Trial judges should not “trammel” costs judges’ jurisdiction when parties go over budget

Approval: judges should be slow to intervene

A deputy High Court judge has refused to provide a receiving party with an “indication” of whether it acted reasonably in exceeding its costs budget, saying trial judges should “not seek to trammel the costs judge’s jurisdiction” unless there are specific issues they want to raise.

Mr Stephen Furst QC also said a court should be “slow” to conclude a delay in a party agreeing to mediation is unreasonable or that, if it is, it justifies an order for indemnity costs.

He was ruling in Car Giant Ltd & Anor v London Borough of Hammersmith [2017] EWHC 464 (TCC), after giving judgment in favour of the claimant for £179,125 plus interest in a claim for damages for dilapidations following the expiry of the defendant’s (LBHF) lease.

However, the claimant failed to beat the defendant’s part 36 offer and so has to pay the council’s costs from 7 May 2014.

LBHF has an approved costs budget of £111,000, but has spent an extra £89,000, of which £56,000 was due to expert fees. It sought an indication from the judge that these were reasonably incurred.

Mr Furst said: “In my view, whilst there are authorities showing that the courts can give such indications as are sought here, the court should be slow to do so.”

Noting that the circumstances in which a court should find ‘good reason’ to depart from the approved budget were likely to be considered by the Court of Appeal shortly in Merrix, he continued: “It is unclear whether the trial judge in making such comments should temper them in the light of CPR part 3.18 and, in any event, if such comments or observations are made as to what weight a costs judge would or should place on them.

“I can understand that there might be cases where the trial judge has a particular view of costs or on an aspect of costs, having conducted the trial or where he has had to decide an issue which is directly relevant to the assessment of costs.

“Absent such circumstances it would seem to me that a court should not seek to trammel the costs judge’s jurisdiction, particularly where the costs judge has much greater experience of such matters than I have.”

In this case, the judge said, there was nothing in the nature of the applications to exceed the costs budget which could not be explained “equally well” to the costs judge and so he declined to give any indication.

Mr Furst had to deal with other costs issues, including an argument over indemnity costs in which LBHF said there was an unreasonable 17-month delay in agreeing to mediate or take part in some form of ADR.

“In my view a court should be slow to conclude that this delay is unreasonable or that, if it is, it would justify an order for indemnity costs,” he said, noting that this was not one of those cases where it could be said that an early mediation was more likely to succeed.

“In other words, any delay in mediating cannot be shown to have caused any increased costs.”

Mr Furst continued: “The courts should be slow to criticise a party’s behaviour where decisions such as when to mediate are matters of tactical importance where different views may legitimately be held.

“In this case, Car Giant took the view that mediation was more likely to succeed when the experts’ views had been fully set out. That is a perfectly possible point of view.”

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