CIVIL LITIGATION REVIEW OF 2017 (IV): COSTS, BUDGETS, PROCEDURAL GAMES AND MISCONDUCT ON ASSESSMENT
This year has been a surprisingly muted year for costs cases, particularly in the higher courts. Several judgments were expected, however they rarely proved to be definitive or wide ranging. 2018 may be the year that some issues are resolved. I am not reviewing each procedural issue in relation to costs but some of the major cases. I have set out the posts on costs on this blog under key headings in Costs Budgeting: The cases and posts in one place.
THE IMPORTANCE OF THE BUDGET ON ASSESSMENT
There are differing judgments at first-instance which deal with the issue of whether a change in the hourly rates represents good reason to depart from a budget.
Some guidance was provided by the Court of Appeal this year in Harrison -v- University Hospitals Coventry & Warwickshire Hospital NHS Trust  EWCA Civ 792
Where there is a proposed departure from budget – be it upwards or downwards – the court on a detailed assessment is empowered to sanction such a departure if it is satisfied that there is good reason for doing so. That of course is a significant fetter on the court having an unrestricted discretion: it is deliberately designed to be so. Costs judges should therefore be expected not to adopt a lax or over-indulgent approach to the need to find “good reason”: if only because to do so would tend to subvert one of the principal purposes of costs budgeting and thence the overriding objective. Moreover, while the context and the wording of CPR 3.18 (b) is different from that of CPR 3.9 relating to relief from sanctions, the robustness and relative rigour of approach to be expected in that context (see Denton v TH White Limited  EWCA Civ 906,  1 WLR 3926) can properly find at least some degree of reflection in the present context
BUDGETING AND PROCEDURAL GAMES
Coulson J warned against the strategy of using the budget as a part of a procedural game in Findcharm Ltd -v- Churchill Group Ltd  EWHC 1109 (TCC)
“…some parties seem to treat cost budgeting as a form of game, in which they can seek to exploit the cost budgeting rules in the hope of obtaining a tactical advantage over the other side. In extreme cases, this can lead one side to offer very low figures in their Precedent R, in the hope that the court may be tempted to calculate its own amount, somewhere between the wildly different sets of figures put forward by the parties. Unhappily, this case is, in my view, an example of that approach.”
“In my view, Churchill’s Precedent R is of no utility. It is completely unrealistic. It is designed to put as low a figure as possible on every stage of the process, without justification, in the hope that the court’s subsequent assessment will also be low. In my view, therefore, it is an abuse of the cost budgeting process
MISCONDUCT ON ASSESSMENT LEADS TO COSTS BEING DISALLOWED IN FULL
GSD Law Ltd v Wardman & Ors  EWCA Civ 2144 the Court of Appeal upheld a decision whereby the claimants’ costs were disallowed because of misconduct during the assessment process
The key quotation here is from the judgment of His Honour Judge Gosnell.
“The alleged misconduct in this case goes to the very heart of the detailed assessment process and examination of some of the issues would be called for on a detailed assessment in any event. The Court has an important role in maintaining professional standards and ensuring that parties behave fairly and honestly towards each other in the litigation process. In my judgment the Judge below was right to investigate this conduct under the summary procedure envisaged by CPR 44.11 and certainly cannot be said to be out with the wide discretion open to him when deciding how to deal with this issue.”