Party Penalised For Failure To File A Costs Schedule In Advance Of Hearing

Scenic International Group Limited (In Provisional Liquidation) v Adenaike and others [2024] EWHC 1178 (Ch) involved a post-judgment application by the Claimant, Scenic International Group Limited (in provisional liquidation), for continuation of pre-judgment freezing orders against the First and Fourth to Sixth Defendants. Following the hearing on 30 April 2024, the Court held that the relevant Defendants should pay the Claimant’s costs.

Issue to be decided

The main issue to be decided by the Court, insofar as it related to costs, was the appropriate manner of assessing the Claimant’s costs, given that the Claimant had not prepared a schedule of costs for summary assessment at the hearing.

Claimant’s position and arguments

The Claimant initially requested a detailed assessment of costs, explaining that “it was felt that it was unlikely that the Claimant would succeed in recovering costs and that it was therefore disproportionate to incur the expense of preparing a schedule of costs.”

Court’s reasoning and decision

The Court found the Claimant’s approach to be mistaken, stating that if a party wants an order for its costs, “the general rule is that such costs, if ordered, should be summarily assessed” for a relatively routine application for freezing orders in the Interim Applications list. The Court emphasised that summary assessment is more efficient, as it can be done quickly and the judge who heard the application is better positioned to assess costs than a costs judge months later.

“A party may of course decide that it will not seek its costs because it considers that the chance of ever recovering costs are so low that it does not wish to spend even the modest costs of preparing a schedule of costs for summary assessment. But if it does want an order for its costs, then for a relatively routine application for freezing orders in the Interim Applications list, the general rule is that such costs, if ordered, should be summarily assessed: see Practice Direction 44, para 9.2(b).”

The Court refused to direct a detailed assessment and instead directed the Claimant to file a schedule of costs if it wished to recover costs, which would then be summarily assessed on the papers. The Claimant subsequently filed a schedule of costs, accompanied by a covering letter from its solicitors explaining some of those costs.

“The whole point of summary assessment is that it is much more efficient, both because it can be done quickly and because the judge who has heard the application is in a better position to assess the costs than a costs judge who lacks that advantage and comes to the matter many months later. It is inappropriate and contrary to the overriding objective to ask for those costs to be the subject of detailed assessment because the claiming party, while wishing to preserve its right to recover costs, does not want to incur the small additional expense of preparing a schedule.”

The Court found the total costs of over £36,000 (excluding VAT) to be disproportionate and unreasonable, given the nature of the application.

“I appreciate that in the underlying proceedings these were substantial claims based on sustained tax and VAT fraud. However, by the time of this application, the Claimant had obtained default judgments against all the defendants. Pre-judgment freezing orders had already been obtained. In those circumstances, the application to, in effect, continue the pre-judgment orders as, now, post-judgment orders was not particularly complex. I therefore find that total costs of over £36,000 (which does not include VAT) for this exercise appears to be disproportionate and unreasonable.”

The Court found the Claimant’s schedule of costs confusing and inaccurate regarding work done on documents:

“Work done on documents accounts for £5700 of the total, but the schedule in this regard is confusing and, it seems, inaccurate. It shows almost 4 hours work done by a Grade C solicitor. For the work involved, that would be reasonable, but from the figures it appears that all that work was in fact done by a Grade A solicitor and is charged at £550 per hour. That is not proportionate. Further, the schedule shows 2.4 hours work by a Grade B solicitor but no Grade B solicitor is identified in the list of fee earners. In fact, from the figures it appears that those hours were expended by the more senior Grade A solicitor charged at £595 per hour.”

The Court also noted that the Claimant’s failure to comply with Practice Direction 44, which requires filing and serving a schedule of costs at least 24 hours before the hearing, would be taken into account in deciding the costs order.

“I have explained that there was no reasonable excuse for the failure in this case. And I regard the failure as the more serious in a case where the Claimant knew that the defendants were unrepresented and could have expected, from the experience of the previous hearing in December, that the First Defendant would appear in person and therefore have the assistance of a CLIPS barrister on the day of the hearing but not thereafter. I do not suggest that the Claimant’s approach was a deliberate tactic to avoid the defendants having such assistance on the matter of costs, but this was nonetheless a foreseeable consequence.”

The Court assessed the costs on a broad brush basis at £23,235, consisting of £12,000 for solicitors’ costs, £10,960 for counsel’s fees, and a court fee of £275.

“I accordingly take this into account, along with my view of the proportionality and reasonableness of the costs charged. I assess the solicitors’ costs, on a broad brush basis, at £12,000, to which is added counsel’s fees of £10,960, which I regard as reasonable given the history of the matter and some of particular features of the proposed orders regarding expenses which were the subject of dispute. With the addition of the court fee of £275, this produces a total figure of £23,235. I therefore assess the costs in that amount.”