Case Study: Successful Recovery Following Detailed Assessment in a Complex Action Against the Police

At ARC Costs, we are regularly instructed in high-value and complex costs disputes where significant issues arise concerning costs budgeting, hourly rates, proportionality, and recoverability.

This case involved a substantial action against the police arising from allegations of wrongful arrest, unlawful search, and malicious prosecution. The underlying claim concerned three claimants who were arrested following allegations relating to firearms offences and the seizure of substantial sums of money. Searches of residential property were also carried out as part of the investigation.

The claimants maintained that the arrests, searches and subsequent prosecution were unlawful. The litigation spanned several years and involved extensive factual and expert evidence before ultimately settling in favour of the claimants.

Although the damages recovered were approximately £150,000, the litigation itself was complex and carried significant personal consequences for those involved, including reputational damage and serious impacts on career prospects.

Following settlement of the substantive claim, the parties became involved in a substantial dispute concerning costs.

The Costs Dispute

The Bill of Costs totalled close to £700,000.

The Defendant challenged a number of aspects of the claim, with particular focus on:

• Alleged overspend against the approved costs budget
• The hourly rates claimed
• The extent of work undertaken following the costs management process
• Whether there was good reason to depart from approved budget figures

Prior to the detailed assessment hearing, the Defendant made a Part 36 Offer of £414,000.

Given the difference between the Bill total and the Defendant’s offer, a four-day detailed assessment hearing was listed to determine a number of significant preliminary issues.

Hourly Rates Under Scrutiny

One of the central issues concerned the hourly rates claimed.

The Defendant argued that the rates exceeded the applicable Guideline Hourly Rates and should be reduced accordingly.

However, the Receiving Party argued that the nature of the litigation justified a departure from guideline rates.

Although actions against police forces are no longer uncommon, particularly in London, it was submitted that this case carried particular significance. The litigation involved allegations of wrongful arrest and prosecution which had serious consequences for the claimants and, in particular, had impacted career opportunities and professional reputation.

The Costs Judge accepted that the circumstances justified enhanced rates.

As a result:

• Grade A fee earner rates of £400 per hour were allowed
• The conducting Costs Lawyer’s rate of £250 per hour was also permitted

The decision serves as an important reminder that Guideline Hourly Rates remain guidance rather than fixed limits. Where the complexity, importance, or circumstances of a case justify a departure, higher rates may be recoverable.

Budget Overspend and Good Reason

A second key issue concerned costs budgeting.

The Defendant argued that significant parts of the Bill exceeded the approved budget and should therefore be restricted.

The Receiving Party argued that there was good reason to depart from the approved figures.

Importantly, budgeting in the case had only extended to the end of December 2023.

The litigation, however, continued well beyond that point.

Following the approved budget:

• Further disclosure became necessary
• Additional expert evidence was obtained
• A Joint Settlement Meeting took place during 2024
• Significant work was undertaken in progressing the matter towards resolution

The Costs Judge accepted that these developments justified a departure from the approved budget.

This aspect of the case raised an interesting and often debated question within costs litigation.

Where a party establishes good reason to depart from an approved budget, what assessment methodology should then be applied?

Several possible approaches were discussed:

• Allowing the costs claimed without further consideration because no alternative contentions had been advanced
• Assessing each phase item by item, effectively disregarding the budgeting process altogether
• Using the approved budget as a starting point before making additional allowances to reflect developments and what the court considered reasonable

Whilst the issue was explored during the hearing, no definitive guidance was given as to the preferred approach.

The discussion nevertheless highlights an area of continuing uncertainty within costs law and one that is likely to generate further judicial consideration in future cases.

A Strong Result at Detailed Assessment

The Receiving Party achieved a successful outcome on the first day of the hearing in relation to the preliminary issues.

The findings on hourly rates and the ability to depart from the approved budget significantly altered the landscape of the dispute.

Following those decisions, the parties entered settlement discussions.

Rather than continuing with the remainder of the four-day hearing, negotiations took place with the benefit of the court’s preliminary findings.

Those discussions ultimately resulted in settlement being achieved at £571,571.18 on an all-inclusive basis.

The Outcome

The settlement represented a substantial improvement on the Defendant’s Part 36 Offer of £414,000.

The final figure reflected recovery of more than 80% of the total Bill and demonstrated the importance of robustly advancing arguments relating to:

• Budget departures
• Guideline Hourly Rates
• Complexity and importance of litigation
• Costs management issues
• Recoverability following settlement

The case also illustrates how preliminary issues can fundamentally influence the outcome of a detailed assessment. Success on key points at an early stage often creates the commercial conditions necessary to achieve a favourable negotiated settlement.

How ARC Costs Can Help

At ARC Costs, we regularly represent receiving and paying parties in complex detailed assessment proceedings involving:

• Costs budgeting disputes
• Guideline Hourly Rate challenges
• Part 36 strategy
• Solicitor-client assessments
• Multi-track litigation
• Actions against public authorities
• High-value Bills of Costs

Our experience allows us to identify the issues most likely to influence recovery and to develop practical strategies that maximise the prospects of achieving a successful outcome, whether through negotiation or at detailed assessment.

To discuss how we can assist on a legal costs case, feel free to give us a call on 01204 397302 or send an email to info@arccosts.co.uk.

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