It is becoming increasingly apparent that the new SCCO Guideline hourly rates are being considered by the courts to be not just a starting point but, in the majority of cases, the end point in costs assessments.

It was previously the case that the 2010 Guideline rates were intended only as a starting point, however they began to be used as a yardstick in all litigation and it became difficult to depart from those rates unless there was obvious justification for an enhancement.

In the two to three years prior to the new rates coming into force in October 2021, however, there were multiple examples of cases in which the court took the view that the 2010 rates were out of date, as a result of which higher rates were allowed. The cases of Harry Cohen v Marion Fine & Ors, and ABS Company Ltd v Pantaenius UK Ltd & Ors to name but two.

We are now hearing of cases in which the hourly rates, however complex the litigation, are being reduced to the new Guideline rates. In the case of Samsung Electronics Co Ltd v LG Display Co Ltd [2022] EWCA Civ 466, it was held that, if a party wants to recover hourly rates outside of the Guideline rates, a “clear and compelling justification must be provided.” That case has now been supported in the judgment by the Court of Appeal in Athena Capital Fund SICAV-FIS SCA & Ors v Secretariat of State for the Holy See (Costs) [2022] EWCA Civ 1061, in which it was stated that “a justification for the much higher rates was needed.”

The judgments in each case can be found here:

Samsung Electronics Co Ltd v LG Display Co Ltd [2022] EWCA Civ 466 

Athena Capital Fund SICAV-FIS SCA & Ors v Secretariat of State for the Holy See (Costs) [2022] EWCA Civ 1061

Unfortunately the important appeal in Belsner v CAM Legal has once again had to be postponed, this time due to one Counsel contracting Covid-19. Whilst this case has a very low monetary value, the ramifications for numerous other cases are potentially very significant and the result is awaiting with anticipation by many in the world of legal costs. The appeal will be heard on the first available date after 1 October (barring any further adjournment, of course).

In the recent case of Richards & Anor v Speechly Bircham Llp & Anor (Consequential Matters) [2022] EWHC 1512 (Comm), HHJ Russen cited the case of Northrop Grumman v BAE Systems [2014] EWHC 3148 (TCC) in which Ramsey J set out, starting at paragraph 56, the six factors which have a bearing on the reasonableness of a refusal to mediate.  Those factors are:

1. The nature of the dispute
2. The merits of the case
3. The extent to which other settlement methods were attempted
4. The costs of ADR
5. Prejudicial delay caused by ADR, and
6. The prospects of successful ADR

In addition, he stated, at paragraph 73, that “any admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply” should also be taken into account. In the prior case of Garritt-Critchley v Ronnan [2014] EWHC 1774 (Ch); [2015] 3 Costs LR 453, the Defendant was ordered to pay the Claimant’s costs on the indemnity basis for failing to engage in mediation. In Gore v Naheed [2017] EWCA Civ 369 the lower court’s decision to disallow indemnity costs on the basis that it was not unreasonable for the Claimant to decline to engage in mediation was upheld by the Court of Appeal. In Richards referred to above, in considering the six factors referred to in Northrop, HHJ Russen held that the Defendants’ failure to engage in constructive mediation was not sufficient to justify an Order against them for costs on the indemnity basis, and instead awarded costs on the standard basis up to and including trial. Each case will clearly be taken on its individual merits, but the factors outlined above should always be considered when deciding whether or not to engage in mediation.