'Plebgate': A costly lesson in costs budgets

Following on from our previous posts on the so called 'plebgate' case, we now welcome Sue Nash, council member of the Association of Costs Lawyers, to explain why the case is so important.

Original news

Mitchell v News Group Newspaper Limited [2013] EWHC 2355 (QB)

Mitchell’s legal team failed to supply their costs budget on time, as is now required by both parties. Master McCloud applied the sanctions available to her to cap the claimant’s costs to the minimum court fees as a penalty for failing to meet the deadline.

Mitchell’s solicitors, a two-partner firm, said two of their solicitors were on maternity leave and a third had recently left the firm, and asked for relief from sanctions, but Master McCloud said in her judgment that ‘such explanations carry even less weight in the post-Jackson environment’.

The case is due to be heard by the Court of Appeal later this year.

How significant is this case?

It’s a landmark case—it’s the first case on compliance that’s going to the Court of Appeal, and it’s been leapfrogged, which shows the importance the court attaches to it. Five judges have been appointed to hear cases on the Jackson reforms, including the Master of the Rolls and Lord Justice Jackson. This appeal will be heard by at least one of those five.I act for claimants and will, like other costs lawyers, want to see guidance from the Court of Appeal. We are all waiting for the Court of Appeal to rule on most of the Jackson reforms.

Does it indicate a tough line from the courts on Jackson compliance?

It brings home what the Master of the Rolls said to the Association of District Judges in March in his 18th lecture on the Jackson reforms, on compliance with the rules and directions of court. He says, effectively, that it is more important to ensure compliance is the overriding objective even if it may mean overriding justice in a single case.

Master McCloud accepted her ruling was harsh. She also said in the judgment that the defendants met their deadline by using a costs lawyer.

She says: ‘The very fact that the defendants, using cost lawyers, were well able to deal with this in the time allotted highlights that there is no question of the time being plainly too short or unfairly so.’

She also says: ‘Budgeting is something which all solicitors by now ought to know is intended to be integral to the process from the start, and it ought not to be especially onerous to prepare a final budget for a case management conference even at relatively short notice if proper planning has been done.’

I would expect the Court of Appeal to uphold this judgment. The judgment in Henry v News Group Newspapers Ltd [2013] EWCA Civ 19, [2013] 2 All ER 840 was slightly different because it was conducted under the defamation costs management pilot scheme. In Henry the Court of Appeal ruled that Henry should be allowed to recover costs incurred in excess of the agreed budget.
I have heard, anecdotally, that the courts are being strict on compliance with the new rules. However, the courts have also granted relief from sanction where there was genuine human error. It is all anecdotal.

What should lawyers take from it?

The ruling is, from our point of view, very good because it emphasises the importance of using costs lawyers throughout a case, from an early stage until the finish. Essentially, solicitors need to stop seeing costs lawyers as people you turn to at the end of the case, and start using them throughout, whether the firm uses external or internal costs lawyers. They can advise on all aspects of Jackson.
It shows how important it is to comply with the court’s rules and procedure post-Jackson, and the best way to safeguard against non-compliance is to use a costs lawyer.

What are the implications for the law firm involved?

It is not good for them. The amount at stake could well be in excess of £500,000.

Interviewed by Elizabeth Davidson. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.

This article was first published on Lexis®PSL Dispute Resolution on 7 October 2013. Click here for a free 24 trial of Lexis®PSL.

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