APPEAL ON COSTS BUDGETING : CLAIMANT’S APPEAL UNSUCCESSFUL: AN OFFER AS TO COSTS DOES NOT BECOME THE BENCHMARK FIGURE

In Gray v Commissioner of Police for the Metropolis [2019] EWHC 1780 (QB) Mr Justice Lambert dismissed the claimant’s appeal from cost budgeting decisions.    The judgment contains important observations about the nature of cost budgeting hearings and appeals on budgeting matters.  In particular the court is not bound to accept an offer on costs made by a party and that the offered figure does not become a “benchmark”.   It means a party must think very hard about not agreeing a costs budget, you cannot assume that the offer you opponent is making will be accepted, or increased,  at the budgeting stage. A judge is perfectly within their rights to award a lower figure for that stage.

“…the figure offered by the Defendant was not the proportionate figure. It goes without saying that, if a Defendant (or any party) makes an offer, that offer does not become the benchmark below which the cost cannot be budgeted”

THE CASE

The claimant brought an action against the police.  The matter was cost budgeted.  The defendant’s budget was £44,301 and was agreed. The claimant’s budget sought £91,427. The Circuit Judge (HHJ Baucher) allowed £44,140 in relation to future costs, giving the claimant a total costs figure of £68,600.  The claimant appealed that decision.

THE ORIGINAL HEARING

Lambert J’s judgment contains a summary of the CCMC itself:-

“The costs and case management hearing lasted 20 minutes. From the transcript it is apparent that it was a relatively informal and discursive hearing. It was conducted briskly and efficiently, with the Judge making a series of decisions as the hearing progressed”

APPEAL ON THE GROUNDS THAT THE JUDGE “FAILED TO ADDRESS PROPORTIONALITY LAWFULLY”

Mrs Justice Lambert set out the grounds of appeal.

1. 1. The Grounds run to several paragraphs but drill down to the following points:

a) The Judge failed to address proportionality lawfully. She placed far too much weight upon the low value of the claim, which was around £10,000 – £15,000, but did not take into account the importance of the case beyond its value to both sides, its complexity and the amount of work which would be involved in preparing for trial and running the trial.

b) The sums budgeted for witness statements, trial preparation and for the trial itself were manifestly too low. The effect of the budget rendered the litigation uneconomic: in spite of the constitutional significance of the claim, it would be impossible for the Claimant to litigate the action to trial as the costs allowed were too low.

c) The Judge made three “free-standing” mistakes: she failed to appreciate that the trial was listed for 5 days and not 3 days (to which she referred at one point); she appears to have been influenced by the fact that the Claimant was publicly funded; and she failed to give reasons for allowing a sum for witness statement preparation which was lower than that which had been offered by the Defendant.

THE DECISION ON APPEAL

The appeal was refused.

“Discussion and Conclusion

1. In considering the Grounds of Appeal and Mr Westgate’s submissions, I make the following preliminary points.

2. First, as I have already remarked, the hearing was short and discursive with the Judge making a series of decisions on the points raised as she went along. Her reasons were short, often a few sentences only. The parties inform me that the way in which the hearing was conducted was typical for a costs and case management hearing for understandable reasons: finite court resources do not permit detailed judicial pre-reading, lengthy hearings or reserved or delayed judgments. It follows, I find, that in hearings of this type, not only is it necessary to look at the transcript as a whole for the Judge’s reasons, but it would be wrong for me to look for detailed and nuanced reasons for the Judge’s decisions. It is to be expected that reasons will often be expressed in shorthand form.

3. Second, I remind myself that the Judge was not only entitled, but obliged, to take into account that the claim was of relatively low value. I mention this only because at times Mr Westgate’s submissions, which focussed upon the complexity of the case and the amount of work which would be required to bring the case to trial, appeared to overlook that one of the factors which the Court was required to take into account under CPR 44.3(5) was the sum in issue in the proceedings and the need for the costs to bear a reasonable relationship with the value of the claim.

