To avoid the presumption applied by CPR 46.9(3)(c) the solicitor is required to explain to the client that the costs may not be recovered because they were unusual. “Unusual” must therefore be read in the context of a between the parties assessment. That is not to be equated with costs which are merely “unreasonable”. A solicitor is not required to inform the client that particular costs may not be recovered because a court may conclude that they were not reasonably incurred or reasonable in amount.
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“In my judgment, the Claimants are right that it is wrong in principle for a party to use the CCO regime, in effect, as a proxy for the abuse of process jurisdiction. Similarly, it would be wrong for the court to impose a CCO in order to punish a party who has lawfully brought proceedings in this jurisdiction because the court thinks that they should have issued their proceedings in a different jurisdiction…. the imposition of a CCO would almost certainly have the effect of forcing the Claimants to abandon their claims. If the Defendant considered that the various reasons put forward … meant that the continuation by the Claimants of these proceedings would be an abuse of process, then the Defendant should have persisted with its strike out application.”
In the course of the costs budgeting exercise the Claimants had complained, in particular, about the level of the Defendant’s incurred and estimated disclosure costs and asked the court both comments on those incurred and significantly curtail, if not disallow altogether, the costs of disclosure going forward.
The Claimant in this case applied to revise an approved costs budget. The application to revise (made soon after the transfer to the High Court took place) was based not on value alone but on the argument that the case had turned out to be more complex and more demanding of legal time and cost than was reasonably anticipated when the budget was drafted. It was said that the case had developed in the period following the initial realisation that the value had increased, and that it was not really feasible to seek to revise the budget before the District Judge in part because the impact of the new medical evidence, other than on value, was not at the time of the budgeting hearing clear.
Master Kaye has refused an application by the Claimant to revised an approved costs budget under CPR 3.15A. Her lengthy decision provides some useful guidance to parties seeking to vary a costs budget and highlights in stark terms the mandatory requirement to act promptly.
Following judgment for the Defendant in this case, the court awarded costs on the standard basis along with pre judgment interest at 2% pursuant to CPR 44.2(6)(g). The Judge went on to consider an appropriate payment on account. In line with developing case law, in particular the decisions in MacInnes v Gross  4 WLR 49 and Thomas Pink Ltd. v Victoria’s Secret UK Ltd.  EWHC 3258 (Ch) he awarded 90% of the budgeted costs as against 50% offered by the Claimant.
In Richard v The British Broadcasting Corporation (BBC) & Anor  EWHC 1666 Chief Master Marsh urged a “degree of caution” when considering whether to make a comment about incurred costs at a costs management hearing, saying “To my mind there is little or no value in the court recording a general comment about incurred costs along the lines that the incurred costs are “substantial” or they are “too high”. If the court wishes to record a comment that the incurred costs are “excessive” or they are “unreasonable and disproportionate” it will wish to be sure that the comment is made on a sound footing, rather than impression, because commenting is quite unlike the exercise of approving a figure per phase for future costs. The court will also wish to consider the utility of making a comment unless it is specific and well-founded.”
These sentiments have been echoed by Master Kaye in a decision handed down last November, but only just published.
Master Gordon-Saker determined three issues which arose in the course of a detailed assessment, namely:
i) whether the caps on recoverable costs of budgeting provided by sub-paragraphs 7.2(a) and (b) of Practice Direction 3E of the Civil Procedure Rules 1998 include or exclude value added tax;
ii) whether the Claimant was entitled to recover the sum of £2484.48 in respect of interest paid under a disbursement funding loan; and
iii) whether the Claimant’s entitlement to interest should run from 3 months after the date of the order for costs.
Master Brown (costs judge) has joined the debate about the effect of an underspend in a costs budgeted case.
“I agree with [DJ Lumb] that if an underspend were to be a good reason for departing from a budget it would be liable to substantially undermine the effectiveness of cost budgeting. As the Judge effectively observed, solicitors who had acted efficiently and kept costs within budget would find their costs subject to detailed assessment, whereas less efficient solicitors who exceeded the budget would, absent any other “good reason”, receive the budgeted sum and avoid detailed assessment…
“even if ‘underspend’ were a “good reason” for the purpose of CPR 3.18 it does not follow that there should be a deduction from the sums claimed. Plainly, the fact that a party has spent less than its budget for a phase does not mean there is therefore in fact a good or appropriate reason for any further reduction and I was not satisfied that there was any additional “good reason” for any such reduction.”
Relief from sanctions was refused to the second Defendant (“D2”) in this case following the late filing of its costs budget.
Having initially failed to file its budget prior to the CCMC (which was adjourned) D2 then failed to file it less than 21 days prior to the adjourned hearing.
To compound matters, D2 then left it until the day before the adjourned CCMC to file and serve its application for relief.
Finding that there had been “an abysmal approach on D2’s part to conducting this litigation efficiently” HHJ Simon Barker QC refused relief from sanctions result in D2 being treated as having filed a budget comprising only the applicable court fees.