High Court sanctions claimant for failing to update budget

Budget failure: sanction need not be nil assessment

Budget failure: sanction need not be nil assessment

A claimant’s failure to update his budget in advance of an unplanned preliminary hearing has led a High Court judge to rule that “every assumption” would be made against him in assessing the costs.

Mr Justice Warby said ordering no costs would be disproportionate, and was in any case not a sanction prescribed by CPR 3.18 (relating to assessing costs where a costs management order has been made) or the practice direction.

Simpson v MGN Ltd & Anor [2015] EWHC 126 (QB) concerned the costs of a preliminary hearing on meaning and an application to strike out a plea of justification in a libel claim brought by Premier League footballer Danny Simpson against the Daily Mirror.

The claimant’s original budget had included a contingency for such a hearing – which the defendant contested – but Master Yoxall declined to direct a preliminary issue and so neither approved nor disapproved the figure. However, the defendant’s contingency was agreed.

The claimant then sought an order for the preliminary hearing and served an amended budget on the defendant, which failed to respond until two working days before the hearing; the claimant had not filed the amended budget with the court in the meantime.

The hearing was largely a success for the claimant but the defendant argued that his approved costs budget did not make provision for the hearing and there was no good reason to depart from it, meaning no costs should be allowed. The claimant described this as “rank opportunism”, especially given the late reply to the claimant solicitor’s letter on the amended budget.

Warby J said the application of rule 3.18(b) – not departing from a budget unless there is good reason to do so – was not straightforward here, given that the claimant had put forward a budget for this phase of the litigation which was not agreed, approved or disapproved, while the defendant’s budget had been agreed.

“I am inclined to think that the wording of CPR 3.18 was not aimed at such a situation, but rather at ensuring that once the court has reached a decision on what it is reasonable for a party to spend on a given phase that conclusion should be final in the absence of some good reason. However, that was not a point addressed in argument and I reach no conclusion on it.

“Assuming that I am wrong in this, it seems to me that on the facts of this case there is good reason to depart from the budget approved by Master Yoxall for this phase of the litigation, by allowing recovery of some costs by the claimant.”

Among the factors the judge took into account were that the claimant’s proposed budget for this phase had been known from before the overall budget was set, the revised budget that was sent through, and the defendant’s delayed response to it – “that is not a co-operative approach”, he said.

Further, “the claimant’s failure to comply has had only a modest impact on the efficient dispatch of this litigation, and no appreciable impact on the efficient conduct of litigation overall. It was never likely to have any substantial impact on either.”

Making every assumption against the claimant in assessing the hearing’s costs was a “just and proportionate” sanction that “in more general terms provides a sufficient incentive to parties to comply”.

The defendant also complained that while the claimant had filed its costs schedule for the hearing with the court, it had not been served on the defendant.

Again Warby J noted that this failure to comply with paragraph 9.5 of practice direction 44 did not prescribe a sanction of no costs being recovered.

However, he said the failure led to unnecessary delay in costs in resolving the assessment and he made a deduction from the costs claimed to reflect this.

Overall the claim for £24,096 was slashed to £10,500 (both including VAT), with the major reduction coming from only allowing the costs of one counsel when two had been instructed, which Warby J said was not necessary.

Jon Lord, a Council member of the Association of Costs Lawyers, commented: “This ruling shows how some of the kinks in the budgeting process still need to be smoothed out; otherwise they risk just introducing an unnecessary layer of costs into litigation.

“In keeping with the football theme of the case, the only goal scored was an own goal by Mr Simpson in failing to serve his team sheets (budget and statement of costs) on the opposition before the game. The penalty for that was sensibly proportionate in the form of the additional cost caused by his failure.”


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