Costs management order cannot be “deemed” to be set aside by inference

A costs management order cannot be ‘deemed’ to be set aside by inference because an intention to revise the budgets after significant developments in the case did not lead to an actual court order, an SCCO master has ruled.

In Vertannes v United Lincolnshire Hospital NHS Trust, Master Nagalingam was dealing with a preliminary point on the format of a bill for £950,000, which was not broken down into phases.

Though the case was subject to a costs management order dated 9 April 2015, the bill narrative argued that there was no approved budget because the court later accepted on two occasions that considerable developments in the case meant that updated costs budgets were necessary.

It said updated budgets were prepared and served, but were not considered by the court and so not approved. “As the revised budgets were ordered by the court, it is considered that the initial approved budget of 11.04.2015 is deemed to be superseded and that there is no approved budget in this case or, in any event, it is a circumstance which allows the court to assess the costs without being constrained by the outdated original budget.”

But Master Nagalingam said “the fact is there is simply no mechanism by which a costs management order can be ‘deemed to be superseded’”.

He continued: “Firstly, for something to be superseded, then something else must take its place. While I acknowledge that revised budgets were exchanged and filed, at no time was the original costs management order replaced.”

The costs judge could not retrospectively approve a revised budget, he said. “Regardless of what the claimant may say with respect to substantial or considerable developments, or indeed significant developments, the assessing court cannot second-guess what the case managing court would have done.

“That is an exercise which would have been undertaken on a phase-by-phase basis, and with no guarantee that the case managing court would have agreed that revisions to the budgets were necessary at all.”

Further, the master said: “For a costs management order to be set aside, that must be in explicit terms. An order cannot be ‘deemed’ to be set aside by inference.”

It did not matter that directions were given which allocated court time to revisit the budgets; the fact that they were not meant the original costs management order remained in place and operative.

Master Nagalingam rejected the claimant’s alternative argument that he should use his inherent powers under CPR 1.1 as a mechanism to depart from the rigour of a practice direction which the claimant said was intended for the generality of cases.

“It will undoubtedly incur expense to draft a new bill of costs, but the fact of that expense does not excuse compliance with a rule, practice direction or order. In any event, given the substantial amount of costs being sought, the expense of preparing a compliant bill will be a proportionate exercise as compared with the amount of costs claimed…

“Further, there is no justice at all in allowing the detailed assessment of a costs managed case to continue in the absence of a phased bill. A costs management order was made and remains in force. Events may have occurred in the litigation since the making of the costs management order, but the order was never set aside or amended.”

The master added that the risk of any unfairness in these circumstances was extinguished by the claimant’s ability to argue there was good reason to depart from the budgeted costs.

Roger Mallalieu (instructed by Eatons Solicitors) for the claimant, Robin Dunne (instructed by Acumension) for the defendant.

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Costs News
Published date
06 Feb 2019

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