Aereal Bank AG v Emmanuel Lumineau & Anor

1. DEPUTY COST JUDGE LIGHTMAN: I now deal with the question of hourly rates. My starting point would be, obviously, what is claimed in the bill of costs. Some of what is claimed are higher than the guideline rates. We know the guideline rates have been changed more recently, 1 January 2025.

2. This litigation took place within a very short period of time, June 2024 until September 2024, and it is said by the paying party that I should be looking at the guideline rates which for London 2, the rates applicable from 1 January 2024, Grade A of 398, Grade B of 308, Grade C 260, Grade D

148. It is very simple. The rates claimed in the bill, some are a bit lower than guidelines, but the partner's rates, if I put it that way, are a bit higher. It has all been set out, and I am not going to repeat what is said in general point 3 of the points of dispute, and the very long reply thereto.

3. I have had the benefit of looking at a great deal over the last day of what is in the bundle that has been lodged by the receiving party, over 13,000 pages, but I note what is said in the response, and I am grateful to Mr Latham for referring me to the very items that I was looking for, but gave up searching for yesterday, variously at pages 321, 12981, 13176 and 11948, and looking at what was said in the decision; how it came to be that there was an order for costs made in favour of Aareal on 12 September 2024.

4. Mention is made in the point of dispute, that I should take note of Samsung v LG, where the Court of Appeal affirm that, "A clear and compelling justification must be provided to hourly rates that exceed the SCCO guidelines." We know that the guidelines are there, in theory they relate to summary assessment, but it had been said that, in recent years certainly, summary assessment guidelines are a starting point. Relying on Samsung which is about three years old now, we should be very cautious in departing from the guideline rate.

5. I take note of what Mr Latham has said to me, that there had been decisions, including myself, where I had departed and gone higher than the guideline rates, but I am extremely cautious. I am conscious that London 1 rates are "Very heavy commercial and corporate work by centrally based London firms, not restricted to any particular London postcode", and London 2 are in Central London. What Mr Latham has said is in respect of the items, the claimed hourly rates exceed, not by much, and I note what is on page 12 of the replies to the points of dispute, and I can see that there is percentage of partner 1; partner 2; the claim for £433.50 and a claim for £518.50; the associate £306, et cetera. I have taken on board all of that.

6. What has been said to me, having regard to the nature of this case and its complexity, that I should go above the guideline rates, and I think he is asserting that I should stick to what is being claimed within the bill. I stand back and I have to take into account what is reasonable and I can still add the word "proportionate", stage

1.

7. My view is this. I have seen enough to understand why it is said it is complex, according to Mr Latham and his side, and I have read correspondence, drafts and redrafts, which I will not repeat, to see why it was so important to the receiving party. In this instance, the third party, Aareal.

8. I am always reluctant to depart from the guideline rates, so I have to satisfy myself that there is something, because of the unusual nature of this case, which would mean that I would depart. I have seen enough to say to anyone that this is an unusual case. I thought I had seen every case on the planet in my 30 years on this side of the bench, 20 years on the side of the advocates but this, even for me, was an unusual matter. I am therefore prepared to say that I will go above the guideline rates, but not by much.

9. I will be guided and referred by the parties, so that I can go to each one, but let us start by looking at page 5 of the bill. The first one is the claim for £433.50, the guideline rate would be £398, compared to the London 1 rate of £546. There is a big gap. What is being sought is £433.50, so not that great an increase, but the best I am prepared to do, having regard to all I have seen, I will reduce the £433.50 to £410. In respect of legal director, it is below guidelines, so I am not going to interfere with that; the £306 is below guideline or about the same. I am going to allow £275.

10. The most interesting point about this detailed assessment, in my point of view, is whether or not leading counsel should have been instructed. What has not come out in either the points of dispute or the response, the response in particular, is why it was that leading counsel was instructed at all. I have the benefit of what the paying party says, I know why, apart from what has been said by Mr Latham today, and the seriousness of the matter.

11. I am going to say this; my knowledge of this case, and I have no idea of the knowledge of Mr Innes' case, but I cannot imagine the paying party does not know the history of this case. It is clear to me that Mr Fisher has been involved in this matter in the past. It is not unreasonable, I make it quite clear, that if someone has been involved in this case, with all the knowledge, to go to him straightaway. Whether he should be charging leading counsel's rates or a lower rate because of his previous involvement is another matter. It is not unusual if someone has been involved in the case, and during the course of that time involved in that case, he is promoted to leading counsel.

