Warby J noted that ‘although costs budgeting has now been in place for over 20 months, the detailed implementation of the scheme is still relatively untested’. The guidance can be summarised as follows: –
- A substantive costs management conference will generally not be needed, and correspondence between the parties can substitute skeleton arguments.
- Significant costs may already have been incurred prior to the costs budgeting exercise. Whilst these are outside the scope of the approval process, the Court may take them into account when determining the reasonableness of future costs.
- Whilst the question of whether the overall totals for each phase of the litigation are reasonable and proportionate will always be the overriding issue, the Court may well need to consider hourly rates and estimated hours (particularly with libel, privacy and harassment cases where costs may become disproportionate at an early stage). The Judge likened this to a summary assessment and distinguished it from the detailed assessment procedure.
- Contingencies should only be allowed where (1) they involve work that does not fall within the Precedent H categories, (2) can be clearly identified to the other side and the Court, and (3) are ‘more likely than not to be required’.
In the instant case, the Judge reduced the budgets prepared on behalf of Mr Yeo by 20-25% as he considered his solicitors’ hourly rates to be too high, and that excessive partner time had been provided for. He further reduced the budgets for disclosure, as he considered that disclosure would be more onerous for the defendant newspaper, and witness statements, in view of the substantial costs already incurred.
Two contingencies were put forward by those acting for Mr Yeo, namely ‘strategy review and consultation’ and ‘possible further work’. The Judge considered that the former was included within the budgets for the main heads of work, whilst the latter met none of the criteria which he had identified. Neither was allowed. Four contingencies were suggested on behalf of Times Newspapers, namely ‘application to strike out honest opinion’, ‘application for specific disclosure’, ‘application for third party disclosure’ and ‘costs associated with costs budgeting’. The first three were disallowed, because the Judge did not consider that any of the eventualities was more likely than not to occur. The latter was allowed, the Judge accepting that costs of budgeting would be higher than they might ordinarily be.
Comment
The costs sanctions imposed in the Mitchell libel case, and the subsequent affirming, and then softening of that approach by the Court of Appeal in a string of further cases on sanctions, has been a focus of comment since the introduction of the Jackson reforms. In that case, those acting for Mr Mitchell famously failed to file a costs budget on time.
In this case we are reminded that costs budgeting itself was a far more significant change than the approach to sanctions. The budget approved for Mr Yeo was £370,000 (not including costs incurred), some £189,000 less than that applied for (including contingencies). The budget approved for Times Newspapers was a similar £346,000. Whilst these figures may sound incredibly high to ordinary members of the public, they would not do so to experienced libel practitioners; and this is a very high profile case. Mr Justice Warby has clearly set a marker for the approach in future publication cases.
This post originally appeared on the Brett Wilson website and is reproduced with permission and thanks.