Aoife Murphy discusses a costs judgment that concerned the assessment of forensic accountants’ fees incurred by the claimant in a long-running and complex commercial dispute. The decision in Deutsche Bank AG v Sebastian Holdings Inc & Vik (2021) demonstrates how costs management could have avoided the protracted assessment of the fees.
This was a long-running and high-value matter proceeding in the Commercial Court, with the claimant’s disclosure amounting to a review of over 1.5 million documents. The parties serviced 54 witness statements and 40 experts’ reports. There were ten joint experts’ reports. The judgment ran to over 428 pages.
The claimant is an international bank, and the defendant is a company incorporated in the Turks and Caicos Islands.
The costs claimed by the claimant against the defendant are in excess of £53m, the claimant being entitled to 85% of its costs of the claim to be assessed on the indemnity basis. For the purposes of this article, the focus is on the fees of the forensic accountants, Deloitte paid directly by the claimant, running to tens of millions of US dollars.
Deloitte had incurred substantial fees in the matter, and they issued monthly gross sum invoices for the work done between July 2011 and November 2013. It had been agreed that any time spent in excess of 8 hours per day would not be charged, and from September 2011 to November 2011 a discount of 5% of fees between £250,000 and £500,000, and 10% of fees over that had also been agreed. From December 2011, the 8 hour cap continued, but the discounts were replaced by a discount of 10% on the total, and from July 2012, 15%. For the purposes of the detailed assessment, Deloittes had produced very good breakdowns in the form of monthly summaries for the months up to January 2012. These identified the works streams each month and provided broad detail of the work done on each workstream in that month, but not the amount of time spent on each workstream.
The assessment of the fees of Deloitte was time consuming and expensive. The question of how they should be assessed had already been the subject of earlier hearings, and the hearing to assess the actual sum to be allowed lasted 12 days.
Deloitte’s fees were ultimately assessed at almost $19,700,000.
What benefit could costs budgeting have had here?
Although costs budgeting did not apply in this case, it was mentioned in the final paragraph of the 233-paragraph judgment stating that “It may be that a better solution in a case such as this where the expert evidence is very substantial would be for the parties to invite the court to make a costs management order in relation to the costs of all or some of the experts.”
In this case, it may have saved the parties, in this tranche of the litigation at least, substantial sums of money.
Despite budgeting not being applied here we must bear in mind that if we consider a case suitable for the budgeting process it should be raised and explored both with our opponent and the court.
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