HOURLY RATES, SUCCESS FEES, RELIEF FROM SANCTIONS – ALL IN ONE CASE

There is a great deal of material covered in the judgment of Master Gordon-Saker in Various Claimants -v- MGN Limited [2016] EWHC B29 (Costs).

THE CASE

The court was determining various preliminary issues in relation to costs in the “phone hacking” litigation.

HOURLY RATES

The Master found that a higher hourly rate was justified because of the specialist skill involved, the nature of the opponent and the importance of the case to the claimants.

  1. It seems to me that some of the rates claimed are nevertheless too high. Taking into account all of the circumstances and based on my experience of comparable (though not similar) cases, in my judgment a reasonable rate for a Grade A fee earner undertaking this work would be £400. For a Grade B fee earner, £280 would be reasonable; £230 would be reasonable for a Grade C fee earner and £140 would be reasonable for the Grade D fee earners. They are the rates that I allow, save in the few instances where a lower rate has been claimed

SUCCESS FEES ALLOWED AT 100%

The Master allowed a success fee of 100% (except in one case where the success fee was staged and had only reached the stage where 50% was justified).

The Master also allowed retrospective success fees and the premiums as claimed.

RELIEF FROM SANCTIONS APPLICATION REFUSED
  1. Applications for relief from sanctions were made by Mrs Horlick and Mr Yentob. It is convenient to take them together.
  2. In the case of Mrs Horlick her solicitors gave notice of funding in relation to the ATE policy on 10th September 2014, the day after the policy was purchased, but failed to give notice of funding in relation to the conditional fee agreement with her solicitors until 20th November 2014. The agreement had been entered into on 24th June 2014 and proceedings were issued on 13th August 2014. Paragraph 19.2(1)(b) of the Costs Practice Direction in force before 1st April 2013 (which continues to apply by virtue of CPR 48.1(1)) provided that a party who enters into a funding arrangement before proceedings must give notice of funding when he issues the claim form. CPR 44.3B(1)(c), as in force before 1st April 2013, provided that a party may not recover an additional liability for any period during which he failed to provide information about a funding arrangement in accordance with a practice direction, unless the court orders otherwise.
  3. In support of Mrs Horlick’s application it is said that the Defendant was aware at the material time that all of the Claimants were pursuing the claims under conditional fee agreements and a number of examples evidencing that knowledge are quoted in the application.
  4. In the case of Mr Yentob, a conditional fee agreement was entered into on 30th September 2013. The letter of claim was sent on 18th March 2014 but notice of funding was not given until 17th April 2014. Paragraph 9.3 of the Practice Direction – Pre-action conduct and Protocols provided that a party must inform any other party as soon as possible about a funding arrangement entered into before the start of proceedings. Again the Claimant relies on the Defendant’s knowledge that all of the Claimants were using conditional fee agreements to finance their claims.
  5. The sanction imposed by CPR 44.3B is automatic. It can be disapplied only by an order of the court. On behalf of the Claimants Mr Browne QC submitted that neither default was serious nor significant, he accepted that there was no good reason for either default, but submitted that having regard to all the circumstances it would be just to grant relief.
  6. These were specific rules which required a party who had entered into funding arrangements to give notice of those arrangements to the other party. The reason for that is obvious: the funding arrangements may well have a significant impact on the amount of that other party’s liability for costs. These rules were well understood. Notice had to be given at the earliest opportunity if the arrangements were entered into before the start of proceedings and, otherwise, when proceedings were issued. It seems to me that a failure to give the required notice must always be serious and significant unless it is given within a very short time after the time at which it should be given. Having regard to the requirements of the rules generally a failure to serve a document until one month or 3 months after it should have been served is not likely to be treated as insignificant, particularly where the rules provide for an automatic sanction for default.
  7. The failures to give notice in time would appear to have been the result of oversight and no good reason for the failures was advanced.
  8. Having regard to all the circumstances these failures have not prevented the parties from conducting the litigation efficiently or at proportionate cost but nor would the interests of justice be imperilled if relief were not granted. The Claimants would not be denied access to justice. This is a case where the sanction is proportionate to the breach. If relief is not granted the solicitors would be denied success fees on the value of their work done over the one and 3 month periods respectively. The Claimants would still be entitled to their reasonable and proportionate base costs for work reasonably done over those periods. The sums lost are likely to be relatively insignificant. Because of the failure to comply with the practice directions, court time and the parties’ resources have been spent on an application to disapply the sanction.
  9. Accordingly the applications for relief from sanctions are refused.”

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