Malcolm Cohen & Anor (as joint liquidators of The Food Retailer Operations Limited) v Co-Operative Group Limited & Ors (Costs) [2025] EWHC 1981 (Ch)

[2025] EWHC 1981 (Ch)Case No CR-2023-000648IN THE HIGH COURT OF JUSTICEBUSINESS AND PROPERTY COURTSOF ENGLAND AND WALESINSOLVENCY AND COMPANIES LIST (ChD)Venue Royal Courts of Justice,, Rolls Building,, Fetter Lane,London,EC4A 1NLDate Tuesday, 29 July 2025IN THE MATTER OF THE FOOD RETAILER OPERATIONS LIMITED (In liquidation)AND IN THE MATTER OF THE INSOLVENCY ACT 1986
Before
His Honour Judge Hodge KC(sitting as a Judge of the High Court)
Between
Malcolm Cohen & Anor (as joint liquidators of The Food Retailer Operations Limited)ClaimantCo-Operative Group Limited & Ors (Costs)Defendant

Respondents

[1]At 10.00 am on 29 July 2025 I handed down my reserved judgment refusing the joint liquidators’ application for permission to amend their points of claim to plead the sale of a business and also to rely upon expert business valuation evidence. That judgment bears the neutral citation number [2025] EWHC 1892 (Ch).[2]The parties have agreed the terms of a draft order to give effect to that judgment save for one matter. It is common ground that the joint liquidators (and applicants) should pay the respondents’ costs by 4.00 pm on 19 August 2025 (three weeks from the date of hand-down); and that these should be summarily assessed by the court on the standard basis,. The only outstanding point is the quantification of those costs, which the parties have not been able to agree.

Applicants

[3]I have received written submissions on costs from Lord Wolfson KC and Mr Goldfarb (for the applicants) and from Mr Potts KC and Mr Parfitt (for the respondents). Counsel have apparently agreed to bring forward the time for filing those submissions to 4.00 pm yesterday (Monday 28 July 2025) in the hope that the court might resolve the quantification of costs on the papers by the time that judgment was handed down at 10.00 am this morning. Due to a minor problem with my laptop, this supplemental judgment on costs is being handed down an hour later.[4]According to the respondents, when, on Friday 26 July 2025, it became clear that the parties would require the court to determine the amount of costs, they suggested that sequential submissions should be filed to ensure the parties were able to assist the court by dealing with the same points. The respondents say that this would have reflected what would have happened had the assessment been carried out at a hearing; and would have allowed the respondents to address any points raised by the applicants on the respondents’ costs schedule. The applicants refused, pointing (correctly) to the lack of any order for sequential submissions, and also to the persuasive burden the receiving party bears to justify its claim for costs. However, as the respondents emphasise, this refusal means that the parties might well be at cross-purposes in their respective written submissions. The respondents have therefore had to do their best to pre-empt points which the applicants might make. I find it convenient to begin with the applicants’ submissions.

