Justice Jack of the Commercial Division of the High Court set aside a statutory demand and following submissions on costs by the parties, rendered its judgment applying the principles of CPR 64.6.
CPR 64.6 enshrines, along with some discretionary exceptions for deviation, the general principle that an unsuccessful party ought to pay the costs of the successful party.
The Applicant argued that the general rule should not apply as there was no general interest in serving the statutory demand and the Respondent lost on two of its defences. The Court rejected both arguments for deviating from the general rule but acknowledged that, if relevant, the Court will consider the extent to which costs have been increased by arguments on the losing point.
Having determined that the Applicant was required to pay all the Respondent’s costs, the Court then examined the relevant principles for determining the quantum. The court rejected the argument that it should first refrain from taking a line by line approach to assessment and instead take a “broad brush” approach to reduce the overall amount claimed to 75 per cent.
The Court held that the correct approach was to first determine whether the costs claimed are proportionate. If deemed proportionate a “broad brush” approach to reduce costs was not correct. Instead, the Court would examine individual disputed items and make the appropriate deductions. Examining the individual complaints against the successful party, the Court discounted costs incurred by a senior associate that could have been incurred by a junior associate and disallowed costs incurred for research carried out after the hearing of the claim. The total amount discounted from the costs claimed was only US$381.25.
On the costs of the cost assessment, the Respondent was also to be awarded its costs to be determined on paper. The Respondent had the benefit of a without prejudice save as to costs letter that was not defeated by the Applicant.
This “proportionate” amount to assessing quantum is good news for a successful party who has put forward his reasonable costs. He can expect substantial recovery rather than a broad-brush discount approach.
See a copy of the judgment here.