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	England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Sotheby's v Mark Weiss Ltd & Ors [2017] EWHC 3789 (Comm) (23 November 2017) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2017/3789.html Cite as: [2017] EWHC 3789 (Comm)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Rolls Building
		23/11/2017

Mr. Justice Andrew Baker :

1. For a number of reasons, there will need to be yet further and final revised versions of everybody's costs budgets prepared and filed so as to constitute the approved budgets in the light of what I am about to say. As regards the costs incurred to date, I do direct that the order on the CMC when it is finally drawn up record that those have not been the subject of any agreement or approval on the part of the court. I will hear very brief submissions in a moment as to whether I make any more specific order in relation to the total costs incurred by the claimant, Sotheby's, for the CMC phase where I think I am going to be invited to order a cap on recovery.
2. I do not propose to record any specific observation in relation to hourly rates as I have been invited to do. That is not to say that I am in some sense specifically approving particular hourly rates but, equally, I am not minded to record any specific disapproval thereof either. In the normal way, absent agreement in due course, they will be the subject of scrutiny by the costs judge to whatever extent is relevant in the light of the costs orders made at the end of the case.
3. As regards the phases of the case that are now the subject of costs budgeting, I should record, firstly, that Mr. Ford has made the positive submission that this is a case in which, applying the relevant tests in the CPR and Practice Directions, I should make cost management orders and I agree. There has been no resistance to that. In other words, there has been no submission by either of the other parties that the entire process should be waived in this case, as does sometimes occur.
4. In chronological order then, for the issue and statements of case phase with the clarification provided by Mr. Foxton QC that the budget figure of just over £40,000 that has been used by the claimant erroneously included just over £20,000 of anticipated further work in relation to their extant applications for third-party disclosure from Christie's and for the examination of a witness in France, that leaves the correct budget for the claimants on that phase at £20,000. It seems to me that that, and also the figures for the two sets of defendants' teams, are properly to be approved.
5. In relation to disclosure, it seems to me that whilst I have some concern in relation to the second defendant's figure, as to whether it overestimates the extent of documentation that it and its team will ultimately have to review as received by way of disclosure from the other parties, its own disclosure being said in the cost budget to amount to a rather lesser volume of documentation than those parties, I am not prepared to say that the budgeted figure as put forward by the second defendant is beyond the bounds of reasonableness or proportionality. In the case of both the claimant and the first and third defendants it seems to me, again, although the figures are somewhat different, there are reasons for that. In particular, in the case of the first and third defendants in the light of the rulings I made yesterday it may be that their disclosure exercise will prove to be rather more extensive than Sotheby's. In all the circumstances, it seems to me that all three proposed budget figures for disclosure are to be approved but, in saying that, and this does not need to be recorded in any order, of course the court trusts that in the case of all of the legal teams, they will do their utmost to come in under budget if they can. Particularly, I say that in relation to the second defendant. If it does prove to be the case that there are not many thousands of documents coming in on disclosure from the other parties I can say that I would envisage there to be an expectation that they will come in significantly under budget, but that is all for the future and I am not going to cap their budget below the figure proposed because of that possibility.
6. As regards witness statements, I do have a degree of concern that all three sets of legal teams are budgeting very much on the high side for the proper extent of factual witness evidence in the case, bearing in mind that reviewing opposing parties' disclosure documents is itself a part of the disclosure phase, so that when one comes to the witness statement phase, whilst of course the witnesses themselves may need to spend some time refreshing memory to the extent it is legitimate to do so from collections of documents collated from the disclosure by the solicitors, the legwork for that process on the part of the fee-charging solicitors is really done as part of the disclosure stage.
7. That said, in light of the second defendant's offer to reduce its budget to match that of the first and third defendants, and the clarification from Mr. Foxton QC on the part of the claimant that the present intention is and likelihood is that Sotheby's will have four witnesses of fact and their budgeted figure is prepared on that basis, in my judgment all three figures, in the case of the second defendant the revised figure matching the first and third defendant's figure, should be approved.
8. In relation to experts' reports it does seem to me that all parties' budgets are excessive. In the case of the claimants it seems to me that whilst the level of expert fees they anticipate being charged of £65,000 is not a surprise, the idea that that should be almost tripled in aggregate by solicitor and counsel time to my mind suggests a degree of involvement anticipated on the part of the legal teams which is troubling in the context of what should be the experts' independent work to assist the court. What I propose to do is simply record today that the claimant's budget of £182,700 is not approved and I will invite them to reconsider most anxiously, and submit as part of a proposed final revised budget, a materially reduced sum which I will consider on paper.
