Tag: Clarion Costs Team

Costs Budgeting – claims over £10m

Andrew McAulayLeave a comment

In Signia Wealth Limited -v- Marlborough Trust Company Limited [2016] EWHC 2141 the court considered whether costs budgeting was appropriate.

Practical points

  • If there is no value on the claim form, then despite the amount of the claim – costs management applies.
  • The combined value of the claim for costs was considered when deciding whether the proportionality test was engaged.
  • Will an inequality of arms be a determining fact when deciding if costs management applies?  If making submissions regarding the same, then evidence to support the financial circumstances should be provided.

This was a high value claim and the court was asked to consider whether the claim should be taken out of the costs management regime.

The claimant identified that because neither the claim nor the additional claim had specified a monetary value in excess of the £10m limit, the claim was not automatically taken out of the costs management regime by virtue of CPR 3.12 (1)(b).

Costs budgets were filed and both parties’ claims for costs totalled £4.14m, the value of the claim was in the region of £13m. Consequently, the court found that the proportionality argument was engaged.

The court considered whether CPR 3.15(2) applied -“Where costs budgets have been filed and exchanged the court will make a costs management order unless it is satisfied that the litigation can be conducted justly and at proportionate cost in accordance with the overriding objective without such an order being made.

The court commented:

“13. It is not in doubt now that this claim is within the costs management regime. That is so because neither the claim form nor the additional claim mentioned the value of £13 million, which is said to be the value of the shares which were held by the first defendant. Had the figure been mentioned in the additional claim form, then the costs management regime would not have applied.

14. It seems to me that, given that this claim is within the regime, the proper approach for the court to adopt is to apply the test set out at CPR 3.15(2), namely the court must be satisfied, if this case is to be taken outside the regime, that the claim can be conducted justly and at proportionate cost in accordance with the overriding objective without a costs management order being made. If the court is not so satisfied, then the claim must stay within the costs management regime.”

The court  further commented that the incurred costs as against the future costs needed to be considered.   “If a point had been reached at which point future costs were to be de minimus, there was little point it requesting parties to undertake the expense of costs management. Although costs management was occurring later than desirable, there were significant future costs to be incurred and therefore this was a case to make observations about costs which have been incurred”..

The defendant argued that there was an inequality of arms, the second defendant was an individual.  However, no evidence was provided to support her financial circumstances and therefore the court found that it would not be right to make a decision in relation to the costs management.

The court considered that the claim fell within the costs management regime and therefore the proper approach for the court to adopt was to apply the test set out in CPR3.15(2).

Because there were issues of proportionality which needed to be considered  and there were real benefits for the parties if there was a costs management order, the court ordered that there be a costs management hearing.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com

Should the additional liabilities be included in the budget to allow the proportionality test to be applied correctly?

Andrew McAulayLeave a comment

Following the case of BNM v MGN Ltd (3rd June 2016) where it was found that the after the event insurance should be taken into account when assessing whether the costs were reasonable and proportionate, should the additional liabilities now be included in the budget to ensure that the proportionality test is applied properly at the budget stage?

According to the recent decision in  Various Claimants v MGN Ltd (21st July 2016) the Defendant accepted that under CPR, the Claimants are not obliged to disclose the amount of the success fee or ATE insurance as this could reveal the prospects of success. However, they referred to the case of  BNM v MGN Ltd (3rd June 2016) and argued that to enable the court to assess the reasonableness of the budget and apply the proportionality test then the additional liabilities now needed to be included in the budget.

Despite the court recognising that by taking into account the additional liabilities this allows a prospective view of proportionality, rather than a retrospective view, thus fulfilling the courts costs management duties, the court disagreed with the Defendant, referring to the provisions within the CPR, specifically the precedent H form and the precedent H guidance notes, concluding as follows:

  • I do not consider that the apparent change in the approach to proportionality on assessments (if there is one) means that there should be a change to the approach on the occasion of budgeting. The reasons for this are based on both the provisions of the rules and the Practice Direction and on the practicalities.
  • The provisions for costs budgeting are to be found in Part II of CPR 3. The procedures are dealt with in Practice Direction 3E. Paragraph 2(a) requires the court to have regard to the overriding objective and paragraph 6(a) provides:

“Unless the court otherwise orders, a budget must be in the form of Precedent H annexed to this Practice Direction.”

  • The first page of that precedent contains a summary which is amplified in the following pages. Below the summaries of costs under various headings there is included the following wording:

“This estimate excludes VAT (if applicable), success fees and ATE insurance premiums (if applicable), costs of detailed assessment, costs of any appeals, costs of enforcing any judgment and [complete as appropriate]”

Therefore, in light of the emerging case law on proportionality, the approach to the inclusion of additional liabilities remain the same and should be excluded from the precedent H.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com

Claimant’s budget reduced to court fees; the court refused to grant relief

Andrew McAulayLeave a comment

In the case of  Jamadar -v- Bradford Teaching Hospital NHS Trust CA 21/07/2016, the Claimant failed to file a costs budget and their budget was limited to court fees.

The Defendant had admitted liability, following which the Judge revoked the notice of allocation.  The matter was listed for a CMC, therefore the Defendant complied with the rules and filed a budget, however the Claimant did not.  The Judge ordered that the Claimant’s budget be reduced to court fees, the Claimant applied for relief from sanctions and were unsuccessful.  The Claimant appealed to the Circuit Judge, which also failed and the Court of Appeal upheld that decision.

The revoking of the N149C did not mean that the case was not allocated to the multi-track.

The rules are clear, a budget must be filed before the first CMC for all multi-track claims that are less than £10m.  The rules state that a budget must be filed for cases that are likely to be allocated to the multi-track.  This was a claim for £3m, its hard to see how this claim could have been allocated to any other track – the matter had been listed for a CMC, it was suitable for the multi-track, therefore the criteria in the CPR which triggers the preparation of a budget had been met.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com

Who needs Fixed Costs!

Andrew McAulay5 Comments

The case of BNM and MGN Limited  is one of the first cases to really demonstrate the power of CPR 44.3 (2) (‘Jackson test of proportionality’), which states:

Where the amount of costs is to be assessed on the standard basis, the court will –

(a) only allow costs which are proportionate to the matters in issue. Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred; and

(b) resolve any doubt which it may have as to whether costs were reasonably and proportionately incurred or were reasonable and proportionate in amount in favour of the paying party.

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