12. In my day, and we are going back three decades, back into the last century, it was not unusual for leading counsel to say, "I will charge for the first year at a senior-junior counsel's rate, but after that, if I continue to be instructed, I would be expected to be paid at my leading counsel rate." That is not unusual. That has been the position, as I understand it, since I started doing taxations, as they were, over 51 years ago. With that in mind, I make the first point that in my view, it was not unreasonable at all to instruct Mr Fisher, who had previous experience of this case.

13. Let us go to the point of dispute. Instructions to counsel for advice and/or draft. The points of dispute refers to 47 items (I think I counted), all relating to counsel, counsel's involvement, et cetera. It says: "Save for settling the Skeleton Argument the paying party does not perceive any reasonable need to instruct counsel to advise and/or draft in relation to the removal application. Accordingly, no offer is made for counsel's fees, nor for the corresponding communication and preparation time. In the alternative, if the contributions made by the partners and/or Grade A fee earners are upheld as chargeable and recoverable between the parties, the paying party will contend that the fees of counsel for advice and drafting should not be allowed in conjunction therewith, and all the associated communications and preparation time, with the exception of junior counsel for settling the Skeleton Argument. A senior fee earner ought to be able to evaluate the evidence and draft the relevant documentation independently and thus, without the need for a second opinion from counsel." (Quote not checked)

14. As I understand that, they are saying no need for counsel at all, but in the alternative if I do say, and it is strangely worded, that the fee earner should be paid in the solicitors office, then maybe counsel (presumably meaning junior counsel) is quite sufficient.

15. Then the second point, instruction of leading counsel: "In any event, the removal application did not entail, difficult as it is, a (inaudible 1.52.37) therefore the paying party relies upon the Court of Appeal decision in Cooram v D R Dunthorn & Son Ltd, and contends that the involvement of leading counsel was an extravagance and it should not be recovered between the parties on an assessment of costs on the standard basis." (Quote not checked)

16. Pausing there; I was not aware, I may be wrong, it went to the Court of Appeal. I thought it was my colleague, Deputy Costs Judge Paul Joseph. It went to Yip J, and of course I just happen to have the decision on the screen as we speak. I have read the entirety of the judgment, just to refresh my memory, because Deputy Costs Judge Joseph and I are often here in different rooms at the same time on different cases, and I can tell you that has been the case on a number of matters during the course of this year alone. This came up for discussion a year ago, so I am not unfamiliar with this case. Of course, he said, and it was approved on appeal by Yip J, what is reasonable and proportionate

17. There are also other points that have been considered or not considered by Deputy Costs Judge Joseph, but what was set out, and I will not repeat because I suspect everyone is familiar with the decision there, what is reasonable and proportionate. Of course, in that case, it was the usual scenario where you (already) had junior counsel and junior counsel (query) recommends having leading counsel. This is not that scenario; it is the reverse. Leading counsel, as I have said, Mr Fisher was involved in the case, certainly up to several years ago, and I think I am right in saying before he was made a leader in 2020, if I my memory serves me right, and he continued with the case. We therefore have that situation.

18. At the end of the day, as has been pointed out, it has to be reasonable, so The White Book says, and the note has been pointed out by Mr Latham. I was looking to see if Coram actually appears in the list, but it is not there yet. I suspect it will come in, I do not know. I am not an editor of The White Book, I do not know. A certain senior costs judge, no doubt, will consider that in 2026. I do not know if it is in the supplement, I have not checked. Continuing on with the points of dispute: "The court is respectfully reminded that the paying party was adequately represented by junior counsel, who was instructed conservatively. All submissions made hereafter are advanced entirely without prejudice to the general point." (Quote not checked)

19. In response, the receiving party says: "The reply in relation to the proportionality is reiterated insofar as the nature, complexity and importance of the matter is concerned. Those factors justify the general instruction of counsel to advise. The objection does not specify specific instructions of counsel or identify any specific reasons why instructing counsel to advise on specific issues or draft specific documents was unreasonable. Aareal does not, therefore, know the case it is expected to meet and is unable to respond substantively. The objection fails to comply with CPR 47, Practice Direction 8, paragraph 8.2 and, therefore, should be struck out. (I will deal with that later in this judgment) Instruction of leading counsel. The reply in relation to proportionality is reiterated as to the general complexity and importance of this matter. Given the complexity and multiple practice areas involved in this matter, leading counsel was required in order to protect Aareal's position fully. Junior counsel was, however, involved to alleviate the amount of work needed by leading counsel prior to the hearing, and as is evident from their bills. Further, and as set out above, there were unusual points of insolvency law that had to be dealt with in a short and tight timeframe, given surplus in litigation and the applicant's attempts to stay the liquidation and bring the company back under their control. This necessitated the advice from leading counsel, with significant insolvency expertise. The question of reasonableness is a fact sensitive determination to be made by the court, and the quoted case (Corum) relating to an industrial disease claim is non-binding and of no persuasive value." (Quote not checked)

