Costs budgeting is certainly all the rage. Jackson LJ has drafted rules and practice directions which will introduce costs management in all but heavy Commercial Court cases in April 2013. So this case concerning the Defamation Proceedings Costs Management Scheme ,which operated from 1 October 2011 to 30 September 2012, is something practitioners of all types of disputes will need to pay close heed to.
It involved a claim by Sylvia Henry, who was employed by Haringey Council as a Senior Social Worker, against the Sun newspaper for defamation in respect of a series of articles in respect of which readers were encouraged to sign up to an online petition calling for her dismissal due to her involvement in the case of Victoria Climbié and of the child known as Baby P. The proceedings were ultimately settled on payment of a substantial but undisclosed sum. The claimant was entitled to recover her costs on the standard basis.
The Senior Costs Judge explained that he was in no doubt that if the claimant’s bill of costs had been subject to detailed assessment, then she would have been able to strongly argue that the costs incurred were reasonable and proportionate. However, this was not a detailed assessment but a hearing to determine whether there was good reason for the court to depart from the court approved budget. The following were relevant considerations:
- Neither side had managed to keep within the budget, but the defendant had made an attempt to comply with the practice direction by contacting the claimant to discuss the budget prior to the Case Management Conference (“CMC”), and ultimately revising its budget and seeking a further CMC.
- The claimant’s solicitors did not appear to have responded to the defendant’s solicitors in respect of the budgets in any meaningful way except for a telephone call shortly before the case settled.
- The claimant’s solicitors could have incorporated figures in the contingency column to deal with unknown issues.
- The claimant’s solicitors did not keep the defendant or the court informed of the fact that its budget was being exceeded. The defendant kept the claimant informed, but the claimant gave no indication to the defendant.
- The provisions of the Practice Direction are in mandatory terms. Each party must prepare a costs budget or revised budget, each party must update its budget, solicitors must liaise monthly to check that the budget is not being or likely to be exceeded.
The Senior Cost Judge, therefore, decided that due to the provisions of the Practice Direction, there was no good reason to depart from the budget. He came to this conclusion reluctantly as the Claimant would have been entitled to these costs had it not been for the budget requirements and so he granted permission to appeal since a definitive binding decision ought to be given on this issue.
Where a court cost budget applies the parties must pay close attention to its preparation, (building in contingency budgets as appropriate) to monitoring and reviewing it as the case progresses. It is an on-going process. Careful budgeting is a skill that the parties must possess and preparing budgets is an important part of the court process which must have as equal importance as any other part of the court procedure. Failure to monitor the costs budgets, as this case demonstrated, may have dire consequences. It will, however, be interesting to see whether this case is appealed.
Sylvia Henry v News Group Newspapers Ltd 2012 Senior Courts Costs Office