Court “does not have to accept” parties’ agreement not to budget

High Court: no jurisdiction to make case management directions for proceedings in the CAT

High Court: no jurisdiction to make case management directions for proceedings in the CAT

A High Court judge has made it clear that the court is not required to go along with parties who agree to dispense with costs management.

Though the ruling by Mr Justice Roth was in the Competition Appeal Tribunal (CAT) – of which he is president – he was applying the CPR’s costs management rules, which are being used in the tribunal for the first time in this case.

His decision in Agents’ Mutual Ltd v Gascoigne Halman Ltd (t/a Gascoigne Halman) (Costs management II) [2016] CAT 20 is one of a number of interesting costs-related rulings coming out of this dispute.

The case concerns the terms of membership of online property portal OnTheMarket, which the claimant says the defendant has contravened; there is a parallel case brought by the claimant against another member, Morginie James, which is being heard with this one.

Though the actions were brought in the Chancery Division, Sir Kenneth Parker ordered, by consent, that both cases be assigned to a judge who is also a designated chairman of the CAT and that the competition issues in both actions be transferred to the CAT.

He also ordered that the requirements for costs management be dispensed with in relation to the Gascoigne Halman claim.

The defendant argued that this applied to the CAT part of the claim too, or alternatively that the parties had agreed to have no costs management at all. The claimant disputed this.

As to the first ground, Roth J said: “The High Court clearly has no jurisdiction to make case management directions for proceedings in the CAT. Moreover, I have no doubt that Sir Kenneth Parker was well aware of this: that emerges, if support were needed, from several of his observations during the hearing before him and it is unnecessary to lengthen this judgment by quotations from the transcript to illustrate such a basic and obvious point.”

He went on to find that on the evidence there was no discussion between the parties about costs management in the CAT or agreement that it would be dispensed with.

“Finally, I should make clear that even if, contrary to the above, I had found that the parties had agreed to dispense with costs management in the CAT, that would not preclude the CAT’s power to make such costs management orders as it considered appropriate.

“Although I accept that any such agreement between the parties would be a very relevant factor to take into account, for the reasons set out above that situation does not arise in this case.”

In a subsequent hearing ([2016] CAT 21), Roth J scrutinised six future phases of Gascoigne Halman’s budget – the claimant’s having been agreed – and sliced 37% off them, from nearly £1.5m to £922,000. The company’s budget, including incurred costs, was a little over £2.8m, compared to £1.8m for the claimant.

In his preliminary comments, Roth J emphasised that the costs management exercise was “not concerned with what Gascoigne Halman’s solicitors and counsel may actually charge their client”, but with what the company’s recoverable costs would be on the standard basis should it win in the CAT. Proportionality was “fundamental” to this.

The judge continued: “Although comments were made about and comparing the hourly rates and number of hours set out in the budgets, a costs management order is not concerned with a determination of rates or hours. However, the details set out in Precedent H can be scrutinised to understand the constituent basis of the overall figures and in order to assist with the evaluation, but no further.

“I accept that these are complex proceedings in that they involve a specialist area of law and therefore involve higher costs. Both sides are using City of London solicitors and I do not regard that as disproportionate.

“I accept also that the issues are of great importance for both parties although, it seems to me, they are still more important for the claimant than for Gascoigne Halman: the claimant contends that its future in the online portal market may depend on the determination of the competition issues.”

With the claimant’s budget agreed and thus not subject to review by the CAT, he said that “it would not be fair to revise costs in Gascoigne Halman’s costs budget for the same phase of the action to a lesser amount, unless there was a material difference between the two sides in terms of the work involved”.

In reducing the figures for all of the significant phases, Roth J sliced £100,000 off the budget for expert witnesses (to £146,000) because too much of the work was allocated to partners rather than more junior staff, and more than halved the amount for the pre-trial review because it made provision additional applications at the review that at the moment were just “speculative eventualities”.

He also took nearly £300,000 of the trial budget of £842,195 because of the amount of partner time allocated and the apparently high cost of counsel when compared to the claimant’s team. “It may be that the fees charged by counsel acting for Gascoigne Halman represent the market rate for their services but that does not make them reasonable or proportionate,” he said.

In an earlier decision in this litigation, Roth J ruled that a party seeking an order for security for costs does not have to provide a costs budget in the precise form of Precedent H, but the court should expect a full schedule “showing how the sub-totals under the various specified heads were arrived at, including the rates being charged and hours estimated”.

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