This case law blog looks at the case of Pipia -v- Bgeo Group Ltd  EWHC 846 (Comm) whereby Mr Justice Henshaw replaced a Detailed Assessment Order with Summary Assessment.
The background of the claim is that the Defendant was successful in defending a claim made by the Claimant (the claim was struck out as a result of the Claimant’s failure to adhere to a Security for Costs Order). As a result, the Defendant applied to the Court for costs to be summarily assessed (a variation on the previous Order made) in order to avoid a time consuming and expensive detailed assessment.
The Defendant filed an updated Schedule of Costs with their application and the application sought an order in the following terms;
- Summary assessment of the Defendant’s costs of proceedings in the sum of £7,567,265 (the amount previously ordered by way of payment on account).
- An order to treat the sum of £3,157,033 already released to the Defendant from the Court as partially satisfying the final Costs Order.
- An Order that the Claimant pay the balance of £4,410,232.37 within 14 days.
In order for the Court to vary the previous Order in this way, the Claimant had to show that there were material changes of circumstance. Whilst the Defendant acknowledged that there had not been a change in respect of the position in principle as regards to enforcement, there had been three main relevant changes of circumstances. Firstly, the Claimant failed to adhere to the order for payment on account. Secondly, the Claimant showed no intention of adhering to the cost order made against him and thirdly, the costs had been properly calculated, which was not possible at the time of the filing of the initial statement of costs.
Whilst the Court did not place weight on the third point, Mr Justice Henshaw agreed that a key point was that the Claimant had failed to adhere to the previous Order regarding payment of the Security for Costs.
The Court also considered the likely costs of Detailed Assessment and estimated the same to be approximately £1.2 million (excluding VAT). Mr Justice Henshaw considered this to be confirmation of the extent to which good money would be thrown after likely bad money in pursuing a Detailed Assessment.
Mr Justice Henshaw also agreed with the Defendants concerns regarding the Claimants conduct and namely that he did not intend to comply with any future orders of the Court and therefore a Final Costs Order (stemming from summary assessment) would allow for enforcement against the Claimant, both domestically and internationally.
On the basis of the above, the Court concluded that there had been material change of circumstances to allow the Court to make an Order however, prior to summarily assessing the costs, the Court considered the authority and feasibility of the same in view of the value of the costs.
Given the provisions set out in CPR 44 PD 9.1 and CPR 44.6(1) the Court determined they did have authority to Summarily Assess the costs and thereafter considered the level of costs to be awarded.
When considering the costs, the Court confirmed (at para 48) that the costs sought were approximately 44.4% of the estimate costs incurred (Excluding interest which was likely to be high given the non-payment for almost a year) and also stated there were good reasons for the Defendant’s approach given the failure of the Claimant to pay any costs to date.
The Court also considered the hourly rates sought and time in general and concluded that “based on the totality of the information that is before me, as to a fair level of costs to be payable under a final order, which does not run any material risk of amounting to an overpayment. In all the circumstances, I am confident that costs would be awarded on a detailed assessment in the sum of at least £7,250,000 and I consider it appropriate to assess the costs summarily in that amount”(Para 51).
This case is interesting as it is a common belief that if costs are considered “high” the Court will not undertake a Summarily Assessment however, the case above demonstrates when the Court may seek to summarily assess costs.
For the full case, please see here.
If you have any questions regarding the above, please contact Karl Robson, here.