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TCC judge issues pre-order warning to parties over disproportionate costs budgets


Costs management order: judge gives parties time to reflect

A judge has warned parties to a Technology and Construction Court case that they need to find ways to save costs if the budgeting process is not going to make the litigation uneconomic to fight.

Mr Justice Akenhead took the proactive step in a £170,000 claim over damage that the claimant alleges occurred following the use of an adhesive.

In Finesse Group Ltd v Bryson Products (A Firm) [2013] EWHC 3273 (TCC) [2], the judge faced a range of issues in the first case management conference, including costs, that led him to observe that “since the issue of these proceedings in the Tunbridge Wells County Court and its later transfer here, this case has not proceeded effectively or well”.

The claimant and two named defendants have filed costs budgets of some £206,000, £198,000 and £207,000 respectively, and if and when a third defendant is joined in, “it is at least possible that its costs budget will be similar”, the judge noted.

Akenhead J continued: “Because the parties are coming back for a review case management conference in February 2014, I deferred making a decision on costs management orders. However, I did point out to counsel that the expenditure of some £610,000 or, with [the possible third defendant], £800,000 of costs on a claim for under £170,000 at least looks extremely disproportionate.

“One can legitimately envisage, only by way of example, a hypothetical scenario of [the claimant] losing and being ordered to pay the three other parties’ costs, which even after assessment might (subject to the costs management regime) cost them some £500,000-£600,000 plus their own costs; many right-thinking people might consider that to be wholly unacceptable.”

As a result, the judge “invited” the solicitors to give “very serious consideration substantially to reducing the costs budgets to reflect these sorts of considerations and to seek sensible and imaginative solutions, such as the sharing of certain types of expert, to achieve this”.

Otherwise, he warned, the court may well otherwise be faced with a “stark” choice of assessing and fixing the maximum proportionate budget for each of the parties.

“If it has to do that, then the shortfalls between the current costs budgets and those maximum allowances could well be so substantial that commercially it may be unrealistic for the parties to fight the case.”