Case: Viegas & Ors v Cutrale & Ors [2024] EWHC 2778 (Comm)
The judge had the task of determining the issue of costs after hearing a preliminary application. The Defendant sought an order that limitation be tried as a preliminary issue. This was opposed by the Claimant. The Defendant was successful. The Defendant sought 40% of their costs of their application, which they quantified at £292,919.16, and directed an interim payment of 55% of that sum. The Claimant submitted the costs should be reserved to be dealt after determination of the preliminary issue, and in the alternative, that the costs should be directed to be costs in the application and, in the event that the Claimant should pay the costs now, then the sums claimed were excessive and the interim payment on account should be significantly less than the sum which is sought.
As to deferring the costs until after the Trial, HHJ Pelling took the view that ‘this is a case where the time taken in order to resolve the issue, in the light of the way in which it is approached, means that very significant costs have been incurred in order to resist the application and in principle a costs order should be made’.
As to the level of the interim payment, it transpired that if the Claimant’s 40% figure was grossed up to 100%, it would appear over £1 million will have been spent on the application for the trial of the preliminary issue. HHJ Pelling commented that ’Even in hard fought commercial litigation of this sort, these are eye watering sums, and are sums which are likely to be the focus of very careful attention on a detailed assessment’.
HHJ Pelling referenced Kazakhstan Kagazy Plc v Zhunus [2015] EWHC 404 (Comm), namely that in hard fought commercial litigation involving large sums of money and in which the parties had spared no expense, “the touchstone (of reasonable and proportionate costs) is not the amount of costs which it was in a party’s best interests to incur but the lowest amount which it could reasonably have been expected to spend in order to have its case conducted and presented proficiently, having regard to all the relevant circumstances” HHJ Pelling commented ‘..with expenditure over and above that level being for the receiving party’s own account. It is plainly foreseeable that on an assessment there will be a very close focus on whether over £1 million was the lowest amount which the defendants could reasonably have been expected to spend in order to have its case conducted and presented proficiently in order to obtain the direction they had sought.’
HHJ Pelling awarded an interim payment of £225,000.
Commentary – A reminder regarding the caution required on the levels of costs expended even in demanding commercial litigation.