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16.01.2024

The time spent by a lawyer waiting for a court hearing is a component of legal aid, – the Supreme Court

If a lawyer has to wait for the judges to start considering his case in the Cassation Commercial Court of the Supreme Court, then he can hope that he will be paid for such a wait. The relevant position was expressed by the Cassation Economic Court of the Supreme Court in the additional resolution dated December 6, 2023 in case 905/493/22.

The company asked to reduce the amount of legal fees claimed by the other party for the lawyer, referring to the fact that the total duration of the hearings in the Commercial Court of Cassation of the Supreme Court, where he participated, was only 41 minutes.

However, as noted by the Cassation Economic Court of the Supreme Court , the hearings of the KGS of the Supreme Court in this case started three times later than the appointed time, and were held with a delay in time.

Consequently, due to these delays, the lawyer was forced to spend time waiting for them to start. “At the same time, the necessity and duration of such a wait did not depend on the will of the Company’s representative, but was in fact a forced measure before direct participation in the meetings in order to protect the client’s interests in court,” said the Supreme Court of Justice.

Thus, the KGS of the Supreme Court concluded that stages such as arrival at the court or other institution and waiting are components of legal aid. And the time that the lawyer spends on the road to participate in the court session is a component of legal aid and is subject to compensation along with other expenses.

The circumstances of the case

“Kramatorsk MPZ” LLC appealed to the Commercial Court of the Donetsk region with a claim against the D.STEEL SRLS Company for the recovery of an advance payment in the amount of 300,000 euros.

The Commercial Court, by its decision dated February 2, 2023, which was left unchanged by the decision of the Eastern Commercial Court of Appeal dated May 23, 2023, rejected the claim; charged EUR 2,400 of expenses for the professional legal assistance of a lawyer from the LLC in favor of the Company.

By an additional ruling dated July 18, the appellate commercial court partially satisfied the Company’s application for an additional decision and charged the LLC in favor of the Company EUR 1,800 in costs for the lawyer’s professional legal assistance and EUR 5,000 in success fees.

The Supreme Court, by its decision dated November 1, 2023, dismissed the cassation appeal of the LLC, and the contested decisions remained unchanged. He satisfied the cassation appeal of the LLC against the additional ruling of the appellate commercial court dated July 18, annulled the additional ruling of the appellate court and refused to adopt the additional ruling based on the Company’s application for the distribution of legal costs for professional legal assistance in the appellate court.

Application requirements and objections to the application

On September 5, 2023, the Supreme Court received the Company’s response to the cassation appeal of Kramatorsk MPZ LLC.

In the response, the Company, in particular, requested to recover legal fees for legal assistance of a lawyer in the amount of EUR 2,450 from LLC “Kramatorskyi MPZ” and indicated that on 08/31/2023 it paid for the legal services of the Bar Association (AO), which represents the Company under during the hearing of the case in the Supreme Court, in the amount of 2,450 euros.

In support of legal costs, the Company provided copies of:

Additional Agreement dated August 30, 2023 to the Agreement on the Provision of Attorney Services dated May 30, 2022; Ukrainian translation of the additional agreement; invoice dated 08/30/2023 for payment of 2,450 euros; JSC bank statement; bank statement of the Company (Italy) dated 08/31/2023.

On December 5, 2023, a petition of the LLC was received, in which the company asked to reduce the amount of expenses for the legal assistance of the lawyer declared by the Company to zero euros, in connection with which the application of the representative of the defendant on the distribution of court costs was refused.

“Kramatorsk MPZ” LLC motivated its request as follows:

– the Company’s response to the lawsuit contains a preliminary (estimated) calculation of the amount of court costs incurred by the defendant and expected to be incurred in connection with the consideration of the case, which amounts to EUR 20,000 (UAH 593,290.00 at the NBU exchange rate as of July 20, 2022) (lawyer services for the protection of the defendant’s rights and interests in court at the rate of 150 euros/hour); from the above it can be seen that the representative provides services at a rate of 150 EUR/hour and these services are limited to an amount of 20,000 EUR.

– the amount of the lawyer’s fee is determined precisely based on the hourly payment, therefore the representative must indicate what actions he performed and how much time he spent on such actions, since he declared the calculation of court costs in this way; the defendant and his representative actually changed the terms of the contract and the method of calculating the amount of court costs, determining the amount of the fee in a fixed amount;

– the sum of EUR 2,450, which the representative of the defendant is requesting to be collected, is approximately 16 hours of work by a lawyer at the rate of EUR 150/hour; however, the preparation of a response to a cassation complaint of three pages and participation in two court sessions, taking into account the delay in the start of the last court session, could not take 16 hours of time.

