SOME USEFUL GUIDANCE ON COSTS BUDGETING FROM THE HIGH COURT
Whilst the recent case of STOCKER v STOCKER  EWHC 1634 (QB) is a libel case, the guidance on cost budgeting is relevant to all civil proceedings. Mr Justice Warby, who adjudicated on costs budget in Mr Yeo MP’s libel claim (Yeo v Times Newspapers 2015 EWHC 209)) has given some further guidance of general interest on proportionality, costs of budgeting, experts, trial preparation and costs of the trial in Stocker v Stocker. By the way, he reduced the Defendant’s estimated costs by 40%, from £330,000 to £197,000, not a good outcome for Mrs Stocker and her legal team…
Briefly Mr Stocker is suing his ex-wife Mrs Stocker for statement made by her about him on Facebook and by email. The contentious statements included suggestions Mrs Stocker that Mr Stocker tried to kill her by strangling her; that he had been arrested by the police countless times and was subject to a non-molestation order. Mr Stoker made various interlocutory applications which were heard by Mr Justice Warby on 7th May as part of the CCMC. This year with reasoned judgment delivered on 10th June 2015. In the main Mr Stockers applications were unsuccessful however his legal team did have some success with the Defendant’s costs budget which amounted to £575,441 compared to the Claimant’s agreed cost budget of £260,624.
When looking at the Defendant’s budget globally Mr Justice Warby made the following comments:-
- I accept that it is not possible to approach the costs budgeting exercise in a case of this kind by assessing a case as relatively modest in scale, and the costs as high, and then simply reducing the costs to match the perceived importance of the case. As I observed in Yeo, many would suggest that the costs of litigation in this category become disproportionate at an early stage. There is no avoiding that, in many cases. So I agree that an approach based purely on financial proportionality would run the risk of disabling litigants from fairly presenting their cases. I accept also that the “small” cases such as this, involving relatively few publishees, are not inherently cheaper and can tend to be more expensive than cases over mass media publication. I readily acknowledge the importance of ensuring that the costs budgeting process does not result in a party being unable to recover the costs necessary to assert their rights.
- Nevertheless it is vital, in most cases at least, for the court to control the recoverable costs of such litigation. Excessive costs tend to stifle justice, becoming the main issue between the parties. The overall total of the parties’ incurred and estimated costs in this case is unquestionably far beyond anything that could reasonably be thought proportionate to the importance of the issues at stake. If this case reaches a trial then, in the absence of a reasonable Part 36 offer or other settlement offer, one or the other party is going to have to pay the whole of those costs. I know little of the means of these individuals. I am told the Claimant is “wealthy”, but the description is one the aptness of which depends, often, on the perspective of the person applying it. At any rate, few can afford to lose over £830,000 with anything approaching equanimity. In addition, if costs on this scale are allowed in litigation of this kind, many will be deterred from even attempting to vindicate their rights.
- The defence of such cases can indeed be very time-consuming and hence very costly. But in my judgment it is not necessary for such cases to consume as much time, or to cost as much, as the Defendant’s budget assumes. An indication of this is the scale of the costs budget of the Claimant. I recognise that it is not possible to cut radically, at a stroke, the costs of this class of litigation. The process, if it is to be successful, must be gradual. But there does need to be, in my view, a progressive acceptance of the need for greater cost control in this area of litigation. The fact, on which the Defendant relies, that there is as yet no small claims court for defamation is a spur to controlling the costs and procedural complexity of defamation litigation, rather than a justification for allowing higher costs.
- In my opinion the Defendant’s global costs figure is clearly considerably out of proportion to what is at stake and the nature of the issues, and should be substantially reduced for that reason, as well as in order to ensure a reasonably level playing field as between the parties. In aiming to reduce it appropriately I shall address some points of detail, but not at undue length.
THE ALLOWANCE FOR THE COSTS OF BUDGETING
- Dealing first with the Claimant’s points about Precedent H it must, in my judgment, be right to say that a party cannot claim the maximum percentage allowed for the costs of budgeting, and also include budgeting costs in the estimated or incurred figures as well. But I am not persuaded that this is what the Defendant’s team have done here. If it is, then it will be a ground for departing downward from the approved figures.
COSTS OF TRIAL
62.Turning to the Defendant’s assumptions, the first and most important issue is whether, as the Defendant’s estimates assume, this case requires a 10 day trial. I do not consider that it does. The case ought to be comfortably capable of trial within a 7 day period, which is what both parties estimated in their Directions Questionnaires in November 2014. Thus, whilst I would accept that the principal or sole advocate at trial is likely to spend 12 hours a day on the case during trial, I consider it necessary to reduce the provision for his trial costs by 30% to £42,000. I do not consider it at all reasonable to devote the time of two additional fee-earners for 12 hours a day throughout the trial. I reduce the claim in that respect to a total of £24,000 yielding trial costs of £68,000 as against the budget figure of £118,700.
- Trial preparation is an intensive exercise but essentially a task for the principal advocate with, in a case like this, some support from a junior colleague. Again, I note how much work has been and will be done at other stages of the case. In the light of that, my view is that a reasonable allowance is 10 hours a day for 8 days for the principal (£40,000), and a further £23,000 for support from an assistant and trainee. This reduces the trial preparation claim to £63,000, equivalent to £9,000 per trial day.
- Beware filing costs budgets which are wildly disproportionate the issues at stake. The Court will require parties to cut their cloth, at least to some extent, in accordance with the importance of the case.
- Beware double accounting in the costs of budgeting
- Adopt a realistic approach to the estimated costs of each stage and be careful of contingencies. These are unlikely to be allowed. If an unanticipated costs arises that can be accommodated outside the budget (Yeo – Mr Justice Warby again)