11 February 2014Print This Post

When three into one will go – High Court rejects challenge to single costs budget for three cases

Lotus case: three separate budgets would merely have added to the costs

The High Court has rejected a Mitchell challenge to a budget that could have left well-known car manufacturer Lotus with hundreds of thousands of pounds of costs up in smoke.

Master Kay QC said Mitchell “does not provide that a party should be penalised where the balance of justice and fairness would indicate that a contrary approach is appropriate”.

Lotus Cars v Mecanica Solutions [2014] EWHC 76 (QB) was one of three separate claims for which the claimant had submitted a single budget of nearly £600,000, the parties having agreed by a consent order that they would be joined for the purposes of case management and trial.

However, the defendant said the terms of the order, and of an allocation order made a week later, meant the claimant should have filed three separate budgets, as it had.

However, Master Kay comprehensively rejected the challenge, saying the wording of the orders – which were in places in conflict with each other – did not specify separate budgets.

He said: “In the case of large group actions where the management of the various cases is to be treated as common and is dealt with accordingly, there is no sensible reason why the cost budgeting should always be considered separately and some good reasons why it should not.”

He added that as a “significant purpose” of budgeting is to ensure that cases are handled as economically as possible, “it seems logical that if cases are to be managed and tried together, a single costs budgeting exercise should be sufficient. The provision of three separate budgets merely adds to the costs”.

Even if he was wrong, the master said he would have allowed relief against the sanction of limiting the claimant to the applicable court fees.

He said the failure in Mitchell was “much more serious” than here and in this case the claimant was trying to comply. Such default as there had been was trivial “and if it was not, there was an understandable reason for the default which did not arise from the solicitor’s failure to act promptly or dereliction of duty”.

“Although the decision in Mitchell indicates that a more robust approach should be taken with applications [for relief from sanction], it does not provide that a party should be penalised where the balance of justice and fairness would indicate that a contrary approach is appropriate,” Master Kay said.

“In my view, the reality of this case was that the claimant was trying to comply with an aspect of the orders and the rules which were not entirely clear and if, with hindsight, it is found that it failed to do so properly, I think that it would be contrary to the overriding principle to apply the penalty required by the defendant.”

The master also cited Mr Justice Coulson’s pre-Mitchell dicta last year in Willis v MRJ Rundell & Associates Ltd that the court should be cautious about penalising a party in respect of non-compliance with the cost budgeting rules.

The defendant’s solicitor, Philip Rubens of Cooke Young & Keidan, confirmed that there would be no appeal. Olswang, which instructed Thomas Croxford of Blackstone Chambers, is acting for the claimant.

By Neil Rose


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