POSITION OF THE SUPREME COURT

In accordance with clause 3, part 1, article 244 of the Civil Procedure Code, the court that made the decision may, at the request of the parties to the case or on its own initiative, make an additional decision if the court has not resolved the issue of court costs.

According to parts 1 and 2 of Article 124 of the Code of Civil Procedure, together with the first statement on the merits of the dispute, each party submits to the court a preliminary (estimated) calculation of the amount of court costs that it incurred and expects to incur in connection with the consideration of the case. If the party does not submit a preliminary calculation of the amount of court costs, the court may refuse to reimburse it for the relevant court costs, with the exception of the amount of the court fee paid by it.

Submission of a preliminary (estimated) calculation of the amount of court costs that the party has incurred and expects to incur in connection with the consideration of the case provides an opportunity for the other party to properly prepare for the refutation of costs that it considers unreasonable and to prove the disproportionateness of such costs by declaring a request for a reduction expenses for the payment of legal assistance of a lawyer, which are subject to distribution between the parties, respectively, ensures compliance with the principle of competition. In addition, the preliminary determination of the amount of court costs enables the courts in the cases defined by law to secure court costs and in a timely manner (at the time of making a decision in the case) to distribute court costs.

Each court must decide on the distribution of court costs, therefore, according to the provisions of Article 124 of the Code of Civil Procedure, a person must submit a preliminary (approximate) calculation of the amount of court costs that he incurred and expects to incur in connection with the consideration of the case to the court of that instance , where such expenses were incurred.

The relevant legal opinion of the Supreme Court is set out in the resolutions dated February 14, 2019 in case No. 916/24/18, dated June 21, 2022 in case No. 908/574/20.

Under the specified circumstances, the resolution of the issue regarding the expenses incurred by the plaintiff in the court of cassation must be decided taking into account the provisions of Part 2 of Article 124 of the Code of Civil Procedure, namely, whether the person submitted the corresponding calculation to this court.

The company in the first statement on the merits in the court of cassation (response to the cassation appeal) noted that on 31.08.2023 it paid for the legal services of AO, which represents it during the hearing of the case in the Supreme Court, in the amount of 2,450 euros, that is, it indicated the amount that she suffered in connection with the consideration of the case in the court of cassation instance.

Therefore, the Company complied with the requirements of Part 1 of Article 124 of the Code of Civil Procedure.

Part 8 of Article 129 of the Code of Civil Procedure stipulates that the amount of court costs that a party has paid or has to pay in connection with the consideration of the case shall be established by the court on the basis of the evidence submitted by the parties (contracts, invoices, etc.). Such evidence shall be submitted before the end of the court debates in the case or within five days after the court decision, provided that before the end of the court debates in the case the party

Thus, the reimbursement of court costs for legal assistance is carried out in the event of the presence of a relevant statement of the party, which it made before the end of the court debate, if the case is considered with the notification of the participants of the case with the holding of the debate, and the relevant evidence is provided by this party either before the end of the court debate or during seven days after the court decision. Similar conclusions were given by the Supreme Court in the decision dated February 1, 2023 in case No. 921/262/19 and the additional decision dated June 16, 2021 in case No. 918/132/20.

At the same time, the examination of these evidences and their assessment is carried out by the court in case of compliance with this procedure, since in other circumstances the distribution of court costs related to the consideration of the case cannot be carried out.

In the additional resolution dated 17.12.2021 in case No. 10/5026/290/2011 (925/1502/20), the Supreme Court stated that the right of the party who intends to obtain, as a result of the review of the dispute, the reimbursement of expenses for professional legal assistance at the expense of of the other party, based on the provisions of Articles 124, 129 of the Civil Code, corresponds to its obligations: first, to indicate a preliminary (approximate) calculation of the amount of court costs that it has incurred or expects to incur in connection with the consideration of the case in the first application for the essence of the dispute; secondly, to declare it before the end of the court debate in the case; thirdly, submit evidence to the court to confirm the amount of such expenses within five days after the court’s decision.

The procedural law does not define specific requirements regarding the content and form of such a statement, in particular, it does not indicate that it must be made only in writing, and also that such a statement must be made at a certain procedural stage. The law only sets the deadline for filing an application – until the end of court debates (a similar legal position is set out in the Supreme Court ruling dated 01.27.2022 in case No. 921/221/21, dated 05.31.2022 in case No. 917/304/21).

