“Budgeting is something which all solicitors by now ought to know is intended to be integral to the process from the start, and it ought not to be especially onerous to prepare a final budget for a CMC (Case Management Conference ) even at relatively short notice if proper planning has been done…….The court must now, as part of dealing with cases justly, ensure that cases are dealt with at proportionate cost and so as to ensure compliance with rules, orders and practice direction……The stricter approach under the Jackson reforms have been central to this judgment…..”
These words (delivered on 1 August 2013) of High Court judge Master McCloud take us straight to where budgeting is in cases of civil litigation at the current moment. At the very heart of litigation of course, following the implementation of the new rules governing civil procedures as recommended by Lord Justice Jackson and which became law 1 April 2013. Central to these new procedures are new rules on costs budgets and costs management. Essentially these are that:
- Each party must prepare a costs budget in a standard form, setting out details of the costs incurred to date and the estimated future costs of the litigation.
- The court will consider and approve the costs budget. This is set to be done relatively early in the proceedings, usually the first case management conference.
- The court then oversees the case to ensure it complies with the agreed costs budget.
So five months on, it is hardly surprising that Master McCloud adopted such a robust attitude to endorsing the reforms. Most lawyers have known of their coming since 2010. No excuses were allowed from the seemingly feckless lawyers for former chief whip Andrew Mitchell M.P. His libel case against The Sun publishers New Group Newspapers now looked pear-shaped, all because they had failed to comply with an order to file their costs budget, prior to the case hearing in June. That failure to comply with the now much more stringent regulations meant the Mitchell claim would be limited to a budget consisting of the applicable court fees for his claim. However, leave to appeal was granted so this test case is not finished. What it does make clear is that strict budgeting and tight costs management is now the guiding ethos of the court system. The new regime has already been piloted in defamation cases and in the Mercantile Courts and Technology and Construction Court. Several have reached the Court of Appeal. The new rules now apply to most civil cases: although high value commercial cases remain exempt at present it is expected that the tighter costs management will extend there soon.
Certainly a major objective of the Jackson reforms was to curb ever growing costs of legislation and their uncertainty. Part of the new rules emphasised that costs of the case must be proportionate to the claim. For would-be litigants uncertainties over costs, especially for losing parties open to paying the winning side’s costs, have always been the hardest thing to budget for. The reforms have certainly attempted to address this difficulty; from now costs recoverable by the winning party will be linked to the court-approved budget. That this must be done early in the proceedings (each side submitting its first six weeks before the first case management conference) will make for greater confidence of litigants on both sides. That budgets are reached through the collaboration of both parties and of the judge, should aid transparency in costs awards at the end of the case. A ruling of the Court of Appeal earlier this year helps set out the new ethos:
“The management of costs is the responsibility of all parties to the litigation, and ultimately, of the court as well. The court has a responsibility to manage the proceedings, so it also has a responsibility for managing the costs of those proceedings.
The starting point must be that an approved costs budget is intended to provide “the financial limits within which the proceedings are to be conducted’. They are intended to provide some constraint”.
Although there is much uncertainty ahead as with any new system, the ethos seems secure. Costs budgeting and costs management will be the driving forces in civil litigation. The rules are there for all lawyers to follow and to advise their clients accordingly. Master McCloud’s strict interpretation of the rules suggests any one failing to do so can expect little leniency. Now that the rules are in place for budgeting, how to do that budget is much easier and clearer.
This post was written by Anne Evans at Vannin Capital. A UK company offering litigation funding for insolvency. For more information, visit the site.