Vardy v Rooney
We reported previously that warring WAGS Rebekah Vardy and Coleen Rooney did not resolve their case at mediation and their case continues to trial.
Legal costs in any case can be surprisingly high.
It is reported in the Daily Mail that their legal costs of going to trial will cost about £500,000 per party. Further negative publicity has been generated from the hearing last week. It was estimated that the hearing cost about £500 per minute! It is also estimated that if she wins Ms Vardy could recover about £50,000 damages, plus her costs. Obviously there is more than money at stake. Both parties also have their reputations to preserve and defend.
The two day hearing at the High Court is alone estimated to have cost £300,000 and increases the final bill for legal fees to £1.8 million
It was revealed in court that Coleen Rooney’s total costs for the two-day hearing were £163,926.00. The costs for the day totalled £300,000.00. The barristers apparently charge about £1000 plus VAT per hour and would charge about £250,000 each for a 10 day trial. Each party has a junior barrister as well at an estimated cost of £700 per hour and the solicitors would charge about £150,000 – £200,000 each. Generally speaking the losing party pays the winning party’s costs so there is a lot at stake financially.
During a hearing last year at the High Court, it was revealed that Ms Vardy’s total proposed budget for taking the matter to court will amount to £837,735 while Mrs Rooney is estimated to spend a total of £537,029.
Of this total amount, Mrs Vardy is spending £450,000 on solicitors with another £388,000 on hiring barristers.
In comparison, Mrs Rooney is spending £388,000 and £306,000 on solicitors and barristers respectively.
This did not take into account the latest hearing for greater disclosure of evidence, which increased the costs.
This is an illustration, perhaps an extreme one, of how legal costs in a dispute can escalate.
This is why we recommend mediation and why so few cases get to trial.
Jurisdictional Dispute
Another example is the case where the costs claimed for a jurisdictional dispute were claimed at over £13m.In The Public Institution for Social Security v Banque Pictet & Cie SA & Ors [2022] EWCA Civ 29 the Court of Appeal were concerned about the costs involved in litigation on what were, essentially, preliminary issues.
The judge said that:
Quite apart from this, it is simply disproportionate for parties to incur costs, often running to hundreds of thousands of pounds each, and to spend many days in court, on such a hearing. The essentially relevant factors should, in the main at any rate, be capable of being identified relatively simply and, in many respects, un-controversially. There is little point in going into much detail: when determining such applications, the court can only form preliminary views on most of the relevant legal issues and cannot be anything like certain about which issues and what evidence will eventuate if the matter proceeds to trial.
As Flaux J (as he then was) said in Erste Group Bank AG v JSC “VMZ RED OCTOBER” [2013] EWHC 2926 (Comm) (at [11]), although Lord Neuberger’s deprecation of the proliferation of documentation and argument was in the context of the determination of appropriate forum, his observations are obviously equally applicable to other aspects of jurisdictional challenges.
It does not appear that the parties here chose to heed this guidance. There will of course be cases where a novel and/or complex point of law needs to be debated fully and decided and, as foreshadowed above, this litigation raises some new, albeit relatively short, legal issues. Further, the sums involved are substantial and the allegations made are serious. However, these features did not create a licence to turn a jurisdictional dispute into an extensive and essentially self-standing piece of litigation. The costs incurred below ran to many, many millions of pounds: the interim payment orders in respect of the Respondents’ costs amounted to £6.88 million against a claimed total of some £13.5 million.
Inheritance Act Case
On a smaller scale in 2018 a judge criticised the parties for their legal costs in an inheritance act case. The judge expressed ‘astonishment’ at a costs estimate of £74,000 for a one-day hearing dealing with an application in an inheritance dispute.
In Weisz v Weisz & Ors, Mr Justice Francis was hearing an application for interim provision pursuant to section 5 of the Inheritance (Provision for Family and Dependents) Act 1975.
