Henry v News Group Newspapers Ltd (costs)
Reference: PTH 1106483
Court: High Court (Senior Costs Office)
Judge: Senior Costs Judge Hurst
Date of judgment: 16 May 2012
Summary: Summary costs – defamation – costs budgeting – Defamation Proceedings Costs Management Scheme – Practice Direction PD51D – ‘good reason’
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Adam Wolanski QC (Defendant)
Instructing Solicitors: Taylor Hampton for the Claimant; Reynolds Porter Chamberlain for the Defendant
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 the conclusion of the case the Claimant’s solicitors informed the Defendant that they had exceeded their budget by some £270,000.
Applying the test set out within PD51D, whether there was ‘good reason’ for the court to depart from the Claimant’s budget, and therefore to allow the Claimant to recover a sum in excess of the budgeted figure.
(1) PD51D was in mandatory terms and required parties to inform each other if the budgeted figure was to be exceeded. If one party is unaware that the other party’s budget has been significantly exceeded, they are no longer on an equal footing, and the purpose of the cost management scheme is lost.
(2) The fact that, after budgets were set, the Defendant had amended the defence four times, had made numerous third party disclosure applications and had served ten supplemental lists of documents did not in itself provide a ‘good reason’ for the Claimant to depart from the budget. The key question is whether the Claimant had complied with the requirement of PD51D to inform the other side of anticipated increases to the budgeted figures.
(3) There was no ‘good reason’ for the court to depart from the Claimant’s budgeted figure. Whilst neither side kept within their budgeted figure, the Defendant had at least made some attempt to comply with PD51D by informing the Claimant it was incurring greater costs than had been anticipated within its approved budget. The Claimant had made no such attempt.
The first occasion upon which the court has examined the question of what constitutes ‘good reason’ for the court to depart from a party’s budgeted figure. The decision underlines the perils of failing to comply with the requirements of PD51D. If costs budgets are to be exceeded, other parties must be warned, otherwise the receiving party cannot expect to recover the additional costs. The fact a case has become unexpectedly complex does not provide a party with an excuse for not complying with the practice direction.