Costs Budgeting – not the “Usual Order”
The “usual order” following any case management decision made by a judge under Section II of the Civil Procedure Rules 1998 (“CPR”) is “costs in the case”. That means that at the end of the action, those costs will be paid by the loser to the winner, the amount to be decided by detailed assessment if the figures cannot be agreed. Such an order is commonly used where the court is undertaking costs budgeting under CPR 3.13 which requires the parties to file and exchange budgets not later than 21 days before the first case management conference. Where that happens, the order made for costs is the one that is “usual” : no one pays or receives anything until the case is concluded.
Not always, however, as the decision of Master Brown in Reid v Wye Valley NHS Trust [2023] EWHC 2843 (KB) illustrates. In Reid, the claimant was seeking in excess of £1m in damages to compensate her for a delay in diagnosing Caude Equina Syndrome, for which she blamed the Trust. Unfortunately, at the pre- budget discussion stage, no measure of agreement had been reached about the contents of the claimant’s budget, in terms of amounts to be approved by the court. Before the Master, it had been the defendant’s submission that the reason for that had been the claimant’s failure properly to engage in the process because some elements in her budget had been unreasonably high, making impossible the reaching of any accord on the figures.
By way of example, in this context, the defendant had pointed to the hourly rate claimed in the budget for a Grade A solicitor handling the case in Manchester at £425 per hour, far above the guideline rate. In addition, the grade A was proposing to spend 47 hours on the statement of case, for which counsel would be charging a further £3,400. There was then the Experts’ phase which was equally striking at 96 hours totalling £96,000, with only two hours attributed to a grade D Fee earner. And so, it went on.
Reminding himself of the decision in Findcharm Ltd v Churchill Group Ltd [2017] 3 Costs LO 263 where the court had taken a dim view of “low-balling” by the defendant (the practice of advancing a deliberately low budget in order to make the claimant’s budget appear high), Master Brown found the defendant’s argument persuasive. He accepted the submission that there had been “high-balling”, in particular that the claimant had put forward budget figures without any real constraint or consideration as to whether the amounts proposed were reasonable. It followed that the Master was willing to depart from the “usual order” and to direct that if the action ultimately be won by the claimant with costs, there would be a 25% deduction from the amount allowed for the budgeting process over which he had been presiding.
Lessons for the future?
Parties should not assume that where section II of CPR 3 is engaged, the automatic order will be costs in the case. Those litigants who either high-ball or low-ball, will do so at their peril as to costs if they advance figures without giving sufficient consideration as to their reasonableness and proportionality. Care should be taken to present realistic figures, upon which costs lawyers such as Kain Knight have the knowledge and experience to advise on the level of those likely to be allowed.
Author Colin Campbell