4. Third, I find that the Judge was entitled to conclude that the issues for trial were relatively straightforward. Mr Westgate criticised the Judge for making what he submitted to be an inappropriate comparison between the claim and other civil actions against the police, on the basis that civil actions against the police are all by their nature very complicated. I do not find that the criticism to be justified. The Judge was told on a number of occasions, and the point was repeated before me, that at the heart of the case was a series of factual disputes about who did, or said, what during the course of the incident. No doubt, the exploration of those issues before the jury would require care and a thorough knowledge of the papers, but the action does not raise novel or even particularly difficult issues of law. Nor do various types of evidence which require particular care and which can be time-consuming to consider (for example, CCTV footage, or bodycam footage or mobile phone records) and which as Mr Westgate submitted may often be found in such cases, feature in this particular case.

5. Further, I accept the point made by Mr Thomas that the sums claimed and allowed in respect of each of the three phases of the litigation should not be looked at in a compartmentalised way, otherwise costs may be duplicated. So, just as it is necessary in considering the amount which is allowed for witness statements to take into account the costs which the Claimant had already incurred in respect of earlier phases of the litigation including disclosure, similarly the sums allowed for trial preparation and the trial hearing incurred need to be considered together.

6. Against these initial observations and findings, I now consider the various points made by Mr Westgate. I find I can do so relatively briefly.

7. Dealing first with the costs budget for witness statements. I reject the submission that the Judge placed too much weight on the value of the claim at the expense of the other features of the litigation which were identified by Ms Reed. The Judge clearly did take into account the value of the claim but in her short reasons she also referred to other factors: the costs which had already been incurred in the earlier phases of the litigation; the fact that the action was to be tried by a “judge and jury” and that the Claimant was vulnerable. She recorded that she had reviewed the pleadings and “what was involved.” Although the Judge’s reasoning was not detailed, I find that she took into account, albeit briefly, the relevant elements of the proportionality judgement required under CPR 44.3(5).

8. I do not find that the Judge’s reasoning was flawed or that the sum allowed was manifestly too low. By the time of drafting witness statements, the Claimant’s solicitors would already have a reasonably detailed proof of evidence for the purpose of drafting the pleadings and for the evaluation of the merits of the claim needed for public funding. Also, a substantial sum had already been incurred in connection with disclosure. I accept Mr Thomas’s point that it must be assumed that a substantial amount of work had already been undertaken in analysing the disclosure including cross referencing those documents and reports both internally and with the Claimant’s instructions. Closer scrutiny of the disclosure lists, as examined by Mr Thomas in his submissions, reveals that a very large number of the documents that were disclosed were, in fact, common to both parties. This supports the belief that the lion’s share of the documents would have already been considered by the Claimant’s lawyers, even before they were listed and disclosed by the Defendant. Although it was submitted that the Claimant was vulnerable by reason of his mental health problems (and the Judge appeared to acknowledge the difficulty which this may present) the extent of those mental health problems should not be overstated. The Particulars of Claim, which the Judge stated she had reviewed, made no reference to his health problems even in respect of the damages claim, which included aggravated damages. Nor was the Judge taken to any document which explained the extent of the mental health problems. Although those health difficulties have to be borne in mind, viewed in context, they do not justify a significant increase in the costs to be allowed for witness statement preparation.

9. I move on then to consider the costs allowed for trial preparation. The Judge was told that this was a five-day trial with, possibly, ten witnesses. Even if the Judge had mistakenly thought that the trial was three days only, I accept Mr Thomas’s submission that this is not a factor which would have depressed the costs of preparatory work. The Judge found that £7,000 was the proportionate figure to allow for this phase of the preparation. In reaching her conclusion, she again referred to the factors in CPR 44.3(5), noted that the factual issues were not complicated. I find no error in her approach. Nor is the sum allowed manifestly too low. The Claimant’s budget sought the costs of 70 hours of solicitor’s time for the production of the various bundles for trial and for liaising with Counsel, the Claimant and the Court. This number of hours, or anything like it, is impossible to justify. Nor given the involvement of Counsel in earlier phases, is it easy to see how the hours claimed for Counsel’s trial preparation could easily be justified.

