Earlier this year, Warby J gave judgement in the case of Yeo v Times Newspapers Ltd [2015] EWHC 209 (QB). This was a decision primarily on whether the Claimant’s plea of malice should be struck out but, because the application for strike-out was made whilst the budgeting process remained live, it afforded an opportunity for Warby J to provide some guidance as to the latter in a reported authority.
One of the issues with which Warby J engaged was the main practical problem which confronts both lawyers and Judges when embarking on the budgeting exercise: should the Court, or even can the Court, consider hourly rates? The standard response from any party which would prefer that the case managing Judge not probe too deeply into such questions (and it is an argument I myself have made) is that 3EPD 2.3 specifically precludes the Judge from so doing in stating (1) that ‘the court’s approval will relate only to the total figures for each phase of the proceedings’ (eg. it won’t start making decisions as to how those figures are reached or their constituent elements) and (2) that ‘when reviewing budgets, the court will not undertake a detailed assessment in advance’ (emphasis mine).
This latter point is a significant one as, if the Judge conducting the budgeting exercise effectively sets rates for the case, this disenfranchises the Costs Judge of that decision on detailed assessment. Furthermore, that decision is one which the Costs Judge would have made on the basis of the factors at CPR 44.4(3) but an appreciable number of those factors are as yet unknown at the budgeting stage (or at least cannot be stated with any degree of certainty so early in the case). Put bluntly, the decision on hourly rates is squarely a decision for detailed assessment and to pre-empt it would be, or so the argument goes, to run afoul of the prohibition against a ‘detailed assessment in advance’.
It would certainly appear anecdotally that, when undertaking judicial training, Judges are indeed being told to refrain from delving into issues such as hourly rates and time claimed (‘claimed’ is probably the wrong word; ‘prognosticated’ perhaps?). Anyone who has had the pleasure of hearing District Judge Simon Middleton speak on the subject will know that the Jackson ‘hard line’ is that hourly rates and times are utterly irrelevant; a Judge should approach budgeting purely on the question of what would be a proportionate overall figure for each phase.
The response to this is easy to anticipate. Practitioners immediately wonder why, if rates and hours are an irrelevancy, they are obliged to detail the same with such specificity on the form itself. If the Judge is simply going to sit back and ruminate over global figures without any reference to how that figure has been reached, why are professionals being obliged to waste their time so comprehensively by filing in the Precedent H at all?
From my own personal point of view, the learned District Judge’s approach does have much to commend it and it would undoubtedly save cost for the entire exercise to be based purely on headline figures such that one need complete only the first page of the Precedent H. Of course, this has its drawbacks too, particularly insofar as there would appear to be no real judicial consensus as to what a proportionate figure might be. Anyone who attended the Association of Costs Lawyers conference this year would have been amused to hear the responses of the panellists when given a hypothetical scenario and asked what the proportionate figure for costs would be only to hear Master Gordon-Saker give a figure 4 times that of District Judge Simon Middleton. For the proposed global approach to work we would need far greater judicial consensus on what ‘proportionate’ actually means.
Indeed Warby J notes in his judgement that Master Gordon-Saker, when speaking to the Commercial Litigation Association noted that ‘the most common question raised by judges [when receiving training] was how they could approach the overall question without reference to hours and rates’.
Warby J’s solution strikes a sensible middle-ground. He notes that Precedent H ‘allows the court to review hourly rates and estimated hours by requiring these to be stated on the form’ (which is a very fair point). He then states that ‘whilst the question of whether the totals are reasonable and proportionate will always be the overall criterion, the courts may need to consider rates and estimated hours’. He continues that ‘In a case involving costs that run to six or even seven figures in total it is in my judgment appropriate to have regard not only to the factors listed in CPR 44.3(5) but also to the hours and rates, as would be done upon a summary assessment of costs at the end of an interim hearing. That is not the same as conducting a detailed assessment’.
It’s not a wholesale undermining of the Jackson hard-line but it is a softening of the same and an acknowledgment that, in purely practical terms, if a Judge is to undertake a costs budgeting exercise he may well be obliged to consider such issues as hourly rates. The alternative is Judges plucking figures from thin air and a descent into complete arbitrariness when it comes to costs. Perhaps the only way the global approach could work with any consistency would be by having dedicated Costs Judges dealing with all budgeting hearings. One feels, however, that this would rather defeat the object.