Henry v News Group Newspapers Ltd [16.05.12]

Senior Costs Judge rules there was no good reason to depart from the court-approved costs budget leaving Claimant with potential of £300,000 shortfall; permission to appeal given.

Implications

This was one of the first cases to be dealt with under a costs management pilot scheme. The provisions of the Practice Direction to update budgets and for solicitors to liaise monthly were considered mandatory. Therefore, subject to any decision of the Court of Appeal, irrespective of the fact that costs over and above an approved budget might have been reasonably incurred and were reasonable in amount, they will not be recoverable if the receiving party failed to update its budget in accordance with the Practice Direction.

Costs budgeting is expected to be introduced into clinical negligence cases over the next year. The implication of this case appears to be to ensure that a properly costed budget is in place, and to update this as appropriate and liaise with the other parties, in accordance with the relevant Practice Direction.

Background

The Claimant was employed by Haringey Council as a senior social worker and was involved in both the case of Victoria Climbié and Baby P. The Claimant was the subject of numerous defamatory articles in various newspapers, including The Sun, which ran a campaign for the Claimant to be dismissed. The proceedings were settled and the Claimant is entitled to recover her costs on the standard basis.

The preliminary issue to be tried was whether there was good reason for the Court to depart from the court-approved costs budget.

The Claimant’s court-approved budget was sub-divided into nine categories (from pre-action to settlement), excluding trial costs. Some categories were exceeded by "relatively modest amounts" and others were under budget. However, in respect of disclosure and witness statements, the approved budget was exceeded by £76,306 and £216,404, respectively.

The Claimant argued that this was because the Defendant had amended its defence four times and served 10 lists of documents, each necessitating amendments to witness statements. She further argued that the tactics employed by the Defendant gave rise to extra work that made it fair to find good reason to depart from the budget. The Defendant argued the Claimant’s budget for disclosure and witness statements was flawed and/or poorly prepared from the outset - so that by the time the budget was approved, the amounts sought for the items of disclosure and witness statements had already been utilised.

Decision

Senior Costs Judge Hurst held that there was no good reason for the Court to depart from the court-approved budget. His impression was that the Defendant’s protestations that its actions had not adversely affected the way in which the Claimant dealt with her case rang "somewhat hollow". Hurst SCJ was also satisfied that the Claimant would be able to argue "very strongly" at a detailed assessment that her bill was reasonable and proportionate.

Nevertheless, Hurst SCJ reinforced that the provisions of the Practice Direction were mandatory. Whilst both parties had exceeded their court-approved budget, Hurst SCJ accepted that the Claimant had not kept either the Defendant or the Court informed of the fact that the budget was being exceeded:

"… if one party is unaware that the other party’s budget has been significantly exceeded, they are no longer on an equal footing, and the purpose of the costs management scheme is lost."

Hurst SCJ also held that the issues raised in the case were sufficiently important to be referred to the Court of Appeal.