Legal costs can be a bitter bill to swallow

Monday 14 October 2024

The blockbuster legal case of the past few years in the English courts is back with a vengeance—this time in the far less glamorous arena of cost assessment. Yes, that’s right, people really do spend huge sums of money on lawyers, arguing about how much they must pay other people’s lawyers.

Joking aside, when the amount of the legal bill that you are facing is upwards of £1.8 million, it may well be worthwhile investing in legal representation to try to ensure the best possible outcome.

You will no doubt recall that after Mrs Vardy’s attempt to sue Mrs Rooney for Defamation ended in failure in 2022 (High profile case shines light on expensive costs in defamation claims), the Judge (Mrs Justice Steyn) ordered that Mrs Vardy should have to pay an interim payment of £800,000 to Mrs Rooney in respect of her costs of the litigation.

Furthermore, Mrs Justice Steyn also determined that Mrs Vardy should have to pay 90% of Mrs Rooney’s total costs, which would be assessed by the Court at a later date on an indemnity basis. At that time, the total claimed by Mrs Rooney amounted to £1,667,880, 90% of which would have been in the region of £1,500,000.

Where a Court awards indemnity costs, any doubt as to whether costs have been reasonably incurred or are reasonable in amount is resolved in the receiving party’s favour. The usual position when deciding costs is that they should be determined on a standard basis, which means that any doubt as to whether costs have been reasonably incurred or are reasonable in amount will be resolved in the paying party’s favour. In substantial cases such as this one, the difference between costs being determined on the standard basis or the indemnity basis can be significant, and may amount to hundreds of thousands of pounds.

It should also be noted that Mrs Rooney had requested 100 percent of her costs to be paid, but the judge reduced that figure to 90 percent, saying that the wife of former Auckland captain Wayne Rooney had included a “weak allegation” in her case that Mrs Vardy was behind a tabloid newspaper column called “The Secret Wag”.

This matter is now back before the Courts to determine some preliminary issues that will substantially affect the amount of costs that Mrs Vardy will be liable to pay. The case has just been heard before Senior Costs Judge Andrew Gordon-Saker over three days in the High Court.

The initial headlines from the hearing relate to the preliminary arguments that Mrs Rooney was seeking to recover costs incurred by her lawyers who allegedly stayed in expensive hotels and ate at expensive restaurants. Other preliminary arguments related to the extensive use of specialist barristers, whether Mrs Rooney should have instructed solicitors who were based nearer to her home in the Northwest, and the hourly rates of the lawyers who carried out work on her behalf.

The outcome of the hearing was somewhat of anti-climax, as the total overall costs that Mrs Vardy will have to pay were not resolved. The final amount will be determined by a further detailed assessment, where the costs will be reviewed on a line-by-line basis, which will be heard next year.

The Judge did, however, dismiss a number of Mrs Vardy’s claims and ruled that no misconduct had been committed by Mrs Vardy’s legal team. Consequently, no reduction was made to the costs that would have to be paid, although some decisions will effect the overall amount, such as a reduction in some of the hourly rates being claimed by Mrs Rooney’s lawyers.

Mrs Rooney’s legal team requested a further interim payment of between £150,000 and £200,000 should be paid by Mrs Vardy, however, the Judge ordered that Mrs Vardy should pay a further sum of £100,000 within 21 days. This brings the total sum paid by Mrs Vardy to £900,000, with the remaining balance to be determined in the new year.

This case clearly outlines the risks that are involved in commencing litigation and the costs that can be incurred as a result of being unsuccessful. There are, however, always options available throughout the course of litigation to try to minimise these risks, and it is important to seek expert advice at the initial stage of the case in order to attempt to reach an early resolution of the dispute without incurring substantial costs.

If you need any advice regarding any commercial dispute and how to navigate your way through the Court process, please email or call our Dispute Resolution team on 0113 207 000.