Lack of detail on incurred costs “not enough reason” to adjourn budgeting

A High Court master has rejected a call to adjourn costs budgeting on the basis that she did not have enough information about the incurred costs.

Master Kaye also said there was no point in making a general comment about incurred costs if there were no specific points to flag up to the costs judge.

Kings Security Systems Ltd v King and Anor [2019] EWHC 3620 (Ch) – handed down last November but only just published – was the latest litigation in a long-running dispute involving a security company, with the claimant suing the first defendant, the ex-managing director, for allegedly taking bribes, and the first defendant counterclaiming to plead a tortious abuse of process.

Master Kaye said the defendants argued that the claimant had not provided full details of all the costs they had incurred, meaning the court did not have the information it needed to carry out the costs budgeting exercise. There were also “more traditional arguments” in relation to both proportionality and quantum on specific phases by both parties.

The claimant’s costs budget was about £1.2m, including incurred costs of £579,000, with the defendants’ budget at £734,000. The most the claim was worth was £120,000. The judge was clear that she considered the costs disproportionate, but noted that the claim and counterclaim raised issues that the parties considered to be important enough to justify the expenditure.

The master said a variety of sources gave the court “sufficient information” about the nature and extent of the incurred costs for both parties to be in a position to carry out a costs budgeting exercise. “At a CCMC, the court is not in a position to and does not determine the incurred costs figures,” she noted.

“Although the court has to have regard to the overall costs, both incurred and to be incurred, when considering proportionality and thus having the information in relation to incurred costs is helpful in making that assessment, in this case, having more detailed information about other incurred costs is not going to tip the balance between the costs being proportionate and disproportionate; the costs of both parties are already disproportionate.

“Adjourning off the costs budgeting in such circumstances is neither reasonable, nor proportionate, nor good case management, nor in keeping with the overriding objective. It does nothing to progress this dispute and engages further in the war of attrition that the parties are engaged in and will result in further unchecked costs being incurred.”

Looking at proportionality, Master Kaye said the parties’ approach to the dispute “has caused it to become complex and attritional”, and the first defendant suggested that she should make comment in relation to the claimant’s expenditure to date.

“My starting point is that, if I were to comment at all, it would be to the effect that both parties’ incurred costs appear to be disproportionate which is, of course, not what the defendant is asking me to do. However, if I were to comment on the incurred costs in the recital to the case management order, such comment must be taken into account by a costs judge on detailed assessment but it does not bind the costs judge.

“I cannot see any value in a comment that simply repeats for the costs judge a general view that costs incurred to date are excessive or disproportionate but without being able to provide some express guidance as to what it is about the costs that is considered to be disproportionate or excessive.

“There is little or no value in the court recording a general comment about incurred costs when the court is not in a position to make a specific and well-founded comment about any specific element of the costs which might be of assistance to the costs judge.”

She said the costs judge on detailed assessment would have a detailed bill of costs and far more information about how and why the costs were incurred.

“There is no value in a comment at this stage which might be seen as a fetter on the discretion of the costs judge. So, whilst on the basis of the figures I have seen it appears to me that the costs to date for both parties are wholly disproportionate, I will leave it to the costs judge to form his own view in due course in relation to incurred costs.”

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Costs News
Published date
17 Sep 2020

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