The hearing was listed for two hours but ended up lasting a day. The judge said: ‘I should say, so that counsel are aware, that in most of these cases where the time estimate is obviously hopeless, it is very likely that they will be sent out without having been heard, however urgent the case may be, unless of course it is urgent in the sense of relating to the welfare of, or danger to, a child. However, we have been lucky today in that one of the cases that was listed was not effective.’
‘The claimant’s costs – and this is just for today and not the claim overall – are just over £18,000. The costs of the third and fourth defendants, who are two of the children of the deceased, are £37,880. Remarkably, I am told that the executors of the estate do not even know what their costs of today are, and I should say that if any of the lawyers in this court appear in front of me again not knowing what their costs are for the application in front of me, I will have a lot more to say about it than I have done today,’ he said.
‘But, if I take the executors’ costs as being the same as the claimant’s (and I note that the claimant has instructed – I hope I can say this without any disrespect – much less expensive solicitors than the third and fourth defendants), then that means that the overall costs of today are in the order of £74,000.’
Set in the context of the total amount being claimed by the claimant – a £75,000 lump sum and £8,511 a month, ‘it cannot be proportionate for so much money to be spent on this issue and it is very sad indeed that the parties have been unable to settle today’s application’.
The judge stressed that he was not criticizing anyone in particular, but hoped the parties reflected on the fact that ‘
if this were a commercial deal rather than a family row, they would not have spent this amount of money on this litigation because it would not be commercially sensible to do so, and the only way they are going to settle this litigation – whether it be next week or some time next year – rather than fight the case, the only way they are going to do so is by standing back and taking a commercial view, on advice’.
The judge also highlighted the benefits of private family dispute resolution or mediation.
Family case
In the judgment of Crowther v Crowther & Ors the judge criticised both parties and their lawyers for a lack of co-operation resulting in “enormous” legal costs.
Mr Justice Peel stated that there had been an “almost complete breakdown of constructive communication” between the divorcing husband and wife during proceedings. It was noted that the couple made a total of 41 statements and the case had 34 hearings. The bundles were also said to exceed 6,000 pages and the parties have argued “almost every imaginable issue, no matter how trivial”.
The total costs amounted to £2.3 million (of which £1.4 million was for the wife’s legal costs and £900,000 for the husband), and have now eradicated the couple’s estimated £1.75 million in assets. The debt must now be divided fairly between the couple, said the judge.
The court heard that the wife had agreed with her lawyers that unless they received all outstanding fees and costs to the end of the trial they would cease to act. A further ultimatum was issued when the wife applied for release of £500,000 from the sale of a marital asset, with her lawyers again saying they would cease to act without payment.
The judge commented that:
“Given that W’s solicitors had already received from W in total (divorce, non-molestation, children, and financial remedy proceedings) costs exceeding £1m, and given that more than £1.8m remained in the joint account holding the proceeds of sale which would be available for distribution at trial, it might be thought rather unattractive for W’s solicitors to adopt this position.”
The judge then ordered a release of £300,000 and the wife’s solicitors continued to act.
Mr Justice Peel observed that the proceedings were “intensely acrimonious” and that each party thought the other was “out to destroy” them.
“They, and their lawyers, have adopted a bitterly fought adversarial approach … I asked myself on a number of occasions whether the aggressive approach adopted by each side has achieved anything; it seems to me that it has led to vast costs and reduced scope for settlement”
Mr Justice Peel then concluded:
“The only beneficiaries of this nihilistic litigation have been the specialist and high-quality lawyers. The main losers are probably the children who, quite apart from the emotional pain of seeing their parents involved in such bitter proceedings, will be deprived of monies which I am sure their parents would otherwise have wanted them to benefit from in due course.”
Extraordinary Costs
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.
The judge 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”.
The judge was deciding the costs of two preliminary hearings, which largely went in the Claimant’s favour.
The judge 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 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.”
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 reduced the costs to £70,000.
If you are worried about legal costs and need a mediator please don’t hesitate to contact us.