In connection with the above, if the case is considered in the court of cassation with notification of the parties to the case, the application for reimbursement of court costs in the court of cassation, with the exception of costs related to the paid court fee, must be made before the end of the court session in this court, and relevant evidence – provided by this party either before the end of the court session, or within five days after the decision (by the court of cassation). Similar legal conclusions were given by the Supreme Court in the decision of 04/07/2020 in case No. 910/2022/19 and in the decision of 03/03/2021 in case No. 908/1238/18.

The Company’s application in response to the cassation appeal of the motion to impose court costs on the complainant and to provide evidence of incurring costs for professional legal assistance before the end of the proceedings in the Supreme Court testifies to its compliance with the requirements set forth in Part 8 of Article 129 of the Code of Civil Procedure.

In view of this, the Supreme Court considers it possible to verify the evidence provided by the Company of incurring costs for professional legal assistance in the court of cassation and to give them an assessment.

In order to confirm the expenses incurred for legal assistance in accordance with Part 8 of Article 129 of the Code of Civil Procedure, the applicant provided copies of the additional agreement with its translation into Ukrainian, an invoice dated 30.08.2023 for 2,450 euros, a bank statement of the JSC dated 04.09.2023, a bank statement of the Company ( Italy) dated 31.08.2023 and indicated that a copy of the Agreement for the provision of attorney services is available in the case file.

According to clause 4.1.2. of the Contract in the event of the initiation of legal proceedings related to the execution of the Contract in the commercial court, the services of the executor will be paid at the rate of 150 euros per 1 hour. the work of the JSC partner for the representation and protection of the customer’s interests in accordance with Clause 1.1 of the Agreement.

By means of an additional agreement, the Company and JSC made amendments to the Agreement, namely, added clause 4.1.5 to it with the following content: “the executor represents the interests of the customer during the consideration of the cassation appeal of KMPZ in case No. 905/493/22 in the Supreme Court as part of the panel of the Cassation Economic court For the representation of the Company’s interests during the review of the cassation appeal, the Customer pays the Contractor 2,450 euros within 5 days from the moment of issuing the invoice.”

In the additional agreement, the parties indicated that all other terms of the Agreement remain unchanged.

AO issued an invoice to the Company dated 30.08.2023 for the representation of the Company’s interests during the consideration of the cassation appeal of LLC “Kramatorskyi MPZ” in case No. 905/493/22 in the Supreme Court in accordance with Clause 4.1.5 of the Agreement in the amount of 2,450 euros.

According to the provisions of Part 3 of Article 126 of the Code of Civil Procedure, in order to determine the amount of expenses for professional legal assistance for the purpose of distribution of legal expenses, the party to the case submits a detailed description of the work (services provided) performed by the lawyer and the expenses incurred by him, necessary for the provision of legal assistance.

Expenses for the provided professional legal assistance in the case of confirmation of the scope of the services provided and the work performed and their cost are subject to distribution based on the results of the case review, regardless of whether they have actually been paid by the party/third party, or are yet to be paid. This position was expressed by the Supreme Court in the composition of the judges of the joint chamber of the Cassation Economic Court in the ruling dated 03.03.2019 in case No. 922/445/19, by the Supreme Court in the rulings dated 29.10.2020 in case No. 686/5064/20, dated 19.01. 2022 in case No. 910/789/21.

According to the content of Part 4 of Article 126 of the Code of Civil Procedure, the amount of expenses for the payment of the lawyer’s services must be commensurate with: 1) the complexity of the case and the work performed by the lawyer (services provided); 2) the time spent by the lawyer on performing the relevant work (providing services); 3) the amount of services and works performed by the lawyer; 4) the cost of the lawsuit and (or) the importance of the case for the party, including the impact of the resolution of the case on the party’s reputation or public interest in the case.

“Kramatorsk MPZ” LLC exercised its right and submitted a petition to reduce the Company’s expenses for professional legal assistance in the court of cassation.

In the request for a reduction of legal aid costs, the LLC indicated that from the Agreement and the response to the claim, it is clear that the legal services for the protection of the Company’s rights and interests in court are calculated at the rate of 150 euros/hour, therefore the amount of the fee should be determined on an hourly basis, the representative must indicate what actions he performed and how much time he spent on these actions. Considers that there is no proper justification of the amount and calculation of the cost of attorney’s services.

