Costs Briefing #18
Summary assessment - a cautionary tale
It’s not unusual for the team at Practico to be preparing and advising on schedules for costs which run into hundreds of thousands of pounds.
The recent decision in Golubovich v Golubovich & Mirimskaya is an interesting one for commercial litigators, particularly those dealing with interim applications within substantial litigation.
On 13 May 2022, Johnson J gave permission to appeal (PTA) in relation to a jurisdiction challenge, heard the appeal and then dismissed it. He refused a request for PTA the summary assessment of the costs of that jurisdiction challenge. Johnson J’s judgment runs to 191 paragraphs, but was the outcome of the application for PTA the costs aspect correct?
Here is a brief chronology so far as the costs aspect of this complicated litigation is concerned.
14 June 2021: In advance of the hearing of the Part 20 Defendant’s jurisdiction challenge, the parties exchanged costs schedules. The Defendant’s schedule totalled £169,617.13 and the Part 20 Defendant’s totalled £170,038.08.
15 June 2021: Hearing of the jurisdiction challenge.
22 July 2021: Draft judgment circulated to the parties by Deputy Master Marsh.
29 July 2021: Email to Deputy Master Marsh from the parties confirming their agreement to deal with consequential matters on paper following two rounds of submissions. ‘Primary submissions were to be filed and served by 4.00pm on 3rd August 2021, with submissions in response by 4.00pm on 5th August 2021.’
30 July 2021: Judgment handed down dismissing the jurisdiction challenge and refusing permission to appeal.
30 July 2021: Email from Deputy Master Marsh to the parties stating, "I agree the proposal put forward by the parties concerning consequential issues".
3 August 2021: Primary submissions filed by the Part 20 Defendant including points on the quantum of the Defendant’s costs (the Part 20 Defendant accepted in principle that it should pay the costs of the failed jurisdiction challenge).
3 August 2021: Primary submissions filed by the Defendant and a ‘final’ schedule of costs served totalling £190,260.50.
5 August 2021: During the morning (and before the deadline of 4pm for filing submissions in response), consequentials judgment handed down by Deputy Master Marsh. Having rejected a preliminary point in relation to the costs being claimed, the Deputy Master looked at the reasonableness of the Defendant’s revised costs claim based on summary assessment being ‘an impressionistic exercise rather than an exercise of calculation’ and concluded that ‘£150,000 is a reasonable and proportionate sum for [the Part 20 Defendant] to pay.’
5 August 2021 [11.57am]: Email from the Part 20 Defendant to the Deputy Master which made reference to the agreed timetable for filing the primary and response submissions, as approved by the Deputy Master. “The email went on to refer to the revised costs schedule served by [the Defendant] and pointed out that [the Part 20 Defendant], who had not seen the revised costs schedule prior to the exchange of the primary submissions, would have made submissions on the revised costs schedule as part of her response submissions. The email then set out the arguments which [she] would have included in her response submissions, had she been given the chance…”
5 August 2021 [17:13]: Email from Deputy Master Marsh "Thanks, but I don't need reply submissions. I have handed down the judgment. The decision is made and is final."
The Civil Procedure Rules say little about the procedure for summary assessment. There are general provisions in Paragraph 9 of the PD to Part 44 as to when summary assessment should happen (at the end of a fast-track trial or at the end of any other hearing which has not lasted more than one day), what the schedule of costs must contain and when the statement of costs must be filed and served. Paragraph 9.7 makes it clear that the court cannot order summary assessment by a costs officer and that, if costs cannot be assessed ‘on the day’, the court may give directions for a further hearing before the same judge.
In seeking permission to appeal the costs aspect, the Part 20 Defendant made two points.
First, handing down judgment before giving the Part 20 Defendant the opportunity to file response submissions was unfair and that the decision to allow £150,000.00 was wrong.
Secondly, had the Deputy Master considered the submissions that the Part 20 Defendant wished to make, the costs allowed would have been reduced by a further £10,000 to £15,000.
At paragraph 175, Johnson J finds himself ‘bound to say … that an unfairness occurred in relation to the submissions on costs. The parties agreed on primary and response submissions by certain deadlines, and the Deputy Master approved these arrangements. … In my view a procedural irregularity did occur in this respect, which was unfair …”.
In the very next paragraph, however, any hope of changing the outcome of the summary assessment is dashed. For the application for permission to appeal to succeed, the Part 20 Defendant would need to show that the result of not waiting for response submissions was that the Deputy Master ‘got the summary assessment wrong and should and would have made a further reduction of £10,000 to £15,000…’. A further point is made in paragraph 179 – had the costs been further reduced as the Part 20 Defendant sought, the Defendant would have been left with ‘virtually no recoverable costs in respect of the post hearing period’.
At paragraph 180, Johnson J’s conclusion is clear:
“I do not think that the summary assessment exercise would have been any different if the Deputy Master had waited for the response submissions before making the summary assessment”.
There are references to the broad-brush approach to summarily assessing costs which is “not a matter of precise calculation”. The last nail in the coffin comes at paragraph 182. Assuming for a moment that the procedural unfairness should have resulted in the summary assessment being set aside, neither of the options identified by Johnson J would be acceptable – remitting the matter back to the Deputy Master for a fresh summary assessment would be ‘disproportionate’ and Johnson J summarily assessing the costs ‘at second hand’ would be ‘highly undesirable’.
Commentary by Andy Ellis:
“Practical takeaways from this rather odd appeal decision are not obvious. Having found that there was a procedural irregularity in the denial of the opportunity for the paying party to challenge the additional costs claimed between the hearing and the summary assessment, there seems to me no proper basis for the assumption that it would not have made any or any material difference to the result.
The decision, and the facts that led to it, suggest that the problem lies with summary assessments that are deferred rather than dealt with on the day – especially when costs, as in this case, run close to £200,000. The lack of a process set out in a Rule or PD for finalisation of a costs schedule, and submissions by way of challenge and justification, increases the scope for confusion.
On balance I suggest that the interests of justice may be better served by referring costs to detailed assessment when lack of time or complexity does not permit a summary assessment at the conclusion of the application or short trial.
The fact that the costs in dispute in this case were over twice the limit for provisional assessment lends further support to the argument that if summary assessment cannot be done properly it should not be done at all.”
Further practical commentary on the summary assessment of costs can be found here:
The process might be summary, but there must still be an assessment of the costs claimed. It is not for the judge to impose their own tariff without any calculation or proper reasoning (see Cohen v Fine and 1-800 Flowers Inc v Phonenames Limited). Click here to read our article in the April 2021 edition of the Costs Briefing on this point.
A well-constructed and clear schedule of costs is the best starting point for strong costs recovery on summary assessment. Click here to read the discussion about this and the case of Changing Climates Ltd v Warmaway Ltd in our first Costs Briefing of 2022.