The applicants’ submissions

[5]The applicants acknowledge that the respondents are the successful party on this application, and that they are entitled to a costs order in their favour, summarily assessed on the standard basis. They note that the respondents have served an updated statement of costs for the application, dated 24 July 2025, and totalling £181,374.28. This comprises £93,548 in solicitors’ time costs, £86,900 in counsel’s fees, and £926.28 in travel expenses for attendance at the hearing.The applicants’ position is that they should pay £126,000 in costs, which is approximately 70% of the costs claimed. They rightly say that this is a substantial sum for a one-day hearing. The figure of £126,000 is calculated on the basis that: (1). the respondents’ costs should be summarily assessed in the amount of £140,000 (being approximately 78% of the costs claimed); and (2). the applicants should be ordered to pay only 90% of those assessed costs (under CPR 44.2(6)(a)), to reflect what they say is the applicants’ success on substantial aspects of the application (limitation, and real prospects of success).[6]The applicants agree that the court should assess the respondents’ costs on the standard basis. The respondents are therefore entitled only to costs that are reasonably and proportionately incurred, and which are reasonable and proportionate in amount, with any doubt being resolved in favour of the applicants, as the paying party.[7]The applicants acknowledge that their costs were substantially greater than the respondents’ costs. However, they point to paragraph 11 of the 2021 edition of the Guide to the Summary Assessment of Costs 2021 (set out in Volume 1 of the 2025 edition of Civil Procedure at p. 1441), as follows: The costs which the paying party has incurred for its own representation may be relevant when considering the reasonableness and proportionality of the receiving party’s costs. However, they are only a factor and are not decisive. Both parties may have incurred costs which are unreasonable and disproportionate, but only reasonable (and, on the standard basis, proportionate) costs may be allowed. 17. In numerous cases the Court of Appeal has stressed that the courts should be ready to make proportionate (or percentage) costs orders which reflect, not merely the overall outcome of the proceedings, but also the loss on particular issues.[8]The applicants say that their proposal that the respondents’ costs should be assessed in the amount of £140,000 is a generous one. It is approximately 78% of the costs claimed. This is said to be a high percentage to recover on the standard basis in complex proceedings in the Business and Property Courts. This “modest” reduction in the costs claimed is said to be appropriate for a number of reasons, bearing in mind that any doubt is to be resolved in favour of the paying party.[9]The first relates to the hourly rates claimed. The respondents’ solicitors are based both in London and in Central Manchester (which is National Band 1). The solicitors based in Manchester are charged at hourly rates significantly in excess of the relevant guideline hourly rates: Name Grade Hourly rate charged Guideline hourly rate (National Band 1) Hours claimed Samantha Haigh Grade A (Partner) £345 £288 (83% of rate charged) 42.6 Alexander Caslin / Cameron Fuller Grade C Associates £255 £197 (77% of rate charged) 29.3[10]The second reason relates to attendances at the hearing. The respondents claim solicitors’ time costs for the attendance at the hearing of two partners (one London-based and one Manchester-based) and also two legal directors. These are the four most senior (and expensive) fee-earners engaged on this matter. It was not reasonable or proportionate for four solicitors to attend the hearing (in addition to both leading and junior counsel). It would have been reasonable and proportionate for only one partner to attend, together with one (or at most two) junior solicitors. The respondents also claim 23.3 hours of partners’ and legal directors’ time for “travel and waiting” for the hearing, totalling £7,386. The bulk of these costs should be disallowed. It was not reasonable or proportionate for a partner and two legal directors to travel from Manchester (when a London partner was already attending the hearing); and “waiting time” is not recoverable as a cost of the application absent some exceptional justification.[11]The third reason concerns the time claimed for work on documents. This is unreasonably, and disproportionately, tilted towards senior fee earners. Partners and legal directors spent 111.9 hours working on documents, compared with only 32.8 hours by associates, and 15.1 hours by paralegals. A significant reduction in the costs claimed of £50,820 for work done on documents is said to be warranted on this basis (even assuming that the very significant time claimed for such work is all reasonably and proportionately incurred).[12]The applicants also submit that they should only be required to pay a proportion of the respondents’ costs. Their “very conservative” suggestion is that they should pay 90% of the costs assessed. They say that the respondents fought every aspect of this application tooth and nail. They were entitled to take that approach (as were the applicants); but the reality is that much of the costs of the application, and the time at the hearing, were devoted to issues on which the applicants succeeded, most significantly on limitation and the prospects of success of the amendments.[13]The applicants point to Kew v Bettamix Ltd [2006] EWCA Civ 1535, [2007] 4 Costs LR 527. There, the defendants/appellants succeeded on a limitation issue but the claimant/respondent succeeded on his application to disapply the limitation period (so that the claimants were the successful party overall). Reversing the judge’s order that the defendants should pay all of the claimant’s costs, the Court of Appeal ordered the defendants to pay only 65% of the claimant’s costs. At [49], Leveson LJ explained the difference between(1) a party being generally entitled to put its case at its highest without being penalised in costs, and(2) a party who advances an independent basis for relief that fails. A proportionate costs order was appropriate in the latter category. The applicants say that that is the position in the present case: the respondents relied on a limitation argument that failed. They also failed to establish that the amendments lacked a real prospect of success.

