facts of the case. As I say, that is just background, but it gives us a bit of context against which I am judging these hourly rates.

16. So that takes me to the skill, effort, and responsibility. For the reasons I have given, I believe that they are all present. I also bear in mind the expertise of the solicitors, which is carefully explained in the bill of costs and which I see no reason not to accept.”

83. It is clear from that extract from the October 2021 judgment that the Judge gave careful consideration to the Defendant’s arguments in support of the lack of complexity. That the matter was not legally complex was not in dispute: see [10]. As to factual complexity, the Judge noted that the fact that the questions to be answered by the Inquiry were straightforward, did not mean that the task of answering them was: see [12]. At [13] and [14], the Judge took into account that the Defendant had put forward a number of grounds in support of its case. Those grounds, which involved “considerations of planning policy, development potential, demand, the benefits for the local community, valuation and so on“, were not intrinsically straightforward, and the Judge was entitled to conclude that the task of responding to them involved a degree of complexity. The fact that not all costs judges would necessarily share that view or that the appellate court might take a different view is not enough for the Defendant to succeed. The test is whether the Judge’s conclusions exceeded the generous ambit within which reasonable disagreement is possible. In my judgment, it cannot conclusively be said that the Judge’s conclusions fell outside that generous ambit. The nature of the work for the Inquiry was not, as I have said, intrinsically straightforward. Topics such as planning policy, development potential and valuation, those being some of the factors identified by the Judge as relevant to the case before the Inquiry, can involve quite complex and specialist issues. It was not necessary for the Judge to set out in detail, in the course of this oral judgment, the precise nature of the complexity under each topic in order to justify his conclusion. To require that degree of granularity would be to impose an excessive burden on costs judges and would be likely to encourage parties to bring to costs hearings the same level of detailed evidence and argument that ought to be the province of the underlying substantive dispute.

84. Complexity is not necessarily synonymous with being fact heavy. This may have been a relatively short inquiry without voluminous documentation, but that is not to say that it lacked complexity. Similarly, the number of Counsel instructed to represent a party is not necessarily indicative of complexity. In any event, as the Judge noted, the parties in this case were represented by a “QC backed by a team of solicitors” ([14]). The fact that more Counsel were not involved may point more to efficiency (or, as the Judge put it, “doing the job properly”) than a lack of complexity.

85. In relation to the GHR, the Judge held as follows:

“18. Then there is the place in which the work is done, which brings us to the subject of the guideline hourly rates. I start by saying that I appreciate that the 2021 guideline hourly rates have been applied for a very short period, but they are just guideline rates, based upon the best evidence available. I would be unable to accept that insofar as one does treat them as a starting point (and I will come to that) that it would be inappropriate to uplift them in an appropriate case simply because they are new.

19. I think that is exactly what one would do, but the real question for me is to what extent they are a useful starting point in this case, and I think it is, if at all, to a very limited extent. This is not massively heavyweight litigation, the sort of multimillion pound dispute with trials a couple of months long, but it is certainly not routine. It is a very specific sort of work. It is quite difficult and specialised. It gives rise to very specific issues. It requires very specific skills for which parties can expect to pay, I think, quite substantial fees. In its nature, it is work that one might well see undertaken, as in fact we do see in this case, by firms based in the City of London.

20. This ultimately comes down to my applying judgment and experience as best I can. It is useful, I think, to refer to the fact that Costs Judge Rowley in one of those really heavy commercial disputes last year, was awarding hourly rates of something like £750 an hour for Grade A. That gives us a little context. Obviously, that is not this sort of case at all, but I do judge it as a case, as I say, requiring specialist skills and I am not at all surprised to see it being undertaken by lawyers in central London.

21. If I were to accept the guideline rates as a starting point (which, for the reasons I have given, I do not think would be really right) I would find the London 1 rates rather more useful as a reference point than London 2.”

