Costs budgeting and the courts' discretion

Costs budgeting and the courts' discretion

Coulson J has held that the court has an unfettered discretion to make an order that the costs budgeting regime apply to cases where the claim exceeds the value threshold of either £2 million or £10 million, depending on when the first CMC was/is held - CIP Properties v Galliford Try Infrastructure and others [2014] EWHC 3546 (TCC).

Importance of the word 'unless'

Does such a decision fill you with horror or do you welcome the fact that costs budgeting could be ordered for higher value claims?  Well, before we all get carried away, there is a major caveat to this decision and it is one which Coulson J kindly signposts for us in his judgment.  That is that his decision was determined on the basis of the provisions in CPR rule 3.12 as it was when it came into force on 1 April 2013.  As we all know the provisions subsequently changed on 22 April 2014 and with that change some pertinent wording, on which Coulson J relied in his judgment, namely a little word 'unless' was deleted.  Under the 1 April 2013 wording, the exceptions to the costs budgeting regime were followed by the following wording:  'unless the proceedings are the subject of fixed costs or scale costs or the court otherwise orders' (emphasis added).

Coulson J was of the view that construction of the current provisions might well lead to a different decision. For practitioners this judgment provides certainty on the old wording and but an element of uncertainty as to whether, if asked to exercise its discretion to order costs budgeting, the courts have the power to do so under the current costs budgeting provisions in CPR 3.12. No doubt, given it has now been highlighted by the judiciary, this will be an area that the legal profession, or those that thrive on the challenge of pushing the boundaries of the rules, will look to explore. We will have to wait to see whether the CPR Committee revisit the wording of the current provisions given Coulson J's comment that he considered that the deletion of the wording 'unless' maybe an unfortunate piece of drafting.

Multiple costs budgets?

Another aspect of interest in this judgment was the consideration as to whether parties should provide multiple costs budgets when defending an action and pursuing a Part 20 action in the same proceedings.  Coulson J's view, which will have been a relief to the defendant in this case, was that this would be an expensive undertaking as well as being unfair and contrary to the overriding objective if the defendant was required to incur the significant costs which would be involved in preparing multiple costs budgets. Coulson J referred, as support to his approach, to the decision of Master Kaye QC in Lotus Cars v Mecanica [2014] EWHC 76 (QB), decided earlier this year, where he refused to order multiple budgets on the basis there was no good and sensible reason to do so. That case was a large group action and Coulson J considered that the same approach applied equally well to multi party litigation involving a number of third parties.

For those involved in costs budgeting, or those who have a fear of it, this case is well worth reading and at only 9 pages, is one of the shorter judgments to come out of the TCC.

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About the author:

Janna is a dispute resolution lawyer. She deals primarily with cross border issues and is active in the work being undertaken in relation to the implications of Brexit for Dispute Resolution lawyers. Janna also heads up a LexisNexis costs team bringing together expertise from across the company to deal with the costs issues facing the profession.