Guidance on costs management: Yeo v Times Newspapers Ltd (2015)
Tim Yeo v Times Newspapers Ltd
High Court (Admin)
4 February 2015
Two of the most common issues to arise at costs management hearings are the extent to which the court can and should consider hourly rates, and whether contingencies are justified, necessary or useful. It is now commonplace for judges to refuse to consider the issue of hourly rates, often with the refrain: “This is not supposed to be a detailed assessment!” The approach to budgeted contingencies varies significantly between courts. Both issues fell to be considered in the High Court by Warby J in the case of Tim Yeo MP v Times Newspapers Limited (2015). Advocate Nick Thornsby looks at the guidance provided and how it relates to his own experience of costs management.
The case is another, like Mitchell, involving a Member of Parliament bringing defamation proceedings against a newspaper.
On 26 January 2015, the second case management conference, and first costs management conference, took place before Warby J, who was required to rule on two issues. Of interest here is the second matter: costs management.
Despite costs management having been in place for nearly two years, there have been relatively few reported cases that provide guidance on how the exercise should be approached. It is for this reason that Warby J “thought it useful to give this judgment highlighting particular issues that arise, and offering some guidance for the future…”
The Precedent H form in which parties’ budgets must be contained requires the inclusion of proposed hourly rates. Notwithstanding this, it is now rare for judges undertaking costs management to make a determination on the appropriateness of the hourly rate used in the budget, as the court would be required to do on either a summary or detailed assessment of costs.
Reference is frequently made by judges to judicial training on the issue, which seemingly discourages determination on hourly rates, and to guidance from Master Gordon-Saker, the Senior Costs Judge, in a speech given to the Commercial Litigation Association in October 2014 (referred to at paragraph 64 of the judgment).
A representative attempting to make submissions on hourly rates will frequently find that he or she is given short shrift from the bench; the hourly rates are left unchanged.
Notwithstanding this, courts will often then go onto consider time spent, applying in the final calculation the hourly rate on which they have declined to make a determination, with obvious unsatisfactory consequences.
Warby J makes three points in relation to hourly rates:
Master Gordon-Saker has stated that he is frequently asked by judges how they should approach costs management without reference to hours and rates.
The Practice Direction to Part 3 of the CPR specifically states that “in the course of its review the court may have regard to the constituent elements of each total figure” (PD3E 7.3).
The Precedent H form requires hours and rates to be stated on the form.
All of which leads him to the following conclusion:
“It seems to me that whilst the question of whether the totals are reasonable and proportionate will always be the overall criterion, the courts may need to consider rates and estimated hours. The approach will need to be tailored to the case before the court.”
Further guidance on the sorts of cases where a consideration of the hourly rate is particularly appropriate is not given, but the argument can certainly be made that it would include, for instance, a case where there is a significant, but unexplained, departure from the prevailing SCCO guideline hourly rates for the area.
If there is at least some consistency in the approach of courts to the issue of hourly rates, the same certainly cannot be said for contingencies. It has become the practice of some county courts to remove all contingencies as a matter of course. If something arises at a later date that was not budgeted for, budgets can be amended and either agreed or approved.
On the other hand, it is still common to encounter the “err on the side of caution” approach, leaving in whatever contingencies, however unlikely, on the basis that, if the speculated eventualities do not arise, nothing can ultimately be billed in respect of those contingent costs.
Again, Warby J makes three points:
Contingencies must involve work that does not fall within the main categories on the Precedent H.
In order to qualify as a contingency, it must be possible to identify to the court and other parties what the work would consist of.
Work should be included as a contingency only if it is foreseen as more likely than not to be required. If an event identified as a contingency is not considered “probable”, it should not be included within the budget.
This last point is likely to be a particularly helpful piece of guidance for parties preparing budgets and for the courts in approaching the costs management exercise.
Warby J also briefly makes a more general point about costs management. CPR 3.16(2) states that where practicable, costs management should be conducted either by telephone or in writing. In practice, it has been very uncommon for costs management to be carried out in any way other than at an in-person hearing. Warby J encourages in particular the undertaking of costs management without a hearing, with parties making written representations on each other’s budgets.
This case provides useful guidance on some relatively small but important aspects of the costs management regime. However, more guidance is certainly needed for the process to be as effective as it can be, and to ensure greater consistency in approach.
To discuss the issues raised in this article, please contact Nick Thornsby on 0113 261 6531.
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.