The respondents’ submissions

[14]The respondents’ position is that little, if anything, needs be deducted from their total claim for £181,374.80 (just over £5,000 more than their previous estimated schedule) in order to achieve a reasonable and proportionate assessment.[15]The respondents begin by comparing this figure with that set out in the applicants’ statement of costs. This totals £435,363.50, of which counsel’s fees alone comprise £236,225. The respondents’ costs are just 42% of the applicants’ total figure. As set out at paragraph 11 of the Guide to the Summary Assessment of Costs, the costs which the paying party has incurred for its own representation may be relevant when considering the reasonableness and proportionality of the receiving party’s costs. However, the paying party’s costs are only a factor, and they are not decisive: it is possible that both parties may have incurred unreasonable and disproportionate costs. Clearly, the respondents do not seek to argue that the applicants’ incurred costs are reasonable and proportionate. If the respondents were the paying party, they would be contending that that the applicants’ costs are indefensible. However, the applicants’ schedule does make it clear how significant this application was in the context of this litigation, how heavy this application was, and how hard-fought. Those features were the same on both sides, even though the applicants have chosen to pay more than double the respondents’ costs. Against that background, the respondents’ claimed costs of just 42% of the applicants’ figure is well within the range of reasonable and proportionate costs for a heavy application like this. The respondents say that it would be hard for the applicants to argue that a single penny of the respondents’ expenditure is unreasonable and disproportionate given what they themselves have incurred.[16]The respondents next turn to what was at stake on this application. They point out that, as noted at paragraph 40(3) of my substantive judgment, this was an application on which potentially hundreds of millions of pounds depended. It also imperilled a long, and long-awaited, trial. Those stakes are said to permit a generous assessment of what is reasonable and proportionate.[17]The respondents then address any argument that a proportion of the respondents’ costs should be disallowed because some parts of the argument went in the applicants’ favour. The respondents resist that submission on the basis that: (1). There is no doubt that it is the respondents who are the winners. This was an application with a binary outcome. Costs should follow that binary outcome. There is no reason to depart from the usual position. (2). Although the court held that there was no limitation bar, the respondents succeeded in establishing that the applicants were attempting to add a new cause of action (which was the focus of the applicants’ resistance). (3). Although the court did not fully agree with the respondents’ assessment of the timetable adjustments required by the amendments, the applicants ultimately recognised that the trial would need to be adjourned. This was a significant change of their position, which was made during the hearing itself.[18]The respondents next submit that there is no need to apply any ‘rule of thumb’. They refer to a proposal made by the applicants on the Friday of last week (25 July 2025), of an assessment of 70% of the respondents’ claimed costs. If this was on the basis of any ‘rule of thumb’ that an assessment on the standard basis leads to that proportion, there is no place for that approach here. This was a momentous application on which the respondents have underspent the applicants by an enormous margin. The respondents say that 70% of their respondents’ costs would be just 29% of the applicants’ claimed costs.[19]The respondents also refer to matters of conduct. They contend that the applicants’ conduct has increased the respondents’ costs. They rely upon the following matters: (1). The applicants provided no fewer than three versions of their draft amended points of claim. (2). The applicants proposed a timetable which was unrealistic, but this point was not conceded until the hearing itself. (3). The applicants failed to engage with Fancourt J’s earlier judgment, a critical matter which the respondents had to address in correspondence, in evidence and in submissions. (4). The applicants had no good reason for having failed to advance this application sooner: see paragraph 94 of my substantive judgment. (The respondents make it clear that there is no criticism of the delay between the filing of the application and the hearing.) (5). The result was an application which needed to be dealt with at the same time that the respondents have been dealing with the expert evidence phase of the substantive litigation. The application itself diverted resources away from the respondents’ proper preparations for the upcoming trial.[20]Finally, the respondents deal with specific line items. Since the applicants have declined the respondents’ suggestion of sequential submissions, they point out that they cannot anticipate what the applicants might say about any given line items. They say that there has been no indication from the applicants that any particular objection is being taken to anything in the respondents’ costs statement. The respondents therefore invite the court to apply a generous margin of appreciation in order to ensure a fair assessment. They observe that the respondents “cannot fairly bid against themselves in circumstances where the joint liquidators have not shown their hand”. They point out that the court can gain comfort from a comparison between the parties’ costs schedules. By way of example only, they point out that: (1). The respondents claimed for four fee earners attending the hearing (with only half a day for the most expensive fee earner); the joint liquidators claimed for six fee earners all day, four of whom were at Grade A level. (2). The respondents claimed £15,059 for the evidence of Ms Sam Haigh in response to the application. The applicants claimed almost as much as that simply for reviewing it (line items 33, 34, 35, 37, 43 in their schedule of work done on documents, totalling £12,612), let alone responding to it. (3). The hourly rates are comparable (the applicants claiming a materially higher rate for Legal Directors: £425 rather than £295). (4). The respondents’ hourly rates are either below the guideline rates or only a little above them. One fee earner was based in London (“PR1” on the schedule: £470 against a London 1 rate of £566); the other fee earners were based in Manchester (National 1, for which the guideline rates are A: £288, B: £242; C: £197 and D: £139).

