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An opportunity to depart? Cost Budgeting charging caps & complex cases

The high-profile case of Sir Cliff Richard OBE v The BBC & Chief Constable of South Yorkshire Police [2017] EWHC 1666 (Ch) provided guidance in relation to commenting on incurred costs of a Budget and the capped charges for Costs Budget Preparation and Costs Management. Victoria Stewart, Costs Lawyer, PIC, reports.

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Firstly, in its skeleton argument, the BBC was of the opinion that the Claimant’s incurred costs were unreasonable and grossly disproportionate and invited the Court to register its strong disapproval. The Court responded, asking the BBC to formulate what comments they would like the Court to make and the BBC suggested: “The incurred costs based on information available appear to be excessive and disproportionate”.

The Court was not persuaded that a comment should be made for the reasons given by the BBC. The Court was concerned that making a comment could unfairly skew a detailed assessment at a later stage. That consideration, set against there being no real benefit to the BBC in making such a comment, other than a short term tactical advantage, led the Court to conclude that in the exercise of their discretion, the Court should reject the BBC’s request.

A comment is not a finding of fact, but merely a matter to be taken into account. Making a comment does bear the risk, however, that on a detailed assessment disproportionate weight might be given to it, although the comment is based on limited information.

The Court ultimately declined to make any comments on the incurred costs in the Claimant’s Budget. The Court did not accept the BBC’s submission that there was a danger that, if a comment is not made, a Costs Judge at Detailed Assessment would proceed on the basis that the costs were both reasonable and proportionate.

It would seem, like the trend with recent case law, that parties would need a good reason to have the Court record their comments on the incurred costs in a Budget. The generic reasons of ‘substantial’, ‘too high’, ‘excessive’, ‘unreasonable’ and ‘disproportionate’ are not case specific or well-founded.

Secondly, the Court was asked by the Claimant to declare the budgeting procedural steps in this case exceptional and, therefore, the cap imposed by Practice Direction 3E para.7.2 for the charging of the Costs Budget Preparation and Costs Management can be ignored (i.e. 1%/£1000 and 2%).

There is no guidance as to what ‘exceptional’ means in terms of budgeting. The factors put forward by the Claimant in this case to evidence that this matter was exceptional were, first, that two budgets were prepared in advance of the CMC on the basis of a split trial, with the consequence, subsequently, that further work had to be undertaken.

Secondly, there was redrafting of the budgets following on from that hearing – a hearing at which the parties were ready to deal with costs management but it was deferred pursuant to the order of the Judge.

Thirdly, at the hearing that this Judgment relates to, there had been a request by the BBC for comments to be made on the incurred costs in the Claimant’s Budget, which was rejected.

The Court confirmed that the circumstances around Costs Budgeting and Costs Management in this case were exceptional. The Court did not consider that ‘exceptional’ meant wholly exceptional but it meant something to the effect that the circumstances of the Costs Budgeting process in this case were significantly out of the norm.

The fact that a case may involve further unexpected work is not in itself exceptional but the aforementioned factors, taken together – and in particular the issue relating to comments – should take this case into the exceptional category. The Court, therefore, lifted the cap for Budget Preparation and Costs Management fees.

In certain cases Costs Budgeting is not the simple and streamlined process Jackson expected it to be. A change in the direction of the case and the Defendant’s conduct is not taken into account in the Costs Budget charging cap. This case gives parties some scope to argue departure from the cap when the process becomes more complex.


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Victoria Stewart is a Costs Lawyer & Team Leader at PIC.

To contact her on any of the matters arising in this blog, please click here.

 


 

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