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News of costs budgeting getting strong backing

Costs budgeting

The court's new tools in the area of costs budgeting and management are recognised as important opportunities by insurers, and rightly so.  Costs budgeting applies to the vast majority of multi track claims which insurers face.  The new process gives the opportunity not only to more accurately reserve for opponents' costs, but also to ratchet down the level of costs being incurred by claimants.

Significant news is emerging of a recent robust decision on costs budgeting which is likely to lead to early input from the Court of Appeal in this area, and which will be influential.  The judgment came in the high profile libel action arising out of "Plebgate", between Andrew Mitchell MP and News Group Newspapers, the publishers of The Sun.

In this judgment, Master McCloud refused relief from sanctions to Mr Mitchell whose lawyers had not filed a costs budget in time.  Under the rules, where budgeting applies, a costs budget must be filed in all cases seven days before the first case management conference.  The rules also say that if a budget is not filed when it should have been, the party in default will be treated as having filed a budget comprising only of the relevant court fees, in other words, the costs that they can recover will be limited to court fees.

The costs budgeting rules apply to almost all cases issued after 1 April 2013.  The Mitchell case was issued before then, but was subject to the defamation costs pilot that was already running before 1 April.

The blame was taken by Mr Mitchell's solicitors.  He had instructed a small two partner firm, who said that they had not had the staff available to have prepared the budget in time, and were being kept busy with the phone hacking litigation that they were also involved in.

Article 6 of the European Convention on Human Rights was argued by the claimant, saying that he would be deprived of his right to a fair trial if the costs that he could recover were limited to court fees.  The Master found an answer to this point however, saying that she saw that claimants were in fact able to represent themselves in this type of claim.  She was unwilling to delve into the specific terms of the claimant's CFA, not being willing to speculate as to how and if so in what way the order will affect Mr Mitchell's position against his lawyers.

Master McCloud accepted that the claim was important to Mr Mitchell, but did not see that point as being decisive, as if it had been, the new post 1 April rules could not be implemented in any case that was seen as important to a litigant.  She went further, saying that she saw the need for justice in this specific litigation as effectively being of secondary importance to the need to ensure compliance with the rules, which would assist in turn in this piece of litigation getting its fair share of the court's limited resources, but not more than that share.  It may have been significant that the Master revealed that she had vacated a half day due to be allocated to asbestos cases, to hear the application for relief in this case.

Perhaps there is room for a view that this order was a tough one.  After all, it seems that the claimant's solicitors had only two working days to have prepared their budget in time, because notice of the case management conference was relatively short.  The Master did not however see that as an excuse, saying that the parties should have planned to have prepared their budgets well in advance.  Litigants and their lawyers, including solicitors acting for insurers, would do well to take notice of this warning.

Permission to appeal was given, and in a high profile case such as this, the case is likely to reach the Court of Appeal before too long.  This will be an opportunity for the Court of Appeal to revisit the issue in the light of the new post 1 April climate, following the earlier warnings given in Henry v News Group Newspapers.

The signs here are that costs budgeting and management is going to be seen as significant by the court, and that excuses for not complying with the processes are going to be rejected.  Insurers should be pleased with this development as if the same approach is continued where budgets are exceeded, this can only be in their interests.  They need to make sure that their own houses are in order (as NGN’s was in this case as their budget was served in time) to be best placed to take advantage.

We will continue to keep an eye out for further developments.

For further information contact Simon Denyer, Strategic Legal Development Partner on 0161 604 1551

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.