86. Mr Cohen submits that it is not right to say that an inquiry dealing with an objection to a CPO is “difficult and specialised” because: (i) such issues are adjudicated upon by non-legally qualified inspectors and are not legally complex; and (ii) CPO litigation is “well known” and “all major hearing centres have a multitude of solicitors offering CPO services“. In my judgment, neither point establishes that the Judge was wrong to view such work as he did. That the matter was not legally complex was, as I have said, acknowledged by the Judge. However, that does not necessarily mean that the factual issues relevant to the Inquiry (even if not all such issues were determined at the Inquiry) were straightforward. Moreover, it does a disservice to Inspectors, who are often required to preside over the most difficult and specialist of factual disputes, to suggest that their non-legally qualified status is commensurate with disputes that are neither difficult nor specialised. As to the fact that there are many practitioners offering CPO services, that tells one little, if anything, about the nature of their work generally, or specifically in this case.

87. Mr Cohen then criticises the Judge for rejecting the GHR as a starting point, for providing no reasons for doing so and for ultimately concluding that if the GHR are to be used as a starting point, the “London 1 rates were rather more useful as a reference point that London 2”. I do not accept any of these criticisms.

88. As stated above, the Guide is intended to be a starting point in a summary assessment and “may be useful as a starting point in a detailed assessment“. The Judge was not conducting a summary assessment and was not required to take the same approach to the Guide as he might have done had that been the case. It was open to the Judge to conclude, as he did, that the GHR were not particularly useful in this case. In any application of the Guide and the GHR there will be a degree of judgment involved. That is because the category definitions are very broad. London 1 is for “very heavy commercial and corporate work by Central London firms“, whereas London 2 is for “all other work“. London 2 therefore encompasses all manner of work from the most straightforward and simple of cases to work that is legally highly specialised and difficult. Some work fitting the latter description might well be considered by a costs judge to warrant a considerable uplift from the London 2 starting point notwithstanding the fact that it does not amount (in terms of volume or value) to “very heavy commercial or corporate” work. In other words, the GHR do not dictate that London 1 rates are reserved exclusively for very heavy commercial or corporate work. The Judge in the present case concluded that whilst this was “not massively heavyweight litigation” (which would probably be London 1), it was: “certainly not routine”; “a very specific sort of work”; and “quite difficult and specialised”. In my judgment, there is nothing that precluded the Judge from making those judgments in the present case.

89. Mr Cohen is right to say that a costs judge ought not to base assessments solely on preconceived notions about a category of work without reference to the particular work undertaken and for which the claim for costs is being made. Had the Judge relied only on the view that all CPO work was “difficult and specialised” in awarding the rates that he did then that would be unlikely to provide a proper foundation for the assessment. However, the October 2021 judgment needs to be read as a whole. When that is done, it is tolerably clear that the Judge’s view as to level of difficulty was grounded in the particular features of this CPO Inquiry as set out (albeit briefly) in [13] and [14]. Moreover, the Judge’s conclusion as to the appropriate hourly rate was not based solely on his view of complexity (which is but one of the seven pillars) but also on the value of the dispute, the importance of it to the parties and the specific skills required to undertake the work. Those are all matters that ought to be and were taken into account by the Judge.

90. Mr Cohen’s final point in respect of the Planning Team hourly rates is that the Judge erred in law in taking into account his understanding that planning cases “can command very high fees” ([15]). However, as the Judge made clear in the same paragraph, this was “just background but it gives us a bit of context against which I am judging these hourly rates“. Similarly, at [20], the Judge referred to the fact that Master Rowley had awarded a rate of £750 per hour in a heavy commercial dispute, noting that “That gives us a little context“. The Judge was not, therefore, relying on assumptions as to the going rate or the level of fees in order to make his assessment, but merely referring to such factors to provide some context and background against which to sense-check the rates being sought. I see nothing objectionable about a specialist costs judge taking account of market knowledge in this way. As Mr Carpenter KC submits in his skeleton argument, “[T]hat Costs Judges can bring such knowledge to bear is precisely why appellate courts afford their decisions on matters peculiarly within their expertise significant weight”.

