Guideline hourly rates and their relationship with detailed assessment
Whether you are a paying party or receiving party, when discussing the recoverability of costs, Guideline Hourly Rates will always be part of any costs negotiations. There is however, more misunderstanding about Guideline Hourly Rates than most other aspects of costs.
The SCCO Guide to the Summary Assessment of Costs state;
“The guide is specifically limited to summary assessments of costs and is intended to provide a simple collation of hourly rates incorporating a 50% profit mark-up appropriate for routine costs to be assessed summarily at the end of a hearing which has lasted no more than a day. It has nothing to do with detailed assessments. The rates, in the words of the guide, ‘are broad approximations only’. They are not prescribed by the SCCO. They are not a scale. They may be amended locally at any time by the Designated Civil Judge. They are not carved in stone.”
Simply put, Guideline Hourly Rates have no application at all in relation to anything other than summary assessment, and even in summary assessments they are guidelines and not tramlines, and are not supposed to replace the experience and knowledge of those familiar with the local area and field and the field of law generally.
InHiggs v Camden and Islington Health Authority EWHC 15 (QB)the High Court concluded that the guidelines were of limited assistance. This was reaffirmed by the Senior Master at the time (Master Hurst) stated that “The Guideline Rates are published for the assistance of Judges and Court users in connection with Summary Assessment.They are guidelines only and the Court retains the discretion to allow rates which are reasonable in all the circumstances” (AA and others v TUI UK Ltd and others  EWHC 90017 (Costs) (11 August 2005)) and in (1) KMT, (2) Kay, (3) Mey, (4) MJY (Children proceedings by their Litigation Friend the Official Solicitor) v Kent County Council  EWHC 2088 QB.
More recently in G (by her mother and litigation friend M) v Kingston Upon Hull City Council,Case No 9KH 02927, 18 September 2013, His Honour Judge Jeremy Richardson QC said:
“20. A detailed assessment is not a scientific process, neither is it a process which will produce a necessarily right or wrong answer. A multiplicity of different methods for establishing the appropriate hourly rates has flourished. At the heart of this appeal is the question of the relevance of the guideline rates. The range of possibilities varies from following those rates slavishly to ignoring them altogether. There are clearly many shades in between those two extremely. Whilst they are described a “guidelines” for “summary” rather than details assessment, it is nevertheless commonplace on both summary and detailed assessments for courts to be referred to the guidelines. This is often on the basis that they should be uplifted (on the receiving party’s submission); disregarded entirely (receiving party); or followed (a common submission from a paying party in response to a Bill claiming higher rates than those in the Guidelines). However it is put, it is a matter for the court’s discretion. The seven factors in CPR 44.5(3) will be relevant; but the weight afforded to each factor is a matter for the wide discretion of the costs judge.
21. As we shall come to explain the guidelines are an extremely useful tool for detailed assessments, but they are not to assume an enhanced status beyond a useful starting place or cross-reference point. We emphasize at once that a detailed assessment requires the exercise of judgement as we hereafter set out”.
His Honour Judge Jeremy Richardson QC was critical, as many others have been, of the rigid guidelines approach of the Regional Costs Judge, who made provocative remarks in his judgment. The court held that he imposed a straitjacket upon himself by the comments that he made and that he did not extricate himself from that straitjacket.
His disregard of expertise, which the court held to be synonymous with skill as a charging factor set out in CPR 44.5(3)(e) was an error of law, described by the court as “significant”, “an error of principle” and “plainly wrong”, (paragraph 43) and compounded by an “overly robust approach to the application of the guideline rates”. (Paragraph 44).
His Honour Judge Jeremy Richardson QC however rejected the argument that Guideline Hourly Rates have no relevance whatsoever on detailed assessments.
“…….it is not wrong in principle at all, and is entirely appropriate, for the guidelines to be referred to during a detailed assessment and/or for them to be used as a starting point or crosscheck”. (Paragraph 39).
Guideline Hourly Rates should therefore only be used within detailed assessment as a starting point, and the expertise and knowledge of the Costs Judge should prevail.
By Michael Mansi - Costs Lawyer