30 October 2014Print This Post

Courts have “unfettered discretion” to order costs budgets, says High Court

RCJ

Coulson J: “No presumption” against costs budgets in big money cases

The courts have “unfettered discretion” to order costs budgets, whatever the size of the damages at stake, Mr Justice Coulson has ruled.

Despite arguments to the contrary based on the wording in the CPR, he said: “There is nothing to suggest otherwise. The discretion extends to all cases where the claim is for more than £2m (old regime) or £10m (new regime).”

Ruling at the Technology and Construction Court in a Birmingham property dispute where around £18m is claimed from the main contractors, the judge said there was “no presumption” against ordering costs budgets in claims above these amounts, and “no additional burden of proof” on the party seeking the order.

Coulson J said costs budgets were not automatically required in higher value cases because it was “less likely that issues of proportionality would be important or even relevant”.

However, he said that when a court decided to exercise its discretion, it should “take into account all the relevant material, without prejudging or making any specific assumptions one way or the other”.

Ruling against the claimants in CIP Properties (AIPT) v Galliford Try Infrastructure and others [2014] EWHC (TCC), Mr Justice Coulson said the court had a “complete discretion” to decide whether costs budgets should be filed and exchanged.

He said that if the claimants continued to oppose budgeting, a case management conference would have to be held in November “for the matter to be argued out in detail”.

Coulson J added: “I make no comment at this stage on the facts, although I do observe that, in view of the likely involvement of many experts, whose fees can often be the single largest items of cost in any bill, the provision of costs budgets and the possibility of subsequent costs management orders comprise at least one way of keeping such fees under some control.”

However, the judge ruled in favour of the claimants on ADR, where they “vehemently” opposed the fixing of a ‘window’ before disclosure, on the grounds that they needed disclosure before they could engage in any “meaningful mediation”.

Coulson J went on: “A sensible timetable for trial that allows the parties to take part in ADR along the way is a sensible case management tool. A stay or a fixed ‘window’ is likely to lead to delay, extra cost and uncertainty, and should not ordinarily be ordered.”

He declined to order a ‘window’ of four months prior to disclosure in the case.

Andy Ellis, costs lawyer and managing director of Practico, said: “By not treating the £10m claim limit as a cap, this latest decision is a further example of good sense. I can foresee other situations arising, including perhaps group actions and cases where there is a disparity between the parties’ budgets, when the courts will now exercise discretion to costs manage cases actively as the rules allow.

“Anyone who has monitored the emergent case law in budgeting through the pilot schemes and beyond will have paid particular attention to the judgments of Mr Justice Coulson. He has taken a tough line on adherence and refused attempts at retrospective variations in the Murray and Elvanite cases. Equally importantly, his support for budgetary control has also provided an antidote to the apathy and less than subtle resistance which has been threatening to derail this aspect of the reforms.”

By Nick Hilborne

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