Master removes cap for “exceptional” budget drafting costs

The chief master of the Chancery Division has applied the little-used provision to remove the cap on the costs of budgeting by ruling that the work involved in drawing up a budget for Sir Cliff Richard (pictured) was “exceptional”.

Chief Master Marsh also rejected a request to comment on Sir Cliff’s incurred costs, saying there was “little or no value” in recording a general comment such as that they were “too high”.

Paragraph 7.2 of practice direction 3E provides that, “save in exceptional circumstances”, the recoverable costs of initially completing Precedent H shall not exceed the higher of £1,000 or 1% of the approved or agreed budget, and all other recoverable costs of the budgeting and costs management process shall not exceed 2% of the budget.

In a ruling as part of Sir Cliff’s case against the BBC and South Yorkshire Police over coverage of a police raid on his home, he was asked to rule that his costs in relation to preparing the budget and dealing with the costs management to be exceptional.

Master Marsh said: “There is no guidance as to what ‘exceptional’ means in these circumstances. In other words, it is not absolutely clear how far out of the norm the circumstances have to be to become exceptional.

“The factors put forward by the claimant here are, first, that two budgets were prepared in advance of the CMC in early May on the basis of a split trial, with the consequence, subsequently, that further work has had to be undertaken.

“Secondly, there has been redrafting of the budgets following on from that hearing, which was a hearing at which the parties were ready to deal with costs management, but it was deferred pursuant to the order of the judge. Thirdly, at today’s hearing, there has been a request by the BBC for comments to be made, that application being rejected. That is a factor which I should take into account.”

Master Marsh said that “exceptional” meant “significantly out of the norm” rather than “wholly exceptional”.

“The fact that a case may involve further unexpected work is not of itself a circumstance which is exceptional, but the factors I have indicated, taken together, and in particular the issue relating to comments, should take this case into the exceptional category and I will, therefore, lift the cap.”

The BBC, meanwhile, asked him to make a comment along the lines of: “The incurred costs based on information available appear to be excessive and disproportionate.”

Given that the costs management exercise was “necessarily a summary one that often has to be undertaken briskly” where figures were often approved at an “impressionistic level” based on limited information, Master Marsh said he needed to exercise “a degree of caution” in deciding whether to make such a comment.

Sir Cliff’s incurred costs were nearly £1.2m. “The difficulty for the court, however, is that, although those figures appear to be substantial in absolute terms, it is quite impossible for the court today to form any meaningful view about whether those costs can properly be characterised as being unreasonable and/or disproportionate, let alone to be significantly or substantially unreasonable and/or disproportionate.

“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.”

Master Marsh concluded that there was “no significant benefit to be gained in the court making the sort of anodyne comment that the BBC proposes”.

He explained: “A comment is not a finding of fact, but merely a matter to be taken into account. Making a comment does bear the risk, however, that on a detailed assessment disproportionate weight might be given to it, although the comment is based on limited information.

“The costs judge, on a detailed assessment, will have the benefit of a full review of all the work that has been carried out. That is a far safer basis for a review to be taken. I am not persuaded that a comment should be made for the reasons I have given.

“I am also concerned that a comment could unfairly skew a detailed assessment at a later stage.”

He also rejected the suggestion that if he did not make a comment, the costs judge would proceed on the basis that the costs were reasonable and proportionate.

“That is a fanciful suggestion, given that costs judges are experienced in dealing with costs in many different types of claim and drawing conclusions about reasonableness and proportionality in a wide range of different circumstances.”


Picture credit: Eva Rinaldi

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Costs News
Published date
07 Jul 2017

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