Summary Assessment Of Costs | No Justification Found For Indemnity Costs, Leading Counsel, Multiple Fee Earner Attendance Or £750+ Hourly Rates

SAUDI ARABIAN AIRLINES CORPORATION v SPRITE AVIATION NO.6 DAC [2025] EWHC 1663 (Comm)

In Saudi Arabian Airlines Corporation v Sprite Aviation No.6 DAC [2025] EWHC 1663 (Comm), the Commercial Court’s summary assessment of commercial litigation costs applied guideline hourly rates and proportionality principles to extension application costs. The defendant sought costs on the indemnity basis following the claimant’s disclosure extension application, arguing lack of transparency about Saudi data protection issues necessitated the hearing, while the claimant contended costs should be in the case as a routine application. HHJ Pelling KC awarded standard basis costs, finding the application avoidable with initial frankness but conduct insufficient for indemnity costs under the Excelsior test. The summary assessment applied proportionality principles from Kazakhstan Kagazy Plc v Zhunus and Samsung Electronics Co. Ltd v LG Display Co. Ltd, rejecting premium hourly rates for Grade A fee earners (£744-760 vs £566 guideline rates) as unjustified for straightforward disclosure extensions. Significant reductions followed: leading counsel’s £12,245 fees disallowed entirely; multiple solicitor attendance at hearings rejected; document preparation time cut from 40.6 to 18.8 hours; costs lawyer fees reduced from £1,625 to £1,200. The judge allowed London 1 rather than London 2 rates due to claim size but emphasized guideline hourly rates as the commercial court default, substantially reducing the defendant’s £75,000+ claim to a proportionally assessed sum.

In my judgment, none of these factors either individually or collectively justify imposing a costs order that costs be assessed on the indemnity basis. If every case in which an in-time application for an extension of time had to be made attracted an indemnity costs order, then it would be virtually unknown for standard orders in costs to be made on such applications. Furthermore, the absence of information, whilst no doubt aggravating, and whilst no doubt making it marginally more difficult for the defendant to answer the application, is nonetheless not something that justifies imposing the entirely exceptional remedy of ordering costs to be assessed on the indemnity basis.

Citations

Michael Wilson & Partners Ltd v Emmott [2008] EWHC 2684 (Comm) Unless orders are orders of last resort and should only be made where less draconian measures have been attempted and failed. Kazakhstan Kagazy Plc v Zhunus [2015] EWHC 404 (Comm) In commercial litigation, proportionality in costs means the minimum cost necessary to perform a proper job in relation to the application or trial. Samsung Electronics Co Ltd v LG Display Co Ltd [2022] EWCA Civ 466 Guideline hourly rates provide a starting point for cost assessments but must be justified as reasonable and proportionate if exceeded. Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson (a firm) [2002] EWCA Civ 879 Indemnity costs may only be awarded where the paying party’s conduct falls outside the norm expected in commercial litigation.

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IPEC scale costs transfer Patents Court PD 30 para 9.2 costs caps Court of Appeal

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Provisional assessment set aside CPR 3.1(7) points of dispute filing duty PD 47 para 14.3 SCCO

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Key Points

A party seeking indemnity costs must demonstrate conduct by the paying party that fell outside the norm for commercial litigation; failure to comply with directions or to provide timely and complete evidence may be aggravating factors but will not by themselves justify indemnity costs. [16–17]
Applications for extensions of time made in time and involving limited departures from procedural timetables are not, without more, ordinarily appropriate cases for indemnity costs orders. [17]
Where an application for an extension becomes necessary due to a party’s failure to comply with prior orders or to provide timely and frank explanations, that party may be liable for the opposing party’s standard basis costs of the application. [18–20]
In summary assessment, hourly rates in excess of the guideline rates must be clearly justified on the grounds of reasonableness and proportionality; the designation of a case as requiring sector-specific expertise does not by itself establish such justification. [23–25]
In assessing the reasonableness and proportionality of costs, the court may disallow attendance by multiple fee earners at hearings, excessive time claimed for routine tasks, and involvement of leading counsel in straightforward applications, absent clear justification. [26–34]