91. For all of these reasons, the challenge to the hourly rates awarded in respect of the Planning Team fails.

Litigation Team

92. The relevant passages in the October 2021 judgment are at [17] and [24]:

“17. Time spent is not really a factor for present purposes. I know that Mr. Cohen touched on an apparently large amount of time spent by the litigation team. It was not really pressed as a particularly relevant point, but I think Mr. Grant has explained the context for that. There was more going on than simply obtaining an order from the administrative court. The litigation team did have to deal with costs and, as we have already found, the costs issues can be potentially quite complex. I have not lost sight of the fact that it was mooted by the Defendant that including certain categories of costs in the bill amounted to misconduct, so one should not understate the burden that is placed on the Claimant’s solicitors for these purposes.

…

24. The litigation team, as I say, were doing more than getting an order rubber stamped. I accept that. Also, one can hardly expect the Claimant to change solicitors at this stage. They would pay similar rates to what they were paying for the planning team, but I do not really see a reason for the increase in the Grade A rate. I do not think that as between the parties, on the standard basis, that can be justified. I would limit it to the £525 that is claimed for the senior fee earner on the planning team. I have no difficulty with either the B or C rates and, again, insofar as Grade D is involved, I would limit that to £150 per hour.”

Mr Cohen submits that the Judge was wrong to consider that there was anything remotely complex about the work done by the Litigation Team. Their work involved nothing more that negotiating with the Defendant about costs and then obtaining the HC Costs Order. To allow the Grade A partner to recover more than the London 1 rate for such work is, he submits, unjustifiable even if the awarded rate matches the one for the Grade A partner in the Planning Team. Mr Cohen further submits that it is not open to the Judge simply to reason that the rate permitted for the Planning Team provides a sufficient basis for awarding the same rate to an entirely different team doing different, simpler, work.

93. The Judge was alive to the argument that the Litigation Team’s work involved little more than rubber stamping. That argument was rejected because, as the Judge found, there was more to the work done than that. There was (as the Defendant accepts) the negotiation with the Defendant as to costs undertaken pursuant to the SoS’s Costs Order. Moreover, in that context, it was relevant to note that the Defendant had asserted that the Claimant had engaged in misconduct in relation to the bill. Mr Cohen says that this is a non-point as the allegation pertained “primarily” to the conduct of the costs draftsman drafting the bill and not to the Litigation Team. Be that as it may, it appears to be the case (if not accepted) that the alleged misconduct would feature at least to some extent in the negotiations in which the parties engaged about costs, and that increases the degree of complexity involved.

94. However, although not mere rubber stamping, it does not appear, on the face of it, that the work done by the Litigation Team was especially difficult or taxing. Certainly, if that work had been the only basis of claim before the Judge, the rates awarded would have been difficult to sustain. I therefore have considerable sympathy with Mr Cohen’s argument that in these circumstances, the hourly rates permitted for the Litigation Team ought not to be the same as those for the Planning Team.

95. However, I am aware (with the benefit of my learned assessor) that the general position is that rates are assessed for a firm and are not reassessed for different stages of litigation. Furthermore, there is, as the Judge in the present case found, no expectation that a litigant should change firms and use a different (cheaper) firm for a smaller and simpler aspect of the work. That is not to say that different rates might not be awarded within the same firm in an appropriate case. In this case, however, where the costs sought in respect of the Litigation Team (£7,233) comprised a very small proportion (1.5%) of the total bill, it is perhaps somewhat unrealistic to expect a costs judge to go through a full-blown “seven pillars of wisdom” analysis in respect of that amount in order to reach a significantly different rate in the course of a concise oral judgment. In any case, the Judge did not award the rates claimed for the Litigation Team automatically, without scrutiny or without an eye on proportionality: he expressly reduced the rates for the Grade A partner and for the Grade D lawyer in the Litigation Team to match those of their commensurate colleagues in the Planning Team.

96. For these reasons, there was no error of principle or law on the part of the Judge and no judgment that exceeded the generous ambit afforded to him. Accordingly, there is nothing that would entitle this Court to interfere with his conclusions.

97. This ground passes the arguability threshold insofar as it relates to the hourly rates for the Litigation Team, and permission is granted. However, for the reasons discussed, Ground 2 of the appeal fails on the merits and is dismissed.

Conclusion

98. For all of these reasons, and notwithstanding Mr Cohen’s forceful and eloquent submissions, this appeal fails and is dismissed.