20. On that last point, I think it is the penultimate paragraph in Coram, where Yip J. says at paragraph 57: "Each case will fall to be determined on its own circumstances and in light of material placed before the judge carrying out the assessment. In this case, I have simply concluded that the cost judge did not err in the exercise of his discretion."

21. Every case is different. It was no surprise when I saw a Skeleton Argument from Mr Latham at paragraph 2 citing the paragraph 47 of Practice Direction 2 which reads: "Points of dispute must be short and to the point. They must follow the precedent G in the schedule of costs annexed to this Practice Direction, as far as practical. They must:- (a) identify any general points or matters of principle which require a decision before the individual items in the bill are addressed."

22. Pausing there; I take the view that what I have read out in the points of dispute comes within (a) and then, "(b) identify specific points stating concisely the nature and grounds of dispute."

23. Having regard to Ainsworth, which I will come to in a moment, my initial reaction was the points of dispute referred to the items, but they do not say in respect of item 1, it is unreasonable to have instructed leading counsel and if we are wrong on that, the fee should be X or whatever. That has not been done. That, in my view, should have been done, and I say that when I read it before reading anything about Ainsworth.

24. I am not going to read out all of this, but I will read from the Skeleton of Mr Latham, but Ainsworth, which I always remind myself was a solicitor and client bill not a party and party bill: "The Court of Appeal considered the decision of then Senior Cost Judge Gordon-Saker to strike out point 10 of the paying party's point of dispute, which failed to comply with CPR 47, Practice Direction 8.2. The nature of the point of dispute filed in that case is set out at paragraph 6 of the judgment of Asplin LJ . In summary, it disputed all entries of document time, and explained the challenge was to the reasonableness of the time claimed by reference of seven principled challenges (I will not read them all out). It failed to say which of the individual entries in the bill was challenged by reference to any particular point of principle. The paying party's approach in the present case is mildly similar to the points in Ainsworth.

25. The items have been pointed out, one, two, four, et cetera, so I am, in theory, able to look at each one, but by reference to the point of dispute that I can see the point of principle, but there is nothing else. There is a difficulty there. However, I can look at every item. Mr Latham then goes on at paragraph 4, "The crux of the Court of Appeal's decision to uphold the senior cost judge' judgment is set out in paragraphs 37 to 45." He then refers to paragraph 37: "37. Sub-paragraphs (a) and (b) leave no doubt in about the way in which the draftsman should proceed. General points are matters of principle, which require consideration before individual items in the bill/s are addressed should be identified, and then specific points should be made, 'stating concisely the nature and grounds of dispute'.

38. Common sense dictates that the points of dispute must be drafted in a way which enables the parties and the court determine precisely what is in dispute and why. That is the very purpose of such a document. It is necessary in order to enable the receiving party, the solicitor in this case, to be able to reply to the complaints. It is also necessary in order to enable the court to deal with the issues raised in a manner which is fair, just and proportionate. (Those are the words that come up all the time)

39. …Having explained the nature and grounds of the disputes succinctly, the draftsman should insert the numbers of the items disputed on that ground in the relevant box. (Well, the numbers are there on the left-hand side) The principle is very simple. In order to deal with matters of this kind fairly, justly and proportionately, it is necessary that both the recipient and the court can tell why an item is disputed. The recipient must be placed in a position in which he can seek to justify the items which are in dispute.

42. …Points of dispute 10 was in a general nature and stated that all items were disputed, that the list provided was not exhaustive of the issues but provided a general overview and that Mr Ainsworth reserved his position generally. It did not contain cross references to the number of items disputed on particular grounds. In fact, it was accepted that it did not state why any item in the bill was disputed. In my judgment, therefore, it did not comply with paragraph 8.2 of Practice Direction 47, nor, for that matter, did it take the form of precedent G."

