Court Reaffirms Guidelines in Cost Assessment for Solicitors in Maggie Otto & Ors v Inner Mongolia Happy Lamb & Ors [2023] EWHC 3151 (Ch)

Citation: [2023] EWHC 3151 (Ch)
Judgment on

Introduction

The case of Maggie Otto & Ors v Inner Mongolia Happy Lamb & Ors [2023] EWHC 3151 (Ch) offers a detailed examination of the judicial approach to costs assessment following the withdrawal of an interim injunction application by the petitioners. HHJ Paul Matthews provides a comprehensive analysis, applying legal principles to the assessment and demonstrating the scope and boundaries of solicitors’ costs within the English legal system.

Key Facts

The petitioners filed an application for an interim injunction which was adjourned and later withdrawn before the rescheduled hearing. Upon withdrawal, a costs order was made against the represented respondents who were directed to pay the petitioners’ costs. Disagreement arose over the amount of these costs, leading to summary assessment conducted by HHJ Paul Matthews.

The petitioners claimed total costs of £23,244.20, which the respondents contested. A key point of contention was the hourly rates charged, with the petitioners’ solicitors claiming rates above the guidelines. The respondents also argued about the necessity of certain charged work and the attendance of multiple fee earners at hearings.

Several important legal principles are highlighted in this case:

  1. Guideline Hourly Rates (GHR): The Court reaffirmed that any rate exceeding GHR must have “clear and compelling justification,” referencing the cases of Samsung Electronics Co Ltd v LG Display Co Ltd [2022] EWCA Civ 466 and Athena Capital Services SICAV v Secretariat of State for the Holy See [2022] EWCA Civ 1061. The judge declined to align the rates with general inflation or to consider the geographic location of solicitors as less relevant due to remote working practices.

  2. Reasonableness and Proportionality: Both the principle of incurring costs which are reasonable in amount, and the principle of incurring costs which are proportionate to the matters in issue (as per CPR 44.3(5)), are applied in assessing the time claimed by the petitioners for various activities including correspondence and attendance.

  3. Attendance of Fee Earners at Hearings: The appropriateness of multiple fee earners attending court is questioned, although the judge only permitted the claim for the higher grade fee earner.

  4. Standards of Conduct Impacting Costs: While the respondents put forth arguments regarding the conduct of the petitioners and the relationship between the parties, the costs order was not made on an issue-based premise.

  5. Costs on the Standard Basis versus Indemnity Basis: The standard basis for costs assessment was applied, in alignment with CPR PD 44 suggests, which requires a less generous approach to allowed costs than indemnity basis would.

  6. Deadline for Payment of Costs: Customarily, costs are to be paid within a standard period, unless there is a compelling reason to extend this deadline. The respondents’ request for a longer period due to their overseas location was denied because they had previously complied with shorter payment terms.

Outcomes

The costs claimed by the petitioners were subjected to scrutinous analysis, leading to a reduction mainly due to adjustment of the hourly rates to fall in line with GHR. The judge allowed costs for certain challenged activities as being reasonable and proportionate. The respondents were given 14 days to satisfy the adjusted costs order of £20,795 (inclusive of VAT and court fees).

Conclusion

In conclusion, the decision in Maggie Otto & Ors v Inner Mongolia Happy Lamb & Ors provides key insights into the court’s enforcement of GHR, the factors considered in determining the reasonableness and proportionality of solicitors’ costs, and reaffirms the principles for cost assessments. The judgment underscores the judiciary’s strict adherence to established baselines in assessing costs, while still addressing the merits of individual case dynamics. This case serves as an exemplary guide for legal professionals to understand the nuances of cost determination in the UK’s legal practice.

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