COST BITES 182: ANOTHER CASE OF A CLAIMANT PAYING THE COSTS OF A BUDGETING HEARING BECAUSE OF AN UNREALISTIC APPROACH

In Jenkins v Thurrock Council [2024] EWHC 2248 (KB) Master Thornett revisited the principles considered in Worcester v Hopley [2024] EWHC 2181 (KB) It was held that the claimant’s unrealistic figures in a costs budget should lead to the claimant paying the costs of the cost budgeting hearing.

“Under no circumstances can parties therefore assume that because a hearing has been listed, and because that hearing is interlinked with case management, that the order at the next hearing will be bound to be “in the case”. The resources and time of both the court and other parties, as with any hearing, always have to be considered by all those participating; and, critically, throughout the period leading to the hearing. In short, a continuing realistic appraisal (as is required before any hearing) why the hearing is proceeding and whether, having regard to the Overriding Objective, a more costs efficient alternative approach is possible.”

THE CASE

The judge had cost budgeted the case.   The budgeting hearing was separate to the case management hearing. The claimant served a budget of £1,195.754.26 to trial or £730,396.28 to a second CMC.  The claimant’s incurred costs were £355,640.61 some £27,695.59 less than the defendant’s entire budget.

Following the case management hearing the claimant served a revised budget of £944,537.17.

THE BUDGETING PROCESS

The matter proceeded to a separate hearing in relation to the budget.  The claimant’s costs budget was reduced.  The judge was considering who should pay the costs of the budgeting hearing.  He held that the claimant’s approach had not been realistic and the claimant should pay the costs of the hearing. Further there should be a reduction of 35% of the claimant’s costs of the budgeting process.

1. 1. In his Witness Statement dated 25 July 2024, directed by the court to be prepared on the issue of costs following the Costs Management Hearing, Mr Christopher Asbury, Costs Lawyer on behalf of the Defendant, describes how the polarity between the Claimant’s first budget and the Defendant’s first Precedent R resulted in the parties’ costs lawyers agreeing on 24 May 2024 that they would be unable to present any agreement about costs at the Case Management hearing. So from that date, in anticipation of KB Masters’ practice, a further Costs Management hearing seemed inevitable. The clock was set, to so speak, for the Claimant carefully to consider whether his budget was proportionate.

1. 1. I pause here to comment that subsequent specific Costs Management hearings are not always inevitable. Many parties have agreed their respective budgets by the time of the Case Management Conference. Many still do so subsequently, such that the Costs Management hearing as provided becomes unnecessary and is vacated. Under no circumstances can parties therefore assume that because a hearing has been listed, and because that hearing is interlinked with case management, that the order at the next hearing will be bound to be “in the case”. The resources and time of both the court and other parties, as with any hearing, always have to be considered by all those participating; and, critically, throughout the period leading to the hearing. In short, a continuing realistic appraisal (as is required before any hearing) why the hearing is proceeding and whether, having regard to the Overriding Objective, a more costs efficient alternative approach is possible.

1. 1. Mr Asbury describes how, in preparation for the 11 July 2024 hearing, a further discussion took place with the Claimant’s costs lawyer on 9 July 2024 in attempt to negotiate. The Claimant was invited to, and did, present some counter-budget proposals in writing. However, the counter-figures still did not reflect the Defendant’s position on proportionality neither, as it transpired, the court’s similar views at the subsequent hearing. No further discussions took place, the Claimant in effect taking the view that his budget was reasonable and that the Defendant’s counter submissions had sufficiently little currency to deserve any further discussion.

1. 1. At the hearing on 17 July 2024, the court was entirely satisfied that the Claimant was maintaining an unrealistic and inappropriately ambitious budget, having regard to the requirements of the case. Despite the Claimant having attempted to offer slightly reduced figures, the court found that the Defendant’s submissions as to proportionality remained far closer to what, on any objective terms, could be submitted as within a reasonable range. Further, this was in respect of the management of such phases the court decided could be costs managed, despite the polarity between the figures.

1. 1. Critically, the court concluded that that the high figures proposed for Trial Preparation and Trial phases would accordingly be better deferred to a date closer to the Trial Window, at which time the court might be in a more informed position, on the evidence as had by then transpired, to gauge whether the Claimant’s estimated costs totalling £204,742.98 had any greater foundation than was apparent at the Costs Management Hearing.

1. 1. Likewise, ADR costs management was adjourned for the same or similar reasons, the court noting the Claimant’s figure in excess of £49,000 for this phase seemed considerably higher than normally seen for an ADR phase; indeed, even in catastrophic cases.

1. 1. The table at the conclusion of this judgment, drawn from Mr Asbury’s Witness Statement, illustrates the respective figures sought, offered, counter-offered and as then approved. The Defendant’s budget remained agreed, as previously, in the sum of £368,427.30 including estimated costs of £215,295.00.

1. 1. Costs were reserved having regard to the significant percentage deductions to the Claimant’s budget. The court also expressed an observation that the Claimant’s incurred costs seemed high at £358,762.51, given the case had proceeded on quantum since March 2021 and only two quantum expert reports had been disclosed by the Claimant. The court specifically described the Disclosure phase as apparently “significantly disproportionate”.

1. 1. My conclusion is that the Claimant had presented and maintained an unrealistic and disproportionate approach to his estimated costs in the context of the demands and requirements of this case. He continued to do so despite the opportunity to modify his position in response respectively to the Defendant’s first Precedent R, observations made at the Case Management Conference and then overtures made by the Defendant during an intervening period before the Costs Management Hearing, a period as prescribed by the court specifically to facilitate appropriate discussion and negotiation.

1. 1. The hearing on 17 July 2024 therefore could well have been avoided had a more reasonable modified approach been taken by the Claimant. If and in so far as the hearing should be taken as having still been necessary, then in terms of success and conduct I see no reason why the Claimant should be the beneficiary of a “costs in the case” direction. In real terms, the fact that liability is admitted means he is likely to receive his costs despite the events I describe.

1. 1. I instead direct, for the reasons discussed, that the Claimant pay the Defendant’s costs of and occasioned by the Costs Management Hearing on 17 July 2024.

1. 1. I am satisfied that there is a further relevant point on costs that should be recognised: the extent to which the Claimant’s costs of preparing several budgets through to the hearing on 11 July 2024 ought to be capped having regard to the approach he adopted.

1. I accept that some costs would always have to be incurred in preparation but conclude these, if the Claimant becomes a receiving party, should not be to an extent that incorporates crafting an inappropriate and unrealistic approach. The costs of the Claimant’s costs management as assessed, to the extent recoverable having regard to the consequences of the order at Paragraph 20 above, should be reduced by 35%.

THE TABLE