By Ruwena Khan
Can litigants in person ‘escape’ the rules relating to costs budgeting in all claims? To what extent does the costs management regime under CPR 3.12 to 3.18 apply to the costs of a litigant in person?
Chief Master Marsh has clarified that the court does indeed have jurisdiction to order a litigant in person to produce a costs budget and to make a costs management order in relation to litigant in person costs.
The case concerned a dispute between brothers who jointly owned valuable interests in a jewellery manufacturing, retail and wholesale business. Although the sums in issue exceeded £10 million, the claim was not automatically exempted from costs management because the value of the claim was expressed in the claim form in terms that “…it is expected to be in excess of £300,000” and no application had been made to seek otherwise.
In November 2015 directions were given relating to a variety of matters including a future costs management hearing. At a further directions hearing on 21st July 2016 the much delayed costs management hearing was listed for 19th August 2016.
The Claimant was initially represented by solicitors until 26th May 2016 when he filed notice of change and became a litigant in person. From the outset the Claimant had had Counsel acting for him and Counsel continued to act for him via the Bar Public Direct Access Scheme. The Claimant also had assistance from a solicitor – which further raised issues of the recoverability of costs under CPR 46.5 where a litigant in person obtains legal assistance from a solicitor and a member of the Bar.
On 21st July both sides asked the court to make a costs management order in respect of the Claimant’s costs and the court’s jurisdiction was not debated at length at that time. The Claimant was directed to produce a budget. The Claimant’s costs budget dated 5th August provided for future expenditure in excess of £315,000. The costs already incurred amounted to £547,620.99.
At the subsequent hearing, Master Marsh noted that the court’s jurisdiction to make a costs management order in relation to a litigant in person was not entirely clear. He considered it helpful to set out his reasons for concluding why such a power exists.
Master Marsh’s Reasoning – Costs Budgets/Management Orders
The Ordinary Case:
- Limited assistance is required.
- Little need for the court to exercise control over the recoverable costs by making a costs management order.
- Litigant in person hourly rate set at £19/hour.
- The amount of costs should rarely be disproportionate to what is at stake.
- The default provision for the service of budgets in CPR 3.13 therefore excludes litigants in person.
The Complex Case (and where Counsel instructed on a Direct Access basis):
- Recoverable costs may be substantial with disbursements.
- The starting point is CPR 3.12(2): “The purpose of costs management is that the court should manage both the steps to be taken and the costs to be incurred by the parties to any proceedings so as to further the overriding objective.”
- This objective is expressed in general terms – litigants in person may still benefit from costs management
- CPR 3.13 sets out a default set of provisions which apply “unless the court orders otherwise.” These provisions expressly exempt litigants in person from the requirement to file and serve a budget.
- The Editors of the White Book 2016 suggest that in spite of this exemption a litigant in person may wish to file and exchange a budget if they wish.
- CPR 3.15(2) “…the court may manage the costs to be incurred by any party in any proceedings.” Unlike CPR 3.13, no indication is given that different provisions apply to litigants in person.
- Practice Direction 3E, Part A paragraph 2(a) provides “In any case where the parties are not required by rules 3.12 and 3.13 to file and exchange costs budgets, the court has a discretion to make an order requiring them to do so…”
- Practice Direction 3E, Part B provides for the court to direct that a budget is prepared in a different style. The statement of truth can be adapted to apply to a budget prepared by a litigant in person.
- Practice Direction 3E, Part D applies where a costs management order has been made and there is nothing in its provisions which is inconsistent with a costs management order being made in relation to a litigant in person.
Master Marsh’s Conclusions – Costs Budgets/Management Orders
- CPR 3.13 default provisions exclude litigants in person – the ordinary case.
- However, a litigant in person may opt to serve and file a budget.
- The Court may order a litigant in person to serve and file a budget.
- The Court may also decide to make a costs management order in relation to a litigant in person’s budget
- Where the costs are likely to be substantial, due to Counsel fees being incurred under the Direct Access scheme or otherwise, it may well be desirable to do so.
- If budgets are required, ancillary orders may be needed to adapt the provisions of Practice Direction 3E, including adapting Appendix H and amending the form of the statement of truth.
The Recoverability of Costs
The Claimant also sought a declaration that the cost of solicitors from whom he intended to seek advice, but not instruct to have conduct of the case, would be recoverable, along with the fees of junior Counsel the Solicitors would instruct. It was not disputed that Counsel’s fees, via the Direct Access scheme, would be recoverable. (At an earlier hearing Mr Foxton QC held that ‘legal services’ under CPR 46.5(3)(b) did not include those provided by a lawyer qualified in another jurisdiction (Jersey)).
Master Marsh held there was no reason “to construe CPR 46.5(3) narrowly so as to prevent a litigant in person recovering the cost of assistance in the course of their conducting the claim. The Direct Access scheme, whether it is used for advocacy or other assistance, provides a litigant in person with expertise which may be essential to be able to progress a claim in an orderly manner and is likely to be of assistance to the court for that reason. Similarly, it is clearly contemplated that a litigant in person may pay for and recover the cost of ‘legal services’ relating to the conduct of the proceedings. In a complex claim, the litigant in person may wish, for example, to obtain assistance with disclosure or the drafting of witness statements. This is part of the unbundling of legal services contemplated by Lord Woolf.”
The declarations sought by the Claimant were granted in relation to the recoverability of costs under CPR 46.5 in respect of legal assistance
22nd September 2016