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Observations about matters outside of Costs Budget

The realm of costs budgeting has been yet again plunged into the spotlight following the recent case of Excelerate Technology Ltd – v- Cumberbatch & Anor [2015] EWHC B1 (Mercantile) (16 January 2015) 

This shake up holds vital ramifications for those involved. Perhaps more specifically Counsel, who, it is suggested, should be meticulously aware of not only the costs budget but the need to ask the trial judge to consider matters outside the budget.

The Facts

The substantive dispute related to a claim arising out of alleged breach of fiduciary duty. A former director, it was alleged, used the Claimant’s confidential data when setting up a new, rival, company. The successful Claimant obtained damages in the sum of £155,343.00.

The Order

In this case, an interim payment of costs of £155,409.66 was granted, ostensibly based on the costs budget provided in the case. Moreover, the judge specifically looked at, and referred to, additional costs outside the budget, which the judge ruled were prima-facie reasonable.

Specifically, it was ordered that:

  1. “David Osmond be joined as a Third Defendant for the purpose of the Claimant’s application for the costs of the action.
  2. There be judgment for the Claimant against the First and Second Defendants in the sum of £ 158,343.00 together with interest assessed at £ 7,248.00.
  3. The £ 62,500.00 paid into court pursuant to the order made on 10 October 2013 together with accrued interest (calculated as £ 223.45) shall be paid out to the Claimant’s solicitors forthwith in partial satisfaction of the judgment debt.
  4. The balance of the judgment debt and interest of £ 102,867.55 shall be paid by 30 January 2015.
  5. The First, Second and Third Defendants shall pay the Claimant’s costs of the action to be assessed upon a detailed assessment on an indemnity basis if not agreed.
  6. The First, Second and Third Defendants shall make a payment on account of costs in the sum of £ 155,409.66 such payment on account to be paid by 30 January 2015.

 

Judge’s observations on Claimant’s costs additional to their costs budget

 The following costs (excluding VAT) are considered to be prima-facie reasonable:

(A) Costs for hearings 19.11.14 and 12.01.15 £ 6,985.00

(B) Costs for Claimant’s application 09.12.14 £ 1,782.50

(C) Costs re First Defendant’s IVA £ 3,562.50

Analysis

We have seen from several important cases about budgeting heard by Mr Justice Coulson, the so-called ‘Mr Costs Budgeting’, that the guidance on costs management is becoming ever refined. This case, heard by H.H Judge Simon Brown QC, is no exception. Noteworthy, it seems, is the general position that courts appear willing to make substantial awards for interim payments of costs. More thought-provoking, however, is the position of H.H Judge Simon Brown, QC, who was willing to make observations that costs incurred outside of the budget were, prima facie, reasonable.

From a practical perspective, this decision poses important considerations. Firstly, there is the obvious; assumptions prepared in respect of Precedent H documentation must be detailed. Any attempt to formulate a successful submission to include additional work would be, it seems, nigh on impossible without detailed assumptions in support.

Secondly, and conceivably even more problematic, is the precise in-house legal management required of cases, to maximise the apparent keenness of the judiciary to implement costs management of this type. Continued analysis of the Precedent H documentation is obviously fundamental, yet in turn, this may require a shake up of day-to-day practices to ensure maximum efficiency.  This efficiency allowed, in this instance, the Claimant to persuade the Court that a further £12,000 of work could be claimed, thereby maximising the recovery of costs.

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