Keeping an eye on costs

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The overriding objective of the Civil Procedure Rules states that cases must be dealt with “justly and at proportionate cost” [1]. Whilst the CPR give some guidance, Lord Justice Jackson famously acknowledged that the meaning of proportionality will have to be discerned, on a case-by-case basis, through satellite litigation. Now that costs cases are coming through thick and fast, what key principles and tips can we derive?

  • Ignoring proportionality can result in less than 50% costs recovery [2].
    • Unless it is a test case, the issues are particularly complex, or the importance of the case to a party is so great (for example, the party is being sued for all he is worth), it may not be proportionate to use leading counsel;
    • Depending on the particular case, it may not be reasonable for a paying party to have to pay for a partner and a solicitor to attend all hearings/trial;
    • Hours, rates and any duplication of work (including work from prior dispute resolution attempts) will be considered;
    • Counsel’s prior involvement may affect the reasonableness of brief fees;
    • The relationship between the amount of costs claimed and the amount in issue will be highly relevant.
  • Appellate courts will not “tinker” with costs budgets.
    • In an appeal of a costs management decision [3], His Honour Judge Freedman emphasised that it is not the role of the appellate courts to “tinker” with costs budgets. Judges have wide case management powers and in the words of the judge, “this is more particularly so in the context of assessment/budgeting of costs”. In this case, the fact that the appeal judge would probably have been more generous in his assessment of the claimant’s budget, did not mean that the decision of the district judge fell outside his wide ambit of discretion.
  • Although cost budgeting relates to costs to be incurred in litigation, high costs already incurred can result in a reduced budget [4].
  • Don’t incur costs arguing about costs.
    • If costs budgets are agreed between parties, the court will not interfere [5].
    • If you get your cost budget right then, as a winning party, you are likely to get such a significant payment on account that further debate or dispute on costs can be avoided. In two very recent cases the winning parties immediately received 90% of their budgeted costs [6].
  • And finally, behave yourself!
    • The conduct of a case on an unreasonable or untenanble basis can lead to indemnity costs [7].
    • Failure to accept a good Part 36 offer can lead to indemnity costs.
    • Proportionality is not relevant to the assessment and recovery of indemnity costs.

[1] CPR 1.1 (1)
[2] Savoye and Savoye Ltd v Spicers Ltd [2015] EWHC 33 (TCC)
[3] Havenga v Gateshead NHS Foundation Trust [2014] EWHC B25 (QB)
[4] Redfern v Corby Borough Council [2014] EWHC 4526 (QB)
[5] CPR 3.15 (2)
[6] Thomas Pink Ltd v Victoria’s Secret UK Ltd [2014] EWHC 3258; Excelerate Technology v Cumberbatch and others [2015] EWHC 204 (QB)
[7] Richmond Pharmacology Ltd -v- Chester Overseas Ltd [2014] EWHC 3418 (Ch); Kellie v Wheatley & Lloyd Architects Ltd [2014] EWHC 2886 (TCC)