Bespoke budgets in multi-party litigation, proportionality, updating the incurred costs included in the budget prior to the CCMC, including the costs of interim hearings in the budget, disapplying the 2% cap for costs management and the resourcing of fee earners were all points that were dealt with at the most recent CCMC in the latest phone hacking cases (Various Claimants including (1) John Leslie (2) Chantelle Houghton v MGN Limited [2018] EWHC 1244 (Ch)).

MULTI-PARTY LITIGATION – The court’s approach to this multi-party litigation avoided the need for multiple costs management hearings for similar claims. The court applied a structure that was similar to a GLO and directions were made regarding managing the costs of the claim. Common and individual costs were split, and Costs Management was dealt with by the application of template budgets for individual costs and common costs. There were 3 categories of claims for the individual costs and the court could order that there be bespoke individual budgets in place of the template budgets. In this decision the court agreed that bespoke budgets were applicable to two of the Claimants, Leslie and Houghton.

THE BUDGET AND PROPORTIONALITY – Chief Master Marsh applied the proportionality test to the Claimants’ budgets commenting that “I would emphasise that the court is not required to have regard to the constituent elements of each budget phase (it may do so) and the court’s task is to decide whether the total for each phase falls within a range of reasonable and proportionate costs…. And the court is not looking to establish what the budget figure should be objectively ascertained, but rather a figure that falls within the applicable range applying the reasonableness and proportionality tests alongside each other.”

“The court must apply both the reasonableness and proportionality tests, but the former may yield to the latter. And, in practice, although PD3E, paragraph 7.3, requires the court to consider each budget phase separately, and therefore to consider the proportionality of each phase total, the task has to be undertaken with an initial overall review of proportionality by reference to the factors in CPR44.3(5)…

The costs in the budget phases must not only be reasonable but must also bear a reasonable relationship with the proportionality factors I have indicated. The proportionality factors that are relevant are to be taken together and given notional weight as a whole. In these cases, the sums in issue are not large for High Court claims when taken in isolation. But when the proportionality factors are put together, the financial value of the claims proves to be relatively unimportant because of the wider factors. The budgets substantially exceed the sums in issue but is not a reason to conclude that the overall budgeted sums and the totals per phase are disproportionate.

It seems to me that the wider factors I have summarised, in particular the public importance and test case factors, will have the effect that if the costs are reasonable they are proportionate. That conclusion chimes with the approach the parties have adopted and avoids the court wielding a concept of uncertain application.”

UPDATING INCURRED COSTS – There was a considerable time period between the date that budgets were required to be filed and when the CCMC was listed. Mr Leslie updated his budget prior to the CCMC to include incurred costs up to 1 May 2018, however the other parties did not. The Master recognised the problems of one party updating the incurred costs and the other parties not, explaining that this approach resulted in Mr Leslie having “ousted the court’s jurisdiction to consider a significant amount of expenditure” and consequently found that “the relevant date for the purposes of incurred costs as being 17 January 2018.”

This can be avoided by agreeing a date that the incurred costs are included up to and in turn obtaining the court’s permission to update the incurred costs.

HOURLY RATES – Chief Master Marsh refused to be drawn into the debate regarding hourly rates and instead considered the allocation of work in the budget between different grades of fee earner and the total figure claimed for each phase was of greater importance.

INTERIM HEARINGS – An amount for specific disclosure had been included in the disclosure phase, the Master found that the inclusion of interim hearings in the budget were wrong in principal as they may be subject to an inter partes costs order, the costs were moved into the contingency phase.

COSTS MANAGEMENT COSTS – The costs associated with costs management are subject to a 2% cap. Chief Master Marsh was asked to consider lifting the cap, he agreed on the basis that the complexities surrounding the multi-party litigation warranted exceptional circumstances in this case.

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