In Henry v News Group Newspapers Ltd  EWCA Civ 19, the Court of Appeal considered the issue of whether there was good reason to depart from the appellant's approved costs budget.
The claimant social worker (Henry) brought libel proceedings against News Group Newspapers Limited after one of its’ newspapers, The Sun, published articles concerning her involvement in the cases of Victoria Climbié and Baby P. The proceedings were settled and the claimant was entitled to recover her costs on the standard basis.
Issues arose during the detailed assessment of Henry’s costs. The Senior Costs Judge, Master Hurst, ruled that Henry was not entitled to claim any more costs than those in her court-approved budget. In reaching this decision, Master Hurst considered Practice Direction 51D (the Defamation Proceedings Costs Management Scheme) and its objective to ensure costs are proportionate and that each party is on equal footing.
The appeal was unanimously allowed. In reaching its’ decision, the court considered whether there was “good reason” to depart from the approved budget. Lord Justice Moore-Bick held that a failure to provide information about how expenditure is progressing in litigation is not necessarily an example of unequal footing, but rather that the objective of PD 51D is aimed at ensuring that there is no unfair exploitation of superior resources.
So what constitutes “good reason”? Moore-Bick LJ held that there were several in this case, including:
- The fact that the appellant would otherwise be unable to recover her costs;
- The failure to comply with the Practice Direction did not disadvantage the respondent in terms of its’ ability to defend the claim;
- It was unlikely that the departure led to disproportionate or unreasonable costs; and
- Neither party was financially embarrassed
At first glance it appears that this decision undermines the implementation of the Jackson Reforms which will come into effect on 1 April 2013. Under the new regime, parties are to prepare detailed costs budgets and any departure will require approval from the court.
However, Moore-Bick LJ emphasised that the issue in this case arose under PD51D which applies solely to defamation proceedings, and that the new costs management rules impose greater responsibility on the court and the parties to manage and review the costs of proceedings.
In reality, it appears that Moore-Bick LJ merely adopted a common sense approach to the question of a party departing from an approved costs budget. The concern is that under the new strict regime there will potentially be little scope for such balanced judgments. As with this case, the priority ought to be to ensure that costs are proportionate and reasonable, and that each party is on an equal footing.