In the case of UK Sovereign Investments Ltd -v- Hussain  EWHC 2390 (SCCO) the Court considered the appropriate basis for payment of detailed assessment costs when there is an allegation of inflated costs.
The initial claim concerned the return of a deposit together with damages. The claim ultimately settled in the Claimant’s favour in the sum of £103,816 plus costs.
The Claimant thereafter sought costs in the sum of £83,425 however the costs ultimately settled in the sum of £59,000.
This all sounds run of the mill so far, yes?
Well, the Defendant thereafter sought to argue that the Claimant’s Bill of Costs had only exceeded the £75,000 Provisional Assessment limit as it had “grossly exaggerated” the costs. They therefore invited the Court to make an Order limiting the receiving party to £1,500 (plus vat and Court fee) – the same being the maximum allowed in respect of Provisional Assessment.
The Claimant essentially argued that they settled to avoid the expense of a detailed assessment hearing. They also argued that, without assessing the bill, the Court was not in any position to make a ruling on whether the costs were exaggerated.
Judge Campbell agreed with the Claimant and stated that he did not believe that the fact that the Claimant had sought £83,000 and had settled for £59,000, to be “irrebuttable inference” that the costs claimed were exaggerated.
The Judge held that given it is unlikely a receiving party receives all their costs, it is likely that one of the following four reasons were applicable:
- Wanted to accelerate receipt of money
- Merely wanted finality
- The Claimant believed the Points of Dispute were arguable
- They believed the offer received place them at risk
Ultimately, the Court agreed that the “law makers” had not provided that where a bill is reduced to less than £75,000 then provisional assessment costs should apply. Therefore, it was clearly not the case.
The Court did go on to make comments regarding the level of costs sought in the bill however the points made did not have any impact on his findings.
The outcome may not be surprising to most professionals however, it is interesting to consider what conclusion may have been drawn had the costs not already been agreed.
The complete case can be found here.
Please contact Karl Robson for any further queries in relation to the above.