10. Again, I am unable to identify any error of law in the Judge’s approach to trial costs. The Judge made clear that she appreciated that the action was of significance in comparison with other personal injury cases. She remarked in response to Ms Reed “I do know that” and “I do know the distinction but I am just trying to get more in the proportionality aspects of it.” She also noted that the trial was listed for 5 days and that it was a “judge and jury case.” It appears that one reason for her allowing the figure of £19,000 was that she thought that an hourly rate for Counsel of £300 was too high for a claim valued at £15,000 at most (“you’d be lucky to get over the small claim – the fast track limit.”) She was I find entitled to reach that view and entitled to use her assessment as to the appropriate hourly rate for Counsel in reaching her budgeted figure. However, as she observed, in allowing £19,000 she was not stipulating how the amount should be allocated as between Counsel and solicitor which was a matter for the Claimant’s legal team.

11. Overall therefore, I do not find that the transcript of the hearing reveals that the Judge has made any error of law. I do not find that she adopted an impermissible and distorted approach to the proportionality assessment under CPR 44.3(5). There is nothing in the transcript which suggests to me that she did not have in mind the fact that this case was a case of considerable importance to both parties notwithstanding its value. She used the phrase “judge and jury case” as a shorthand reference to the fact that the trial was not run of the mill and that there were wider factors involved in the proceedings under CPR 44.3(5)(e). Nor are comparisons between the parties’ budgets based upon the number of hours of work which might be produced by applying different hourly rates, determinative or even particularly relevant. Under CPR 3EPD.4 at paragraph 7.3, the Judge is not required, in reviewing the budget, to analyse the detail of the costs sought by reference to its constituent elements and at paragraph 7.10, it is made plain that the Court’s function at the budgeting hearing is not to approve or disapprove hourly rates. The Judge correctly observed that how the sums allocated to various phases were to be spent was not a matter for her. All that she was required to do was to assess whether the budgeted costs fell within a reasonable range.

12. I do not find that the amounts allowed were manifestly too low or that the result of the budget was that the litigation was no longer economic. I agree with Mr Westgate to the extent that I accept that the Judge’s costings were low, and perhaps lower than those which would have been allowed by other judges (including me). However, that is not the test. The Claimant’s legal team will need to conduct the litigation efficiently. There will need to be a clear demarcation between Counsel and solicitor to ensure that there is no duplication of work, particularly in relation to trial preparation. But I do not accept that the Claimant will be unable to instruct competent counsel within the budget or that the sum budgeted was so low as to prevent the litigation from being pursued.

13. Finally, I deal with the further self-contained points raised by Mr Westgate. First, I find that the Judge was not required to spell out why the figure which she allowed for witness statements was less than the figure offered by the Defendant. The reason is obvious: the figure offered by the Defendant was not the proportionate figure. It goes without saying that, if a Defendant (or any party) makes an offer, that offer does not become the benchmark below which the cost cannot be budgeted. Second, I do not accept the Judge was impermissibly influenced by the fact that the Claimant was funded by legal aid. Having noted that fact, she then went on to say that this was not relevant and that it played no part in her considerations. I find no reason to doubt that statement. Finally, I have already dealt with Mr Westgate’s third self-contained point which related to a possible misunderstanding during the witness statements consideration and trial preparation that the judge was dealing with a three-day rather than a five-day trial. Even if she was working on that misapprehension (and I make no finding on the point, one way or the other) the mistake would not have operated to depress the figures which she allowed in respect of her budgeted amounts.

14. For these reasons, notwithstanding Mr Westgate’s excellent submissions, I refuse the appeal.”