The question of what constitutes a reasonable hourly rate in high-value litigation is a constant battleground. The Court of Appeal’s costs judgment in the high-profile Kington v Thames Water appeal has provided a clear and forceful judicial interventions on this topic in.
This decision is essential reading for any practitioner, as it signals a hardening stance against what the court deems to be excessive charging practices.
The Court’s Direct Attack on High Hourly Rates
The central drama of the costs judgment was the court’s reaction to the successful party’s £2.26 million bill. The court described the overall sum as “eye-watering” and immediately honed in on the underlying figures.
It specifically called out partner hourly rates of between £1,232 and £1,400. Crucially, the judgment then explicitly reaffirmed the vital principle from the landmark case of Samsung v LG Display:
In order to justify departure from the guideline rates “a clear and compelling justification must be provided.”
This is a direct message to the profession. The burden of proof is not on the paying party to show a rate is unreasonable; it is squarely on the receiving party to provide clear and compelling evidence justifying why such a significant departure from the established guidelines is necessary. A complex case, on its own, is not enough.
A Low Payment on Account Signalling Judicial Displeasure
The court’s scepticism was made tangible in its decision on the payment on account of costs. It ordered a payment of only 35% of the costs claimed, a clear signal that it expects the bill to be heavily reduced at the final detailed assessment.
To justify this low figure, the court articulated the fundamental, objective test it would apply. It quoted with approval a key passage from a judgment by Leggatt J (as he then was), which provides the framework for any costs assessment:
“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… Expenditure over and above this level should be for a party’s own account and not recoverable from the other party.”
By using this core principle of final assessment to decide the interim payment, the court sent a powerful message about how it views the entire bill. The principle makes it clear that recoverability is not based on what a client was willing to pay, but on an objective standard of what was reasonable and proportionate.
Key Principles for All Practitioners
This judgment serves as a powerful reminder for every litigator:
- For Receiving Parties: The burden is on you to provide a detailed, evidence-based justification for any hourly rate that significantly exceeds the guidelines.
- For Paying Parties: This judgment is a powerful authority to challenge excessive hourly rates, focusing on the lack of a “clear and compelling justification.”
- For Everyone: The court’s focus is on the “lowest reasonable amount” required to do the job proficiently. This objective standard is the ultimate measure of recoverable costs.
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