Analysis and conclusions

[21]I consider that it is regrettable that the applicants did not take up the respondents’ suggestion of a sequential exchange of submissions, with the applicants going first, so that the respondents might respond to specific point taken against their revised statement of costs. That would have replicated the order in which any submissions on costs would have been presented had there been a contested hearing on costs. As it is, the respondents have had to direct their fire at a hidden target. Nevertheless, I have borne all of the parties’ submissions firmly in mind.[22]I do not consider that this is an appropriate case for any percentage reductionto reflect the respondents’ limited success on aspects of the substantive application. I have looked at the authority cited by the applicants. Kew v Bettamix was case where the judge hearing a preliminary issue had ordered the appellant employers to pay the entirety of the costs of that issue, notwithstanding that they had succeeded on the issue of primary limitation. The bulk of the two day hearing had been concerned with the issue of the date of knowledge of significant injury attributable to employment, and also the identity of the employers. On both of those issues, it was the appellants who had won, and the respondent who had lost. Nevertheless, the judge had ordered the appellants to pay all of the respondent’s costs. The only note of that aspect of her judgment was that not all of the blame could be laid at the respondent's door. The appellants submitted that the judge had been wrong not to make an issue-based costs order, to reflect the fact that the appellants had been successful on “substantial issues”. At [48] Leveson LJ observed that “percentage costs orders … can be fashioned to ensure that a party does not profit from his failure on a substantial point which resulted in a real increase of the overall costs”. I note that paragraph 49 of Leveson LJ’s leading judgment reads in full as follows: The second further argument advanced by Mr Cooksley is based on Blakes Estate Ltd v. Government of Montserrat[2006] 1 WLR 297 in which the House of Lords determined that a claimant who had been awarded compensation for the compulsory purchase of his land should prima facie be entitled to his full costs although where he had put forward a grossly excessive claim, he could be deprived of part of his costs if the exaggeration had given rise to an obvious and substantial escalation in the costs incurred with the amount of such reduction being proportionate to the time wasted and costs properly attributable to the exaggeration. He argues that this case endorses the principle that a claimant is entitled to put his case at its highest. I entirely accept that proposition. On the other hand, however, there is a distinction between putting the case at its highest (for example, in relation to many heads of damage in a personal injuries claim) and advancing a basis for relief on a basis that fails (especially if it is entirely unsupportable). That case was one where the Court of Appeal held that it should intervene because it had come to the clear conclusion that the decision of the judge was wrong because she had not balanced the various factors fairly in the scale. At [46], Leveson LJ observed:
“In this case, with full disclosure of the documents and, in particular, the medical reports, the claimant determined to pursue the argument that proceedings were issued before primary limitation had expired. As a result, a very much lengthier hearing than would otherwise have been the case was inevitable. It is incumbent on all those involved in litigation to ensure that they carefully reflect on those issues that they seek to put before the court and it will be no bad thing if that leads to the reduced pursuit of bad points.”
In his short concurring judgment, Waller LJ, the other member of this two-judge court, observed (at [58]) that “in these types of case the courts should not be slow to make a reduction in the costs that a successful party should recover if they form the view that bad points have been argued and lost”.[23]Kew v Bettamix was therefore a case where the paying party had succeeded on substantial issues, which had occupied much of the lower court’s time; and those issues on which the receiving party had lost had been bad points which should not have been taken and argued. That is a very different situation from the present case. The limitation objections which were taken by the respondents in the present case were seriously arguable. Indeed, they succeeded at the first two stages of the Geo-Minerals test, and failed only at the third stage. Although the court held that there was no limitation bar, the respondents did succeed in establishing that the applicants were attempting to add a new cause of action, which was statute-barred. However, it rose out of the same, or substantially the same, facts as were already in issue between the parties. I agree with the respondents that this had been the main focus of the applicants’ resistance. This was therefore a case where the respondents were merely putting their case at its highest, which they are entitled to do without facing any sanction in costs. Further, the limitation point did not add materially to the time, or the costs, of the application. The hearing was concluded within a single day; and the applicants’ counsel did not