9. In the case of the defendants' teams there is a realistic acknowledgement that in the light of the ruling I made yesterday about expert evidence they do need to go away and work further to estimate the revised realistic likely costs to be incurred given that they will now be working together to instruct jointly the one or two experts to be called on the defendants' side. I have made clear that it is recognised that because they are still two different parties with separate legal representation one could not expect their joint budget, as it were, in aggregate for that phase to come in at the same level as any one of their budgets would have been acting alone, but I certainly would not expect it to be the same as in aggregate it would have been if they were both acting alone. They will also have heard my observations that the court expects there to be a properly light touch on the part of solicitors and counsel in relation to the instruction and preparation by experts of their reports, in relation to the experts dealing amongst themselves with their meeting and in the preparation of their joint memoranda. Whilst, of course, there will be anticipated time allowed for parts at least of the respective legal teams to review the reports received from opposing parties, in my judgment that really should not be generating, as currently the claimant's budget, for example, does, a level of total budget where the figure is something like three times the experts' fees. In that respect all three legal teams need to do further work and submit some revised figures which I will consider on paper.
10. Pretrial review figures are all agreed and I approve those. In relation then to trial preparation and trial, it seems to me there is no obvious difficulty with the level of fees for budget purposes proposed by the second defendant and those as budgeted are approved. In relation to trial preparation the same is true for the first and third defendants, but it seems to me that the trial preparation budgeted costs proposed by the claimant are out by an extremely large factor beyond anything that could be reasonable. Quickly looking at the budgeted time, if my arithmetic is correct, it represents the equivalent of over thirty full working days in aggregate across the solicitor team to take the steps summarised in the description of the trial preparation phase in the Precedent H category description and it seems to me that that is entirely disproportionate. The approved budget figure for the claimant for trial preparation will be a figure of £95,000.
11. As regards trial, it does seem to me that both the claimant's and the first and third defendant's figures are excessive. They are sufficiently consistent with each other that, rejecting a submission of Mr. Ford's that if his clients' were regarded as appropriate I should trim the claimant to match, the claimant's figure being only of the order of 10 per cent higher than the first and third defendant's, it seems to me there is no evidence of disproportion if the starting point were that the first and third defendant' figure were reasonable. As I observed in argument and Mr. Foxton QC conceded as a matter of logic, either both figures are sufficiently reasonable as to be apt to be approved or neither. In my judgment it is the latter. Both figures do seem to me to reflect exactly the point well taken, if I may say so, by Mr. Wilson QC, that there is a degree of Rolls Royce service being paid for, which it is the claimant's and the first and third defendants' respective perfect right to choose to pay for, but which they cannot reasonably be entitled to expect to pass on to an opposing party under an adverse costs order if they obtain one at the end of trial. In the circumstances, approved budgets for trial costs will be: for the first and third defendants, £500,000; for the claimant, £550,000.
12. Going back to where I started, in the case of the claimant's costs budget I also approve the figure proposed of £20,552 in relation to its applications, the figure that had been erroneously included within the statements of case phase and in a final revised budget for approval on paper that figure can be included in whatever will be an appropriate phase or subheading.
LATER
13. It seems to me, gentlemen, on the one hand, that there is very real force in the submission made, which essentially is that even taking fully into account all of the ways in which this has been a heavier CMC than is true for many cases, and it has extended over in the end the thick end of a day and a half, nonetheless total incurred costs of over £180,000 is far too high. On the other hand, and this is not a criticism, the court is not being asked summarily to assess the costs and although in the costs budgets one has a certain degree of breakdown of the work that has gone into that level of incurred costs one does not have anything like the detail that one would have even on a summary assessment schedule.
14. In those circumstances, the submission that I should reflect independently of any future assessment process the court's view that in absolute terms the figure is just too high and recovery should be capped is well made, but the submission that I am in a position to or that it would be appropriate to cap that recovery at something like or similar in amount to the costs incurred on the part of each of the two defendant teams is not right. In the circumstances, the order will be that the costs of the CMC are costs in the case but no party to be entitled to recover after assessment more than £125,000 in respect of those costs.
LATER
15. It seems to me that a trial listing of ten days with up to two days' pre-reading – and I think the order should say 'up to' two days for pre-reading – is the right listing to obtain. I simply emphasise by way of comment that if nearer the time of trial the parties feel that a full two sitting days is not going to be required for pre-reading, but the pre-reading could be done in a day and a half and then the court take oral opening addresses on what would be the afternoon of day two of the trial window, then they can make a little bit of time there. But it seems to me that even if it is two full days of pre-reading, eight days is ample to allow for time to prepare closings within the course of the trial hearing and for the possibility of a degree of slippage here or there.
LATER
16. It seems to me that in circumstances where the second defendant has not felt able to propose that this is a case for the ordering now at the CMC of a split trial with the determination of a preliminary issue, I shall neither encourage nor necessarily discourage the second defendant in making if so advised of any application, in particular the suggestion being that it might wish to consider an application for summary judgment. I am certainly not going to make provision for it to do so, seeming thereby no matter what I say in doing so today perhaps to offer a degree of encouragement that that would be felt to be appropriate.
17. The second defendant must understand that an application for summary judgment made only after witness statements at a point in time when experts' reports will be being prepared and the parties are otherwise engaged in work towards a full trial, having not felt able to propose at this stage that there be either a summary judgment before all of that work has been done or that it is an appropriate case for a preliminary issue, would be an unusual application and would need to be closely justified but, equally, I am not going to shut it out from making such an application if so advised, and the order will not make any reference to that one way or the other.