26. Paragraph 5 of the Skeleton has referred to Ainsworth, and it has been adopted in other cases, in particular in High Court when dealing with party and party costs. Quoting from paragraph 49, "On the basis of my interpretation of the judge in Ainsworth, the points of dispute in the current case do not satisfy compliance", et cetera. Further down, "…the receiving party cannot identify which individual units of work are disputed and why. The assertion that the time was either unnecessarily incurred or unreasonable amount is an assertion of two alternative allegations, which are actually completely different….The receiving party is entitled to know which of these two allegations applies to any unit of work challenged, so that it can meet the challenge with an explanation or evidence. To allow a generic alternative challenge to stand in relation to potentially any or all entries, is clearly unfair to the receiving party."

27. It could therefore be argued that even though the generic point, item A in the Practice Direction is covered, there is no explanation that could satisfy a court in respect of item B, because they had not gone that far. Continuing with an extract from paragraph 50: "If there is a documents section, as in this case, where there is a schedule with 83 timed but identifiable items, it is up to the paying party how many items it wishes to challenge. A sensible paying party may make a value judgment, and decide to challenge only the highest and, therefore, more valuable entries. If the paying party chooses to challenge every single item in the schedule, then he is the one adopting a disproportionate course of action, which the receiving party has to be able to fairly respond to."

28. Therein lies the problem. It then deals with assessment of costs, that is the party and party costs, I will not read the rest. The rest of it, of course, relates to not only this, but other parts of the same problem with Ainsworth throughout. I am not going to read it all out, it is there to be seen, I do not want to go into too much on that.

29. I stand back, and I have already commented during the course of this hearing that what normally happens is that if there is a schedule; if there are items; we often get cost draftsmen who will annotate the schedule, so that we can see precisely what the objection is and why. Often , the annotation will say if too much time has been spent or perhaps the item is not covered by the order for costs. But what I have here is simply a generic point

30. It is arguable, as I have said, that all of this should be ignored, but my view is that I can, by looking at each individual item, simply bear in mind what is being said. Should leading counsel have been instructed? Should there have been junior counsel? I can look at each individual item. I am going to say this, and I repeat, I can see why leading counsel came on the scene, but I query why leading counsel remained on the scene throughout, at least until the hearing on 12 September 2024. I see, from what I have read, why the receiving party kept leading counsel on the scene. It occurred to me, when I read what I did, and my question was answered because I made an assumption, this all happened June, July, August 2024.

31. It was no surprise to me that junior counsel came on the scene in the middle of August, or thereabouts, so I have had the advantage of seeing why junior counsel came on the scene. I asked myself, if it was reasonable having leading counsel, which it was, this particular counsel in this case, one, should he be allowed to continue on the case but at lower rates, because the case was not as complex as the receiving makes out. My own view on the complexity is that whilst I understand the receiving party (a) has teams (not unusual) and (b) effectively divided up the commercial side and the insolvency side, I am not convinced that it was so complex that leading counsel at leading counsel's rates should have been used throughout. I am not convinced about that at all, and I do not think that that was reasonable and proportionate, to use the words of Yip J. I bear that in mind when I go through each of these items.

32. Do I think it was reasonable instructing junior counsel, where junior counsel was used? I do not think it right to say that she was relatively junior, when she had been attending in 2018 and I have seen why, because I have the advantage over the paying party how she came on the scene, and how she came to be involved and what was said, in fact, by leading counsel in respect of that instruction. I have that advantage. I also have the advantage, because I know that leading counsel was going to be away for a short while, and I therefore do not think it unreasonable that junior counsel came on the scene. However, I query whether it was reasonable for both leading counsel and junior counsel to be involved in the way they were, jointly getting together, jointly incurring fees.

33. As I go through each individual item, I will make my observations on what is reasonable and proportionate.

34. I am asked to consider items 15, 16 and 17 of the bill. It is apparent to me that junior counsel has come in, because leading counsel went on holiday. On the one hand, it is not unreasonable for the paying party to instruct someone else to cover a position when counsel is away and you have to work towards the hearing on 12 September and, more particularly, to deal with this letter that is going out to the shareholders. There was a time limit for that to be sent and the response thereto, and I know it was ultimately extended by agreement, at the time of sending it out. This all happened at that time when leading counsel was away, and that is why we see the fee notes. Reading in was on 8 August and on 9 August, and then the advice on 12 August, all before the 15 August magic date as I will call it.