"The rates which have been claimed in this case are for two grade A fee earners in the range of between £744 and £760 an hour, for grade C fee earner £432 an hour and for the grade D fee earner £252 an hour. This compares and contrasts with the grade A rates for London 1, currently £566, and for London 2, £413. For grade C, £299 or £269 an hour and for grade D either £205 or £153 per hour. There is no coherent reason why the guideline rate should be departed from that has been identified, much less one which is justified on reasonableness and proportionality grounds. It is said this is an aviation case and merits the attention of aviation lawyers. With great respect, that is not the test which has to be applied when considering the costs of a particular application of this sort, which is a straightforward application for an extension of time in which to provide disclosure documents."

Key Findings In The Case

The claimant’s failures—specifically, missing the original disclosure deadline, providing late and incomplete explanations for the delay, and initially omitting reference to Saudi data protection issues—necessitated the application for an extension and justified the defendant being awarded its costs of the application on the standard basis, though not on the indemnity basis [18–20].
The court found that the defendant’s claimed hourly rates for solicitors significantly exceeded the applicable guideline rates and were not justified on reasonableness and proportionality grounds merely by reference to the aviation context of the dispute; guideline rates for London 1 were applied instead [23–25].
The involvement of leading counsel in a straightforward application for an extension of time was held to be disproportionate and unreasonable; accordingly, costs claimed in respect of leading counsel were disallowed in full [32].
Multiple fee earners’ attendance at the hearing and duplication of effort across grades were not considered reasonable or proportionate; the court permitted only one solicitor to recover for attendance and reduced or disallowed claims for excessive preparatory and post-hearing time by junior staff [26, 30, 36–38].
A fee of £1,625 for a costs lawyer to prepare a schedule of costs was deemed excessive given the scope of the hearing and level of complexity; the amount allowed was capped at £1,200 as a proportionate figure [34].

"As far as the attendance at the hearing is concerned, there is absolutely no justification, particularly on an application of this sort, for three solicitors to have attended this hearing. I allow the grade A fee earner, having regard for the potential importance of the application. I disallow the attendance of the D and C fee earners. As far as travel and weighting is concerned, 50 minutes are claimed for that, which I anticipate will be the cost of the solicitors' travelling to counsel's chambers while this hearing was taking place. In my judgment, that is neither reasonable nor proportionate. Where hearings are taking place remotely, then solicitors should be joining remotely, and if instructions have to be given to counsel in the course of the hearing, then the entirely conventional route of dealing by WhatsApp communication should and can reasonably and proportionately be adopted, particularly in a case of this sort."

The summary assessment of costs followed an application by Saudi Arabian Airlines Corporation (the claimant) for an extension of time to exchange disclosure certificates and extended disclosure lists. The original direction required disclosure in March 2025, which was subsequently extended by consent to 18 April 2025 as an interim measure whilst the parties negotiated a longer extension. When those negotiations failed to produce an agreed date, the claimant issued the present application.

The underlying dispute involved aviation-related proceedings in the Commercial Court, with Norton Rose Fulbright LLP acting for the claimant and Stephenson Harwood LLP representing the defendant, Sprite Aviation No.6 DAC. The claimant’s difficulties in meeting the disclosure deadline stemmed from Saudi Arabian data protection laws, though this was not initially disclosed in the application notice.

His Honour Judge Mark Pelling KC granted the extension to 8 August 2025 but did so subject to an undertaking from the claimant’s solicitors to inform the defendant’s solicitors within one working day if they became aware that the deadline would not or might not be met. The judge rejected the defendant’s request for an unless order and more draconian reporting obligations, finding that the undertaking struck the appropriate balance in addressing the delays.

