Aggregate of two budgets not a factor in deciding proportionality of risk faced by party

The aggregate sum of two costs budgets that a party might have to pay is not a factor in deciding whether they are disproportionate, the High Court has ruled.

Mr Justice Birss also said that “legal novelty is not a good explanation for high costs”.

Red and White Services Ltd v Phil Anslow Ltd and Anor [2018] EWHC 1699 (Ch) concerns a dispute between bus companies over slots in the bus station in Cwmbran.

The claimant sued the defendant for trespass relating to those slots. The defendant counterclaimed in competition law against the claimant and the third-party bus station owner.

A 10-day trial of the competition law issue is set for July 2019, with two economist experts and seven fact witnesses.

The defendant’s budget was for £288,000 to bring the case to trial, including £103,000 of incurred costs. Its initial costs budget last year was for £400,000. The claimant’s and the third party’s budgets were each £1.5m, with claimant’s incurred costs about £100,000 and the third party’s £348,000.

The defendant – effectively the claimant in the competition case – submitted that the claimant and the third party’s budgets were “seriously disproportionate”, given that the damages were likely to be around £80,000 to £120,000.

The claimant and third party argued that the defendant’s budget was unrealistically low, so as to act as an unfavourable contrast to their figures, and said the claim had serious implications beyond the claim for damages.

Birss J noted that even the defendant’s own budget was disproportionate for what was at stake, meaning “one cannot simply look at this dispute as a money claim for £80,000 to £120,000. The claim has a higher value and greater significance than can be seen simply by focusing on the likely quantum of damages”.

However, while the land law issues were potentially legally novel – as land agreements are now within the purview of competition law – Birss J found that “legal novelty is not a good explanation for high costs”.

He continued: “I accept that the land law/competition law interaction may well support the idea for two counsel. That could be a justification for a very specific aspect of the budget. However, as a general point across the board, I do not accept that this argument has significant traction.”

While noting the wider significance of the case – such as for the third party as an investor – the judge said the multi-party nature of the claim was not a factor.

“The fact that the two budgets together, each of £1.5m, mean that the defendant could be bearing a cost risk of £3m, does not seem to me to be a matter of great significance on the facts of this case.

“The individual budgets are the figures I need to consider, not the net risk to the defendant of aggregating the two.”

Birss J concluded that a costs budget of £1.5m was disproportionate. “It is and should be possible for a competition law claim about a bus station to be tried at a more modest costs level than that.”

In deciding the right level, he rejected the defendant’s suggestion that the budgets be set at roughly the same level as its budget.

“The defendant’s budget is too low and is not a good guide. For example, the defendant’s budgeted figure for disclosure just does not make sense and, as I have mentioned already, the figure for experts seems to be surprisingly low.” The defendant budgeted £9,375 for disclosure, against £267,000 by the claimant.

Finding various parts of the budgets too high – such as the claimant seeking £633,000 for the trial – Birss J decided to set the claimant and third party’s budgets for future costs at no more than £800,000, and ordered them to file revised budgets.

The judge also commented on the third party’s £348,000 in incurred costs. While accepting that it had more to do at a pre-action level than the other two parties, he arrived at a “more realistic” figure for proportionate incurred costs by taking the incurred costs figures of about £100,000 for the other two and then adding the pre-action costs incurred by the third party, meaning a figure of £190,000.


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Costs News
Published date
19 Jul 2018

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