According to the established practice of the Supreme Court, in case of non-compliance with the requirements of Part 4 of Article 126 of the Code of Civil Procedure, the court is given the right to reduce the amount of expenses for professional legal assistance of a lawyer, which are subject to distribution between the parties, only at the request of the other party (Part 5 of Article 126 of the Code of Civil Procedure, resolution of the Supreme Court dated 03.10.2019 in case No. 922/445/19).

The Supreme Court, with reference to Part 6 of Article 126 of the Code of Civil Procedure, has repeatedly stated that the burden of proving the disproportionality of costs rests with the party that requests a reduction in costs for the payment of legal assistance of a lawyer, which are subject to distribution between the parties (decision of the Grand Chamber of the Supreme Court dated 19.02.2020 in case No. 755/9215/15-ts, decision of the Supreme Court dated 09.04.2019 in case No. 826/2689/15; dated 03.10.2019 in case No. 922/445/19) .

According to Part 5 of Article 129 of the Code of Civil Procedure, when deciding on the distribution of court costs, the court takes into account: 1) whether these costs are related to the consideration of the case; 2) whether the amount of such expenses is justified and proportionate to the subject of the dispute, taking into account the price of the claim, the importance of the case for the parties, including whether the result of its resolution could affect the reputation of the party or whether the case caused public interest; 3) the behavior of the party during the consideration of the case, which led to the delay of the consideration of the case, in particular, the submission by the party of clearly unsubstantiated statements and motions, groundless assertion or denial by the party of certain circumstances that are important for the case, groundless overstating of claims by the plaintiff, etc.; 4) the actions of the party regarding the pre-trial settlement of the dispute and the peaceful settlement of the dispute during the case proceedings, the stage of the case proceedings at which such actions were taken.

At the same time, the court must evaluate the behavior/actions/inaction of both parties when deciding on the distribution of court costs for compliance with the specified criteria.

When determining the amount of compensation, the court must proceed from the criterion of the reality of attorney’s fees (establishing their validity and necessity), as well as the criterion of reasonableness of their size, taking into account the specific circumstances of the case and the financial condition of both parties . The same criteria are applied by the European Court of Human Rights (decision of 23.01.2014 in the case of East/West Alliance Limited v. Ukraine” (application No. 19336/04), awarding court costs on the basis of Article 41 of the Convention on the Protection of Human Rights and Fundamental Freedoms. In particular, according to its practice, the applicant has the right to compensation for legal and other costs only if it is proven that such costs were actual and unavoidable, and their amount was justified (Supreme Court ruling of October 3, 2019 in case No. 922/445/19 ).

The Supreme Court takes into account that the appeal of the LLC to the Supreme Court with a cassation appeal against the main decisions of the courts of previous instances was recognized as unfounded; as a result of consideration of such a complaint, the Supreme Court reached a conclusion about the legality and validity of these decisions of the courts of previous instances. The Company exercised the right to submit a response to the cassation appeal to the Supreme Court, and therefore the costs of the Company’s legal assistance, consisting in drafting and sending a response to the cassation appeal, were unavoidable.

Having examined the content of the Company’s application for reimbursement of legal expenses in connection with the consideration of the case in the court of cassation, the Supreme Court established that the stated expenses were directly related to the consideration of the case.

In the case file, there is evidence that the Company’s representative committed actions regarding the client’s representation, specified in the invoice. Thus, the Company received a response to the cassation appeal, and its representative participated in court hearings in case No. 905/493/22 in the Supreme Court.

Taking on the responsibility of representing the client’s interests in court, the lawyer assumes responsibility not only for some single action, in particular, the preparation of a procedural document, speaking in court, but also undertakes the responsibility of performing a set of actions, the purpose of which is is to ensure the implementation of procedural rights and protect the client’s interests.

As “Kramatorskyi MPZ” LLC correctly points out, the Company and JSC entered into an additional agreement after filing a cassation appeal in this case to the Supreme Court.

At the same time, despite the addition of clause 4.1.5 to the Agreement (regarding the establishment of a fixed amount of 2,450 euros), the terms of the Agreement regarding the payment of a lawyer’s services at the rate of 150 euros per 1 hour. the work of the JSC partner (clause 4.1.2 of the Agreement) remained unchanged.

Therefore, during consideration of the issue of recovery of costs for professional legal assistance The Supreme Court takes into account exactly those specified in clause 4.1.2. The terms of the contract regarding the payment of the lawyer’s services at the rate of 150 Euros per 1 hour.

