This short High Court judgment, delivered by HHJ Pelling QC at Manchester District Registry on 18 November 2015, focused on two outstanding costs issues. Firstly, whether – given the facts of the case – the judge should give an “indication” that he was willing to order an increase in the defendant’s budget, had such an application been made. Secondly, what percentage of recoverable costs the judge should order the claimant to pay on an interim basis (1). Neither party to this dispute could agree what course of action HHJ Pelling QC should take in relation to either of these issues (2).
In relation to his willingness to “indicate” that an increase in the defendant’s cost budget might be approved if sought, HHJ Pelling QC refused the defendant’s request. The judge offered two reasons why this action would be “inappropriate”. Firstly, he doubted that he had the jurisdiction to make such an indication (6). Secondly, even if he did, HHJ Pelling QC asserted that it was a jurisdiction that should only be exercised in “exceptional circumstances”. Such an indication should only be offered, assuming the court had the power make such a decision, “where the parties expressly or impliedly agree that this is appropriate to do so” (7) – which was not the case here (2).
Explaining his rationale for only exercising this possible jurisdiction in “exceptional circumstances”, HHJ Pelling QC suggested that caution was necessary because it “amounts to an interference with the decision making of the costs judge”. Additionally, it would also undermine the costs management regime now in force, he added, for the reasons set out in by Coulson J in Elvanite Full Circle Limited v. AMEC Earth & Environmental (UK) Limited  4 Costs LR 612. Finally, he suggested that other “perfectly adequate” remedies were available, “namely to apply for a variation of the previously ordered costs budget in accordance with the costs codewithin the CPR” (7).
Turning to the second of the defendant’s requests, regarding the claimant’s interim payment on account: HHJ Pelling QC began by asserting that the court had the power to make such a direction under CPR 44.2 (8) – even without a separate Part 23 application being made (10)
Having directed that the defendant should be able to recover 70 per cent of its assessed costs, HHJ Pelling QC suggested that the starting point for any amount payable should also be 70 per cent of the defendant’s approved budget costs (12) – rather than the 90 per cent sought by the defendant. In doing so, HHJ Pelling QC stated that the case of Thomas Pink Limited v. Victoria’s Secret UK Limited  EWHC 3258 had not established that payment on account should be higher in cases where there had been cost budgeting than in cases where there was not. Ultimately, he said, costs issues were fact specific, and represented an exercise of discretion (12).
In reaching this decision, HHJ Pelling QC noted that “where an interim payment is being considered it is necessary to balance the need to ensure that any sum ordered does not exceed the sum ultimately assessed to be due.” The budget, he noted, “establishes a ceiling but it does not follow that the receiving party will be entitled to recover the whole sum budgeted” (13). Directing an interim payment of 90 per cent of the approved budget would require the court having a “high level of confidence that the receiving party will recover at least 90 per cent of its budgeted costs on assessment” – which was not the case in this particular dispute. HHJ Pelling QC therefore ordered an interim payment of around “80 per cent of 70 per cent of the defendant’s approved budget” (14).
Link to Judgment