This may be one of the hottest debate points of 2021/2. In my opinion, the answer is yes, the new Guideline Hourly Rates (GHR), which officially came into force on 1 October 2021, are retrospective and within the marketplace, it is openly known that some predominantly paying party firms seem to be of the same opinion.
But are there any contra arguments?
Given the size of the increases, there will no doubt be those who want to test the point over the coming months at detailed assessment hearings up and down the country before this debate is firmly put to bed. There is also no doubt that different District Judges, Regional Costs Judges and Costs Masters will have their own opinions, which will in all likelihood lead to the senior judiciary necessarily having to wade in on the point.
What is known is that the new GHR have already been utilised before they have officially come into force in both ECU Group PLC v Deutsche Bank AG and another and Axnoller Events Ltd v Brake and another. HHJ Paul Matthews in the latter accepted that the 2010 GHR were now “well out of date” and of “little assistance” in the case in hand.
The Civil Justice Council in their final report discusses the issue of implementation of the new GHR, and whilst they don’t go as far as categorically stating that the intention is for them to be retrospective, they have at least strongly hinted that this is to be the case. Paragraph 10.2 of the interim report states:
“The rates the working group has recommended are based on 2019-2020 data of what has been awarded or agreed. Therefore, the working group sees no justification for any phased introduction of the rates.” (Emphasis added.)
This, coupled with recommendation at paragraph 9, states:
“If the proposed GHRs are introduced they should be applicable to all summary assessments from the date of their introduction.” (Emphasis added.)
It could be suggested that the only way they can be applicable to all summary assessments from the date of introduction, and without phasing for past years, is if they are applied to work already undertaken.
At paragraph 10.6 of the final report, there is a reference to a comment by one SCCO Master who quite rightly pointed out that if they are not retrospective, there would be a practical problem of numerous rates being claimed for all fee-earners, over a number of years. This would lead to complicated N260s and bills alike, naturally leading to an increase in judicial time in performing a summary assessment, which would result in only a marginal gain.
The future will no doubt decide who is right and/or wrong on the subject, or it may be that both sides of the argument are partially correct.
We may see more of a distinct divergence of approaches by judges conducting detailed and summary assessments. Summary assessments utilising the new GHR regardless of when the work was done for ease and simplicity; detailed assessments, where the GHR are only part of the equation, perhaps exercising an option of adopting a phased approach on matters stretching back several years.
Obviously, any argument could have been avoided if the increases had simply been calculated on the basis of one of a multitude of inflationary indices, but one would have to concede that argument has bolted, for now at least!
For sure no doubt this debate will continue well into 2022.
