Costs News

26 November 2014
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“Too close to trial for costs capping,” says High Court

The High Court has refused to make a costs-capping order 10 days before trial, saying that the defendant had already spent so much that a detailed assessment was inevitable.

Hegglin v Person(s) Unknown & Google Inc [2014] EWHC 3793 (QB), a high-profile case over untrue allegations on the internet, actually settled on Monday, the day a five-day trial was listed to begin.

But, in the costs ruling on 14 November, the claimant’s total budget came in at £604,000, split between costs incurred of £283,000 and costs estimated thereafter of £321,000. Google’s budget was nearly £1.7m, with £910,000 already incurred, although incurred costs had reached £1.25m by the time of the hearing.

While acknowledging the arguments in favour of costs-capping, Mr Justice Edis accepted the submissions of Google’s counsel, Antony White QC, that the stage of the proceedings had been reached where no costs capping order should be granted because it could only affect future costs and the bulk of the costs had already been incurred; and that the threshold criterion in rule 3.19(5)(c)(ii) could not be overcome by the Claimant.

Detailed assessment would provide effective control over the risk of the expenditure of disproportionate sums. If so, there was no jurisdiction to make the order sought.

Edis J said: “I agree with Mr White that his two arguments taken together defeat this application. I am anticipating that the costs judge on any detailed assessment will start with the same level of astonishment as I felt when reading the costs statement supplied by [Google].

“The sums appear to me to be so high that the detailed assessment in this case will be conducted in such a way that it will represent a real protection to the claimant against having to pay disproportionate costs if he should lose at trial.”

However, the judge was more sympathetic to the claimant’s application for a costs management order amending Google’s budget to match the claimant’s. “This is not a costs cap by another route, because the status of any such order is defined by CPR 3.18. It does not limit the costs recoverable unless varied. It is, instead, a matter to which the court on the detailed assessment will have regard and from which it will not depart unless satisfied that there is good reason to do so.”

By rule 3.15, such an order must be made unless “the court… is satisfied that the litigation can be conducted justly and at proportionate cost in accordance with the overriding objective without such an order being made”.

Edis J said: “I am far from satisfied that this litigation has been, or will be, conducted at proportionate cost by the second defendant.”

He therefore reduced Google’s budgeted brief fee of £247,000 to match the claimant’s £98,000, which he described as “a very significant outlay” as it was.

He cut Google’s solicitors’ costs for the trial from £237,000 to £125,000, as against the claimant’s solicitors’ budget of £100,000, and reduced Google’s £59,000 budget for dealing with the claimant’s expert report – a 50-page document where there is no application or evidence in reply – to £25,000. The judge emphasised that he was not approving any other item of the budget.

“Of course, I do not criticise the second defendant or its lawyers for agreeing these terms: I am concerned about what level of costs might be recoverable from the claimant should he lose at trial, which is a different question. Large commercial organisations are free to agree whatever terms they like when they retain lawyers.”

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