The Premier League's Recovery of Legal Costs

Following the case of The Premier League ("Premier League") v Everton Football Club Company Limited[1] ("Everton"), a Premier League Commission ("Commission") determined that Everton had breached the Premier League’s Profit and Sustainability Rules ("PSR"). This resulted in a points deduction and an order for Everton to pay the Premier League’s legal costs. The Commission assessed these costs at £1.7 million, significantly lower than the £4.9 million claimed by the Premier League—a reduction of £3.2 million. The Premier League subsequently appealed, arguing that the costs order should be increased.

The matter was subsequently reviewed by the Premier League’s Appeal Board (“Appeal Board”), which delivered its decision on 5 July 2024.[2] This decision offered valuable guidance on the principles and approach to awarding costs in disciplinary proceedings.

Application of costs

The Commission awarded costs pursuant to Rule W51.9 of the Rules, which grants the Commission discretion to order the Respondent to pay such an amount in costs as it deems appropriate.[3] However, the rule is notably vague and provides no specific guidance on how the discretion should be exercised. In this case, the Appeal Board chose to apply the award of costs on the standard basis under the Civil Procedure Rules (“CPR”), considering these rules a useful framework to guide their discretion. The two key principles applied by the Appeal Board were:

1.      CPR 44.2(2)(a)[4] – Under this rule, the unsuccessful party is generally ordered to pay the costs of the successful party. Accordingly, in this case, Everton would be required to pay the Premier League’s costs.

2.      CPR 44.3[5] - Under this rule, where the court is to assess the amount of costs it will assess those costs on either the standard basis or on the indemnity basis. In either case, the court will not allow costs which have been unreasonably incurred or are unreasonable in amount.

It is important to set out the difference between the basis of assessment:-

Standard basis: This means that the winning party may only recover costs which are assessed to be reasonable in amount and proportional to the issues, with any doubt being resolved in favour of the paying party.[6] 

Indemnity basis: In contrast to the standard basis, any doubt in the assessment of costs is resolved in favour of the receiving party, often resulting in significantly higher costs. This basis of assessment is typically awarded only in exceptional circumstances, usually due to the conduct of the paying party or the existence of a specific contractual provision requiring it.

When determining what costs were reasonable and proportionate, the Appeal Board referred to the principles outlined in the CPR and applied in Kazakhstan Kagazy PLC v Shunus [2015]. These principles emphasise that: “The touchstone is not the amount of costs which it was in a party’s best interests to incur, but the lowest amount which it could reasonably have been expected to spend in order to have its case conducted and presented proficiently, having regard to all the relevant circumstances.”

Assessment of costs

Upon review, the Appeal Board concluded that the Premier League had failed to sufficiently demonstrate that the full amount of its claimed costs had been incurred both reasonably and proportionately. Furthermore, the Premier League faced the significant challenge of overcoming the principle governing appeals on costs under the Civil Procedure Rules (CPR). This principle states that “an appeal against a costs decision faces an especially high hurdle, as particular deference is given to the discretion of the lower court..., affording it a very broad margin of appreciation.”[7] In practical terms, this required the Premier League to present compelling evidence that the Commission’s decision on costs was outside the bounds of reasonable discretion—a standard the Appeal Board found had not been met for the following reasons:

1.      Insufficient Detail in Claimed Costs:

Despite claiming a substantial sum of £4.9 million in legal costs, the solicitors representing the Premier League failed to provide a detailed breakdown of the work performed, making it difficult for the Appeal Board to properly assess the costs. The submission consisted of only a two-page statement summarising the aggregated fees for various advisors, including solicitors, senior and junior counsel, and two experts. The statement provided total fees for each grade of solicitor, alongside the corresponding hourly rates and total hours worked. Additionally, it outlined aggregated fees for different stages of the proceedings but lacked specific details, such as the time spent by individual fee earners on specific tasks. This lack of detail made it impossible to effectively assess the proportionality and reasonableness of the time and costs incurred.

The Appeal Board referred to Form N260, a template prescribed under the CPR for summarising costs. This form requires a detailed breakdown of costs into categories such as personal attendances, correspondence (letters sent and received), phone calls with the client, opponent, and others, attendance at hearings, and work done on documents. It also mandates specifying the total hours worked by each grade of fee earner under each category. The Appeal Board noted that the cost information provided by the Premier League fell short of even the basic level of detail required by this form.

