CA-2025-000371 - [2025] EWCA Civ 1003

In considering an appropriate amount to order on account of costs, particularly where the costs claimed are as high as they are in this case, the following comment from Leggatt J (as he then was) in Kazakhstan Kagazy PLC v Baglan Abdullayevich Zhunus[2015] EWHC 404 (Comm) is apposite:

“In a case such as this where very large amounts of money are at stake, it may be entirely reasonable from the point of view of a party incurring costs to spare no expense that might possibly help to influence the result of the proceedings. It does not follow, however, that such expense should be regarded as reasonably or proportionately incurred or reasonable and proportionate in amount when it comes to determining what costs are recoverable from the other party. What is reasonable and proportionate in that context must be judged objectively. The touchstone 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. Expenditure over and above this level should be for a party’s own account and not recoverable from the other party. This approach is first of all fair. It is fair to distinguish between, on the one hand, costs which are reasonably attributable to the other party’s conduct in bringing or contesting the proceeding or otherwise causing costs to be incurred and, on the other hand, costs which are attributable to a party’s own choice about how best to advance its interests. There are also good policy reasons for drawing this distinction, which include discouraging waste and seeking to deter the escalation of costs for the overall benefit for litigants.”

We note that (i) approximately £1.4 million was incurred by the Plan Company’s solicitors and (ii) Counsels’ fees (across the three Counsel at the hearing) were in excess of £800,000. The hourly rates for the Plan Company’s solicitors (e.g. £1,232 to £1,400 for a partner) are far in excess of the guideline rates, with no real justification offered, other than that this was a complex case. As this Court pointed out in Samsung Electronics Co Ltd v LG Display Co ltd[2022] EWCA Civ 466, per Males LJ at §6, in order to justify departure from the guideline rates “a clear and compelling justification must be provided.” Although there are no guideline rates for Counsel’s fees, it is important to stress that only a reasonable and proportionate fee may be recovered from the other side: Athena Capital Fund SICAV-FIS SCA v Secretariat of State for the Holy See[2022] EWCA Civ 1061, per Males LJ at §7.

In circumstances where the Plan Company instructed more than eight professionals (three Counsel and solicitors across five levels of seniority), where the appeal was mostly confined to issues of law (albeit that Kington’s appeal involved a review of the judge’s findings on valuation), and where the parties had argued the same issues before the judge only a matter of weeks earlier, we consider that there is a greater than usual risk of overlap between the work done by the various professionals.

Mr Smith sought a payment on account of 40% of the claimed costs. That was a conservative estimate, he submitted, of what would be allowed on assessment, taking into account the issues we have identified above. We consider it is not conservative enough, and will order a payment on account of 35%: that would result in the total costs claimed being reduced to a still very generous amount, in all the circumstances, of £791,000. When applied to 60% of the costs incurred, the resulting payment on account, rounded up, is £475,500.

Each of Kington and TWL will accordingly be ordered to pay £237,750 on account of the Plan Company’s costs.