even address the limitation point in their otherwise detailed written skeleton argument. I held that the principal authority on which the applicants did rely, albeit only by way of analogy (Alame v Shell), was distinguishable, and of no real assistance to the applicants. In my judgment, an issue-based costs order is usually only justified if the pursuit of an issue on which the receiving party loses has resulted in a lengthier, or unnecessarily more diffuse, hearing than might otherwise have been the case. I also agree with the respondents’ assessment that this was, in substance, an application with a binary outcome. Costs should follow that binary outcome. There is no doubt that it is the respondents who are the winners. I am entirely satisfied that there is no good reason to depart from the usual position that costs should follow the event.[24]I reject the applicants’ challenge to the hourly rates claimed. In my judgment, these are reasonable and proportionate to the value of the joint liquidators’ claim,and also to the issues raised by this application, including its magnetic importance to the integrity of the existing trial dates, I accept the respondents’ submissions. In this regard, I note the following observations in the explanatory notes that accompany the guideline hourly rates, at paragraphs 44SC.27 to 44SC.30 of Volume 1 of the current (2015) edition of Civil Procedure (at pp 1445-6): (1). The guideline rates for solicitors provided are broad approximations only. (2). The guideline figures have been grouped according to locality by way of general guidance only. Although many firms may be comparable with others in the same locality, some of them will not be. (3). In any particular case, the hourly rate which it is reasonable to allow should be determined by reference to the rates charged by comparable firms. For this purpose, the statement of costs supplied by the paying party may be of assistance. The rate to allow should not be determined by reference to locality or postcode alone. (4). Many High Court cases justify fee earners at a senior level. However the same may not be true of attendance at pre-trial hearings with counsel. The task of sitting behind counsel should be delegated to a more junior fee earner in all but the most important pre-trial hearings. The fact that the receiving party insisted upon the senior’s attendance, or the fact that the fee earner is a sole practitioner who has no juniors to delegate to, should not be the determinative factors. As with hourly rates the statement of costs supplied by the paying party may be of assistance. What grade of fee earner did they use? (5). In substantial and complex litigation, an hourly rate in excess of the guideline figures may be appropriate for grade A, B and C fee earners where other factors, for example the value of the litigation, the level of the complexity, the urgency or importance of the matter, as well as any international element, would justify a significantly higher rate. It is important to note(a) that these are only examples and(b) they are not restricted to high level commercial work, but may apply, for example, to large and complex personal injury work. Further, London 1 is defined in Appendix 2 as ‘very heavy commercial and corporate work by centrally based London firms’. Within that pool of work there will be degrees of complexity and this paragraph will still be relevant. In my judgment, this is a paradigmatic case for departing from the guideline hourly rates, as exemplified by the applicants’ own statement of costs.[25]I reject the applicants’ challenge to the time claimed for the respondents’ work on documents. I am satisfied that that the significant time claimed for such work is all reasonably and proportionately incurred. I reject the criticism that this is unreasonably, and disproportionately, tilted towards senior fee earners. In my assessment, no reduction in the costs claimed of £50,820 for work done on documents is warranted. Even allowing for the greater burden of work that fell on the applicants, the costs claimed by the respondents compare favourably with the applicants’ own expenditure.[26]However, I accept that some reduction should be made from the respondents’ costs to reflect the time spent at the hearing. I bear in mind that whilst the respondents are claiming for four fee earners who attended the hearing (with only half a day for the most expensive fee earner), the joint liquidators claimed for six fee earners for a full day, four of whom were at Grade A level. That was clearly excessive, and would not have been allowed on assessment. But it does not excuse over-attendance by the respondents. I will disallow the attendance of PR1 (£1,175) and the related travel and waiting time (£705). I will also disallow 6.8 of the 16.8 hours claimed for travel and attendance by LD at £295 per hour (i.e. £2,006). There is no explanation as to why this is greater than five hours for each of two fee earners; and the burden rests on the respondents, as the paying party, to justify this figure. I consider that the remaining attendance at the hearing (and consequent waiting and travelling times) are fully justified.[27]In summary, therefore, I reduce the costs claimed by a total sum of £3,886 (£1,175 + 705 + 2,006) to £177,488.28. I summarily assess the costs payable by the applicants to the respondents in this sum.[28]That concludes this costs judgment.