2.      Significant Discrepancy Between Everton's and Premier League's Costs –

Another factor weighing against the Premier League in the appeal was the significant discrepancy between the costs incurred by Everton and those claimed by the Premier League, highlighting the disproportionate nature of the fees. For example:

3.      Unreasonably High Hourly Rates –

A significant portion of the work carried out by the Premier League’s legal team was charged at exceptionally high rates, exceeding the guideline rates set out in the CPR and far surpassing the rates of Everton’s legal team.

Partners representing the Premier League billed at an hourly rate of £940, while Everton’s solicitors charged £540 per hour.

After reviewing all the factors outlined above, the Appeal Board concluded that the costs incurred by the Premier League were neither reasonable nor proportionate, leading to the rejection of the appeal.

Relevance of decision for PL

This decision is significant for the Premier League, its members and also the future of disciplinary proceedings for a number of reasons:

1.  The Premier League has incurred £3.2 million in costs related to the Everton case, which it is unable to recover. These unrecovered costs will likely be considered part of the Premier League’s operating expenses and may be deducted from the League’s income, including international broadcast revenue. Consequently, all Premier League member clubs, including Everton, will effectively share the financial burden, even though only Everton was penalised for the breach of rules.

2.      It has been reported that the Premier League spent around £45 million on legal costs during the 2023/2024 season, far surpassing its £8 million budget. This overspend was partly driven by the proceedings involving Manchester City. While the loss in the Everton case may seem relatively minor in the context of the Premier League’s and its member clubs' overall financial scale, such costs can quickly lead to a challenging financial situation.

Given the above, if CPR principles are applied in cases like the Everton case, the Appeal Board’s approach is difficult to challenge. However, a key concern is the fairness of unrecovered costs being passed on to member clubs, particularly those with fewer financial resources. One potential solution could be to amend the Rules to place more of these costs on the clubs found in breach. The Premier League may also want to reconsider whether its own cost rules should align with those under the CPR. Furthermore, there is a broader question regarding the length, complexity, and cost of cases like Everton and Manchester City. Should the Rules be adjusted to reduce the scale and expense of such proceedings, even with the Premier League’s significant revenues?

References

[1] In the matter of a Premier League Commission between:- The Football Association Premier League  Limited (trading as The Premier League) and Everton Football Club Company Limited Available at: https://resources.premierleague.com/premierleague/document/2024/04/08/eef5f482-4d3a-473a-9e38-26f995059377/Premier-League-v-Everton-Decision-FY23.pdf (Accessed: 20 November 2024).

[2] In the matter of appeals from a commission of the Premier League Disciplinary Panel between: Everton Football Club Company Limited and The Football Association Premier League  Limited (trading as The Premier League) Available at: https://resources.premierleague.com/premierleague/document/2024/07/12/4afd1385-4e8b-4f91-bc8e-7a5714681a7c/240705_Everton-FC-v-PL-Costs-appeal-Final-003-.pdf (Accessed: 20 November 2024).

[3] Handbook (no date). Available at: https://resources.premierleague.com/premierleague/document/2024/07/26/e6332e5a-4ca6-4411-bf01-9f8ab76c6fb4/TM1534-PL_Handbook-and-Collateral-2024-25_25.07_V2.pdf.

[4] www.justice.gov.uk. Available at: https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs#rule44.2.

[5] Justice.gov.uk [Preprint]. Available at: https://doi.org/1093835/cropped-android-chrome-512x512-1-32x32.

[6] Ibid, s.1-3

[7] In the matter of appeals from a commission of the Premier League Disciplinary Panel between: Everton Football Club Company Limited and The Football Association Premier League  Limited (trading as The Premier League) [25]

[8] Cox KC, Raymond. “How Are Legal Costs Recovered in Premier League Disciplinary Proceedings? Reviewing Guidance of Appeal Board in the Everton Case.” LawInSport, 31 Oct. 2024, How are legal costs recovered in Premier League disciplinary proceedings? Reviewing guidance of Appeal Board in the Everton case. Accessed 20 Nov. 2024.