Henry v News Group Newspapers Ltd

[2013] EWCA Civ 19

We reported on this case in Issue 144. The question for Senior Costs Judge Hurst had been whether there was good reason to depart from the court-approved costs budget. The case was subject to the Defamation Proceedings Costs Management Scheme. Both parties had exceeded the budgets approved under that scheme. Those representing Henry had failed to comply with the terms of the Practice Direction, so that neither the Court nor NGN were aware of the significant increase in costs such that the budget was being exceeded. This led the Costs Judge to conclude, albeit reluctantly, that 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 cost management scheme is lost. There was therefore no good reason to depart from the budget. This decision has been reversed on appeal. The CA noted that on the facts of this case, there was good reason to depart from the approved costs budget. The CA decision is important for what it did not do. It is a decision handed down before the introduction, on 1 April 2013, of the new civil litigation costs reforms. These rules impose even greater responsibility on courts for the management of costs and proceedings. It is telling that LJ Moore-Bick added that the new rules will:

impose greater responsibility on the court for the management of the costs of proceedings and greater responsibility on the parties for keeping budgets under review as the proceedings progress...they lay greater emphasis on the importance of the approved or agreed budget as providing a prima facie limit on the amount of recoverable costs. In those circumstances, although the court will still have the power to depart from the approved or agreed budget if it is satisfied that there is good reason to do so...I should expect it to place particular emphasis on the function of the budget as imposing a limit on recoverable costs. The primary function of the budget is to ensure that the costs incurred are not only reasonable but proportionate to what is at stake in the proceedings. If, as is the intention of the rule, budgets are approved by the court and revised at regular intervals, the receiving party is unlikely to persuade the court that costs incurred in excess of the budget are reasonable and proportionate to what is at stake.”