Costs Issues Before the Court

The court was required to determine two principal costs issues. First, whether the defendant should recover its costs of and occasioned by the application, and if so, whether those costs should be assessed on the standard or indemnity basis. The defendant sought its costs on the grounds that the application was necessitated by the claimant’s failure to comply with the original disclosure timetable and its lack of transparency about the true reasons for the delay.

Second, the court undertook a summary assessment of the defendant’s costs, which totalled over £75,000. This required the judge to apply the well-established tests of reasonableness and proportionality to various categories of work claimed, including solicitors’ time, counsel’s fees, and disbursements. The assessment involved scrutinising hourly rates claimed significantly above the guideline rates, the number of fee earners involved, and the hours expended on various tasks.

The Parties’ Positions

The defendant submitted that it should recover its costs on the indemnity basis, arguing that the claimant had acted outside the norm expected in commercial litigation. The defendant relied on several factors: the claimant’s failure to comply with the original order, its failure to identify the real problem in the evidence initially filed in support, the ambiguous description of the disclosure exercise in Mr Springthorpe’s fourth witness statement, and the late filing of clarifying evidence in Mr Springthorpe’s fifth statement.

The claimant contended that costs should be in the case, characterising the application as relatively straightforward. Whilst accepting that a hearing was necessary due to the effect on the progress monitoring date, the claimant argued it was disproportionate for the defendant to resist the application as there was ample time in the timetable to accommodate the extension. The claimant emphasised that disclosure difficulties requiring extensions were not unusual in commercial litigation.

On summary assessment, the defendant sought to justify hourly rates of £744-760 for grade A fee earners (compared to guideline rates of £566), £432 for grade C (guideline £299), and £252 for grade D (guideline £205). The defendant argued these rates were justified given the aviation nature of the case and the requirement for specialist lawyers. The defendant also sought to recover fees for leading counsel’s involvement and extensive solicitor time across multiple fee earners.

The Court’s Decision

The judge ordered the defendant to recover its costs but on the standard basis, rejecting the application for indemnity costs. Applying the Excelsior test, the judge found that none of the factors relied upon, individually or collectively, justified an indemnity costs order. The judge observed that if every in-time application for an extension attracted indemnity costs, standard orders would be virtually unknown. Whilst the absence of information was aggravating and made it marginally more difficult for the defendant to respond, this did not warrant the exceptional remedy of indemnity costs.

On the principle of whether any costs order should be made, the judge found this to be finely balanced but ultimately concluded the application could have been avoided had the claimant either complied with the original order or sought an extension on a full and frank basis from the outset. The judge therefore awarded costs to the defendant on the standard basis.

In the summary assessment, the judge applied the principles from Kazakhstan Kagazy Plc v Zhunus, that proportionality in commercial litigation means the minimum sum required for a proper job to be done. Following Samsung Electronics Co. Ltd v LG Display Co. Ltd, the judge held that whilst guideline rates were the starting point, any excess must be clearly justified on reasonableness and proportionality grounds.

The judge found no coherent justification for departing from guideline rates, rejecting the argument that this being an aviation case warranted higher rates for what was essentially a straightforward disclosure extension application. With hesitation, the judge allowed London 1 rather than London 2 rates, primarily due to the size of the claim.

On specific items, the judge made significant reductions: attendances on clients were reduced from five to three hours for the grade C fee earner; the involvement of Mr Edward Cumming KC was disallowed entirely as neither reasonable nor proportionate for an extension application; attendance at the hearing was limited to one grade A fee earner rather than three solicitors; and travel time for attending counsel’s chambers remotely was disallowed. The judge allowed £8,000 for junior counsel’s brief fee despite reservations, acknowledging the additional work caused by the claimant’s late disclosure of material information.

For document preparation, the judge substantially reduced the claimed 40.6 hours across three fee earners for preparing for the CMC, allowing 2.5 hours for the grade A fee earner, 13.3 hours for the grade D fee earner, and three hours for the grade C fee earner. The costs lawyer’s fee was reduced from £1,625 to £1,200, finding the higher figure excessive for preparing a relatively simple costs schedule.

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