Matthews: This kind of thing never used to happen
The High Court has expressed its despair at solicitors conducting litigation “like schoolchildren in the playground”, as well as “pernicious” growth of satellite costs disputes.
His Honour Judge Paul Matthews, sitting as a High Court judge in London, described the case of Crypto Open Patent Alliance v Wright [2022] EWHC 242 (Ch) as an example of “bad-tempered litigation, which is regrettably becoming more and more prevalent in the English courts”.
He went on: “It somehow seems to have become acceptable for solicitors to become mere mouthpieces for their clients to vent their anger at their opponents.
“It is not enough for the clients to dislike or even hate each other: the solicitors must do so too.
“I simply do not understand why in 2022 professional, trained lawyers, who should know how to stand up to their clients, and concentrate instead on what is important in the litigation, think it is appropriate to behave like schoolchildren in the playground.”
He was ruling on the costs of two preliminary hearings, which mainly went in favour of the claimant.
But HHJ Matthews described as “a recurring, but highly undesirable, feature of modern litigation” that litigants were willing to argue create costly satellite litigation arguing every aspect of costs.
The judge said: “I am sorry to be old-fashioned, but, when I started in practice, this kind of thing just did not happen. The losing party accepted liability for the costs, and the receiving party only rarely argued for indemnity costs. (Summary assessment had not then been introduced.)
“Nowadays, it seems, losing parties nearly always argue that they should not pay the costs at all (I do not know when was the last time I heard counsel use the phrase ‘I cannot resist that’), and winning parties nearly always argue that costs should be on the indemnity basis.
“This modern kind of satellite litigation is pernicious. In my view it has the effect of diminishing overall justice, and thus gives English civil procedure a bad name.”
The judge said costs decisions, other than detailed assessments, were supposed to reflect the broad justice of the case. “They are therefore intended to be merely the tail to the dog, and not the dog itself.”
The concept of summary assessment was an example of this. Despite the benefits of the process, parties “persist in arguing minor costs assessment issues, seeking to claw back this or that fraction of costs or small expenditure. This is not cost effective. It is merely disruptive. The costs of the argument must often outweigh even the value of what is in issue”.
In considering the claimant’s argument to assess costs on the indemnity basis, HHJ Matthews said its “et tu quoque” submission on the defendant’s conduct – essentially accusing it of hypocrisy – was “deeply unattractive”. He added: “Judges hate it.”
The judge suggested that the conduct of business relations has become “so legalised, that many businesspeople see litigation, not as a means of resolving disputes… but as one of obtaining leverage in further negotiations. It is thus simply a modern aspect of doing business”.
He added: “To mangle Von Clausewitz, litigation has become the continuation of business by other means. This is highly regrettable, not least because there are many other litigants who play by the rules and are disadvantaged as a result.”
In ordering costs on the standard basis, he found “all this mud-slinging (on both sides) not only unedifying, but also somewhat underwhelming”. The litigants were behaving in “an ultra-aggressive and unco-operative way towards each other”, which was “most regrettably” not out of the norm nowadays.
To order indemnity costs “would be to encourage similar behaviour in future”.
The claimant sought £123,000 in costs for a one-day hearing, which HHJ Matthews described as “extraordinarily high”.
Even though each side “apparently has a lot of money to spend” and considered the litigation “worth the candle”, HHJ Matthews said: “At the end of the day I have to reach an objective decision based on the rules that apply to everyone’s disputes, from prince to pauper, and whether conducted by City mega-firm or high street sole practitioner.”
The costs claimed were not proportionate, reasonably incurred or a reasonable amount, due to insufficient delegation of work down to less expensive fee-earners too much time spent on the evidence, and excessive attendance at the hearing.
He summarily assessed the costs at £70,000.
Bird & Bird acted for the claimant and Ontier for the defendant.
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