In Woolley v Ministry of Justice, the claimant brought a personal injury claim against the Ministry of Justice following an assault he suffered while a remand prisoner. At a CCMC HHJ Baucher significantly reduced the claimant’s costs budget. The claimant argued that the judge had erred in law by refusing to consider the defendant’s agreed costs budget when assessing proportionality of his own. He also submitted the approved budget left him with much lower funding than the defendant, failing to keep the parties on an equal footing. The Ministry of Justice contended that comparisons between budgets were of limited relevance. It was for the judge to assess proportionality of the claimant’s budget, which she had done. The High Court allowed the claimant’s appeal, finding that the judge had disregarded a relevant consideration in refusing to hear submissions based on the defendant’s budget. Her language when addressing claimant’s counsel was also criticised and termed “indefensible”.
To avoid the presumption applied by CPR 46.9(3)(c) the solicitor is required to explain to the client that the costs may not be recovered because they were unusual. “Unusual” must therefore be read in the context of a between the parties assessment. That is not to be equated with costs which are merely “unreasonable”. A solicitor is not required to inform the client that particular costs may not be recovered because a court may conclude that they were not reasonably incurred or reasonable in amount.
“In my judgment, the Claimants are right that it is wrong in principle for a party to use the CCO regime, in effect, as a proxy for the abuse of process jurisdiction. Similarly, it would be wrong for the court to impose a CCO in order to punish a party who has lawfully brought proceedings in this jurisdiction because the court thinks that they should have issued their proceedings in a different jurisdiction…. the imposition of a CCO would almost certainly have the effect of forcing the Claimants to abandon their claims. If the Defendant considered that the various reasons put forward … meant that the continuation by the Claimants of these proceedings would be an abuse of process, then the Defendant should have persisted with its strike out application.”
In the course of the costs budgeting exercise the Claimants had complained, in particular, about the level of the Defendant’s incurred and estimated disclosure costs and asked the court both comments on those incurred and significantly curtail, if not disallow altogether, the costs of disclosure going forward.
The Claimant in this case applied to revise an approved costs budget. The application to revise (made soon after the transfer to the High Court took place) was based not on value alone but on the argument that the case had turned out to be more complex and more demanding of legal time and cost than was reasonably anticipated when the budget was drafted. It was said that the case had developed in the period following the initial realisation that the value had increased, and that it was not really feasible to seek to revise the budget before the District Judge in part because the impact of the new medical evidence, other than on value, was not at the time of the budgeting hearing clear.
Master Kaye has refused an application by the Claimant to revised an approved costs budget under CPR 3.15A. Her lengthy decision provides some useful guidance to parties seeking to vary a costs budget and highlights in stark terms the mandatory requirement to act promptly.
Following judgment for the Defendant in this case, the court awarded costs on the standard basis along with pre judgment interest at 2% pursuant to CPR 44.2(6)(g). The Judge went on to consider an appropriate payment on account. In line with developing case law, in particular the decisions in MacInnes v Gross [2017] 4 WLR 49 and Thomas Pink Ltd. v Victoria’s Secret UK Ltd. [2014] EWHC 3258 (Ch) he awarded 90% of the budgeted costs as against 50% offered by the Claimant.
The Civil Procedure (Amendment No. 3) Rules 2020 and the 122nd Practice Direction Update come into effect on 1 October 2020… the most notable change is the introduction of the new formal procedure for varying your costs budget and imposition of a mandatory duty on parties to do so where there is a significant development in the litigation.
In Richard v The British Broadcasting Corporation (BBC) & Anor [2017] EWHC 1666 Chief Master Marsh urged a “degree of caution” when considering whether to make a comment about incurred costs at a costs management hearing, saying “To my mind there is little or no value in the court recording a general comment about incurred costs along the lines that the incurred costs are “substantial” or they are “too high”. If the court wishes to record a comment that the incurred costs are “excessive” or they are “unreasonable and disproportionate” it will wish to be sure that the comment is made on a sound footing, rather than impression, because commenting is quite unlike the exercise of approving a figure per phase for future costs. The court will also wish to consider the utility of making a comment unless it is specific and well-founded.”
These sentiments have been echoed by Master Kaye in a decision handed down last November, but only just published.
Master Gordon-Saker determined three issues which arose in the course of a detailed assessment, namely:
i) whether the caps on recoverable costs of budgeting provided by sub-paragraphs 7.2(a) and (b) of Practice Direction 3E of the Civil Procedure Rules 1998 include or exclude value added tax;
ii) whether the Claimant was entitled to recover the sum of £2484.48 in respect of interest paid under a disbursement funding loan; and
iii) whether the Claimant’s entitlement to interest should run from 3 months after the date of the order for costs.