The Supreme Court agrees with “Kramatorsk MPZ” LLC that the 2,450 euros claimed by the Company indicate the cost of 16.3 hours. the work of the JSC partner to protect the interests of the client and such time is excessive.

LLC indicates that writing a three-page response to the cassation appeal and participating in two court sessions, even taking into account the delay in the start of the last court session, could not have taken 16 hours. time, which indicates non-compliance by the defendant and his representative with the requirements set forth in Part 4 of Article 126 of the Code of Civil Procedure

However, the response to the cassation appeal provided by the Company is laid out on four pages, not three, as noted by Kramatorsk MPZ LLC.

In the specified response, the Company, in particular, analyzed the arguments of the complainant and the decisions of the Supreme Court in cases No. 904/4859/21, No. 910/18036/17, No. 917/1307/18, 902/761/18, 917/210/17, 129 /1033/13-ts, which was referred to by “Kramatorsk MPZ” LLC in the cassation appeal against the main decisions of the courts of previous instances.

The Supreme Court draws attention to the fact that the service for preparing a response to a cassation appeal covers not only its drafting, but also services for studying the appeal, analysis of judicial practice and positions of the Supreme Court defined in the appeal. A similar conclusion is contained in the decision of the Supreme Court dated January 19, 2022 in case No. 910/789/21.

In view of this, the Supreme Court, taking into account the petition of “Kramatorskyi MPZ” LLC to reduce the costs of legal aid, considers it necessary to reduce the size of the claims made by the Company for the reimbursement of costs for preparing a response to the cassation appeal to 4 hours, which is 600 euros.

Regarding the collection of court costs related to the participation of the Company’s representative in the court hearings in case No. 905/493/22, taking into account the expectation of the beginning of court hearings, the Supreme Court notes the following.

“Kramatorsk MPZ” LLC indicates that the participation of the Company’s representative in the court hearings in the case, even taking into account the delay in the beginning, could not take the amount of time that would correspond to the amount of expenses declared by the Company.

During the consideration of case No. 905/493/22 in the court of cassation, the representative of the Company (lawyer K) personally participated in the court sessions.

The court session in this case, scheduled for September 6, 2023, lasted 3 minutes, on October 18, 2023 – 27 minutes, on November 1, 2023 – 11 minutes. Therefore, the total duration of all court hearings in the court of cassation was 41 minutes.

In this case, the Supreme Court takes into account that the court hearings in this case on 06.09.2023, 18.10.2023 and 01.11.2023 started later than the appointed time and were held with a delay in time.

Therefore, the representative of the Company, who, according to the minutes of the specified meetings, took part in them, was forced to spend time waiting for them to start. At the same time, the necessity and duration of such a wait did not depend on the will of the Company’s representative, but was in fact a forced measure before direct participation in the meetings in order to protect the client’s interests in court.

The Supreme Court in the resolutions of 05/25/2021 in case No. 910/7586/19, of 07/20/2021 in case No. 922/2604/20, of 05/18/2022 in case No. 910/4268/21, of 10/26/2022 in case no. 910/4277/21, dated 04/18/2023 in case No. 903/378/22, dated 03/23/2023 in case No. 921/434/21, dated 04/25/2023 in case No. 910/21424/21 expressed the legal position that such stages as arriving at the court or other institution and waiting are components of legal aid, which, in combination with other types of legal aid, contribute to ensuring the protection of the client’s rights and interests. Taking into account the above, the time a lawyer spends traveling to participate in a court hearing is a component of legal aid and is subject to compensation along with other expenses. The mentioned conclusions of the Supreme Court are permanent and are based on the analysis of the components of the time required for the lawyer to properly represent the interests of the client.

The Supreme Court, taking into account the petition of “Kramatorskiy MPZ” LLC to reduce the costs of legal assistance, the duration of court hearings and their waiting, considers it necessary to reduce the size of the claims claimed by the Company for reimbursement of expenses for participation in court hearings in the court of cassation instance to 4 hours, which is 600 euros.

Taking into account the above, having evaluated the evidence submitted by the applicant to confirm the costs incurred by him and the request for their reduction, based on the criteria defined in Part 4 of Article 126 of the Code of Civil Procedure and the circumstances of the case, The Supreme Court came to the conclusion that the Company’s application for reimbursement of legal costs in connection with the consideration of the case in the court of cassation is subject to partial satisfaction in the amount of 1,200 euros.

Author: Natalya Mamchenko

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