Henry v News Group Newspapers Ltd (Costs) (CA)
Reference:  EWCA Civ 19
Court: Court of Appeal
Judge: Moore-Bick LJ, Aikens LJ, Black LJ, Costs Assessor Campbell
Date of judgment: 28 Jan 2013
Summary costs – defamation – costs budgeting – Defamation Proceedings Costs Management Scheme – Practice Direction PD51D – ‘good reason’
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Adam Wolanski KC (Respondent)
Instructing Solicitors: Taylor Hampton (Appellant) Reynolds Porter Chamberlain (Respondent)
The Claimant brought libel proceedings which were settled shortly before trial on terms including that the Defendant pay the Claimant’s costs on the standard basis. The parties had, in accordance with Practice Direction PD51D, submitted detailed costs budgets which had been approved by the Master at a Case Management Conference. During the following eight months the Claimant’s solicitors did not notify the Defendant that they were exceeding their costs budget. At a hearing after the case settled, Senior Costs Judge Hurst found that the Claimant had failed to show ‘good reason’ as to why she had failed to comply with the Practice Direction and therefore could not recover a sum in excess of the budgeted figure.
Had the Costs Judge been wrong to conclude that the Claimant had failed to show good reason for exceeding the budget?
Allowing the appeal, and ruling that the Claimant had shown good reason for exceeding the budget
(1) When considering whether there is good reason to depart from the approved budget it is necessary to take into account all the circumstances of the case, but with particular regard to the objectives of the costs budgeting regime, namely to manage the litigation so that the costs of each party are proportionate to what is at stake and to ensure that the parties are on an equal footing.
(2) The costs judge was wrong to conclude that compliance with all the requirements of the practice direction is essential before a party can ask the court to depart from the approved budget. It is no more than one factor which the court may take into account in deciding whether there is in fact good reason to do so.
(3) In the current case, neither party had complied with the practice direction and both parties were to some extent at fault. Neither party had sought to address the question of costs when the case came before the court on a strike out hearing before trial. Further, the failure by the Claimant to comply with the practice direction had not put the Defendant at a significant disadvantage in terms of its ability to defend the claim, nor was it likely to have led to the incurring of disproportionate or unreasonable costs.
A party’s failure to comply with practice direction PD51 and keep other parties informed of increases in costs incurred will not disqualify that party from recovering the costs it has incurred above the budgeted figure. As a result of this decision it seems unlikely that the costs budgeting regime will be policed with the rigour that many, particularly in the media, had hoped.