35. Mr Latham says Ainsworth effectively prevents me from doing anything on this, other than to approve them, because there is a failure to comply with what I will call paragraph 3 of the Practice Direction 8.2. Mr Innes says no, the items are set out in the column, we can see the items in dispute are 15, 16 and 17, and he says that looking at the two paragraphs, which I have read out several times now, in particular the second paragraph, "in the alternative contribution…the parties will contend that the fees of counsel for advice and drafting should not be allowed."

36. We have a specific assertion, apart from drafting in respect of Skeleton Argument by junior counsel, it is said, they are objecting to what has been done for advice and drafting. They do not actually say anything about reading in, and it should have been obvious that the fee notes and the bill were indicating that this junior counsel was reading in. I have already made the comment that in most cases, you get junior counsel, and they may recommend leading counsel to be brought in, and this is the reverse. This should have been picked up in the points of dispute, and it was not, and it is left open now.

37. We are going into the realms as I have said already today, I am not supposed to go into. I am not supposed to put in the point that should be made, the specific point as opposed to the general generic point. I therefore stand back, and Mr Latham is absolutely blunt, and he says I cannot. Ainsworth is crystal clear on this and he knows, and everyone else knows that I am not happy on this. We can fall back in due course when we deal overall with proportionality at the end of this detailed assessment, but with all that in mind, I am afraid I repeat, my hands are tied. I do not like it. However, I feel it is incumbent on me to allow item 15 in full and item 16 in full.

38. The initial advice, 17, we have 12 August, the initial advice, and if we go back to Mr Fisher's fee note and we go to 13 August, "advising by telephone", my interpretation was that she has given advice, and he has come in after that. Then I go forward, just before I go any further, just to compare item 19, which is junior counsel's advice. That item, to my mind, is correctly covered all under the 13 August, items 18 and

19. I therefore stick to 15, 16 and

17. I have to allow 15 and

16. Counsel has given advice, someone would have had to have done it. I do not see how I can interfere with that, and it must logically follow, and I have to tick it.

39. Dealing with items 49 to 53, it is pure speculation on my part what would have happened if leading counsel had stayed; not gone on holiday and did everything and not brought in junior counsel to cover the position whilst he was away; pure speculation. I ask myself, have we saved time in having both leading counsel and junior counsel involved in the Skeleton. Items in relation to junior counsel are not challenged and it is items 49, 51 and 53 which are, if you like, leading counsel's input into the Skeleton and drafting initially by junior counsel.

40. Leading counsel was the one who was going to be the advocate in due course for a hearing, initially listed for 30 minutes in the interim list, and we know that they had to prepare for battle when, as far as I can see, the applicants had a change of position and made it plain that they wanted a removal of the directors, and that would have had considerable impact on the receiving party. That is why they had to be so cautious and do what they had to do and did.

41. There is no challenge to the £3,150. I agree with Mr Innes that I should simply reduce the £2,550 to the £1,125 to reflect junior counsel's rate for the input of senior counsel. It is submitted by Mr Innes that I should delete completely item

51. I look at item 52, and we know it is work done by junior counsel, it is going back and forth between the two, and they are in the same chambers of course. I do not agree I should delete it, but in the position we now have, I think it is reasonable that there could be some input.

42. It might be that had this all been done by junior counsel, more time would have been needed. We do not know; it is pure speculation. I am going to reduce the £1,195 and do something similar basically to what I did with

49. I am going to allow £862.50 and I am going to do the same for item 53; that becomes £1,275. I stand back and ask myself if you add all of those fees for each of these individual days, would we have got something different, higher or lower, if there had been only one counsel, be it leading counsel or senior/junior. It is pure speculation. It might have been lower, it might have been higher. That is the best I can do. As far as I am concerned, that is reasonable, and I am not going to say it is proportionate, because proportionality is going to come at the end of this. Without any question, that is what I think is reasonable.

43. I have been asked to consider whether the words in point 5, the last sentence, "Similarly, the paying party challenges recovery of the communications work in time claimed in connection therewith." On its face, I cannot work out to what that refers. I am told by Mr Innes that clearly refers to the work entailed in or involved in sitting behind counsel on 12 September.

44. Stretching a point and being as generous as I can, that may be possible, but my view is that is in total conflict with the dicta in Ainsworth. Even though it is de minimis — we are talking about three hours' work but looking at it, I can tell you that at best, they might get that halved, but I am afraid as a matter of principle, I am against Mr Innes, and I refuse. Epiq Europe Ltd hereby certify that the above is an accurate and complete record of the proceedings or part thereof. Lower Ground, 46 Chancery Lane, London WC2A 1JE Email: [email protected]