Reference:  EWHC 2503 (QB);  1 All ER 154
Court: Queen's Bench Division
Judge: Gray J
Date of judgment: 11 Nov 2005
Summary: Defamation - Libel - Cost-capping orders - Conditional Fee Agreements - After-the-event insurance policies - CPR Rule 3.1 - CPR Part 26 Practice Direction
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Jacob Dean (Claimant)
Instructing Solicitors: Carter-Ruck for the Claimant; BBC Litigation Department for the Defendant
The Claimant brought a libel action against the BBC in respect of a short news item broadcast as part of a local news programme, Points West. The Claimant’s lawyers act under a CFA with ATE insurance in place. The percentage uplift was likely to be 100%. Allocation questionnaires estimated the BBC’s costs to be £290,000 to end of trial; the Claimant’s £360,000. The Claimant’s estimate excluded any cost of the success fee, VAT or ATE insurance. The limit of the ATE indemnity was £100,000. The Defendant made an application for a costs capping order. Some three weeks after making the application, by the time of the PTR, the Claimant re-estimated its costs to trial as £694,000 before uplift, VAT or ATE costs (D’s estimate having risen to £515,000). Total potential exposure for the Defendant was therefore of the order of £1.6 million (subject to assessment). The Claimant argued that the lateness of the application rendered a cap (at this stage) unfair.
Whether a costs capping order should be made.
Declining to make a cost-capping order; (1) The case was a prime candidate for a costs capping order but the application was made too late and such an exercise is invariably prospective and not retrospective by nature. The purpose of an order is to enable the capped party to plan ahead the appropriate level of expenditure to bring the case to trial at a cost which is in line with the amount of the cap. (2) The costs capping jurisdiction should not be used in a way which would deny the Claimant the benefit of the CFA to which she is statutorily entitled. (3) A costs capping exercise is more suitable for a Costs Judge or a Costs Judge sitting with a QBD Judge.
This case emphasises the importance of up-to-date estimates of costs. Gray J pointed out that the proper thing to do where a party refuses to provide such an estimate is apply for one under Paragraph 6.3 of the Costs Practice Direction (supplementing Part 26). A recent amendment to CPR 3.1 gives the Court an additional power to ‘order any party to file and serve an estimate of costs.’ Taking such a course can prevent costs spiralling unaccountably. Courts will not intervene of their own accord. The Judge also observed: (1) The Claimant should have informed the Defendant far sooner about the escalating costs, especially in view of the existence of a CFA; and (2) The Defendant had a legitimate interest in knowing the extent of the protection afforded by the ATE insurance policy and was therefore entitled to a copy.