In granting permission to appeal against a costs management order made under the pilot scheme in the Leeds Mercantile Court, the Court of Appeal (Moore-Bick LJ) made interesting comments regarding the court’s approach to costs management: Troy Foods Ltd v Manton [2013] EWCA Civ 615. (Click here for our outline of the new costs management procedures introduced from 1 April 2013 as part of the Jackson reforms).

In this case the judge below appeared to have proceeded on the basis that he would approve any budget figure provided it was not so unreasonable as to render it “grossly disproportionate”. Moore-Bick LJ said that, although the court would not readily interfere with the judge’s decision in a matter of this kind, which essentially involves an exercise of judgment, it was arguable that the judge did not apply the correct principles and, as a result, approved an over-generous budget. His view that permission to appeal should be given was reinforced by the fact that it was important to ensure the correct principles for the conduct of costs budgeting were established at an early stage of the regime.

Moore-Bick LJ also commented on the defendant’s concern that, on a detailed assessment, a costs judge would treat the approval of a budget as establishing that the costs incurred were reasonable if they fell within that budget. He referred to his own view expressed in Henry v News Group Newspapers [2013] EWCA Civ 19 (see post) that an approved budget was not to be taken as a licence to conduct litigation in an unnecessarily expensive way, and said it followed that he did not accept that costs judges should treat costs as reasonable or proportionate simply because they fell within an approved budget. He said that, in light of these arguments, the court hearing the appeal might wish to comment further on the proper approach to be taken by costs judges on detailed assessment where the court had approved the receiving party’s budget.

Unfortunately, since we understand the case has since settled, we will have to wait for another opportunity for the Court of Appeal to give guidance on these issues.