Costs News

09 April 2020
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Extended timetable not good reason to revise budget upwards, High Court rules

The High Court has rejected the argument that a longer-than-expected procedural timetable in a large group action was good reason to revise the claimants’ budget upwards.

Mr Justice Turner was also unimpressed by some of the budgeted figures put forward by the claimants for the next phase of the British Steel coke oven workers litigation, describing one proposed figure as “redolent of a degree of financial incontinence”.

In Maurice Hutson & Ors v Tata Steel UK Ltd [2020] EWHC 771 (QB), it is alleged that some of those employed by the defendant's predecessors over the years were exposed to dust and fumes at work and, as a result, went on to develop occupational diseases mainly involving respiratory conditions.

The litigation is subject to costs budgeting, divided into phases that are individually budgeted. Phase 1 lasted two years, ending last month.

The claimants applied to retrospectively amend their budgeted costs for phase 1 in respect of the case management conference (CMC) and costs case management conference (CCMC) by £125,548, and the group co-ordination costs by £249,996.

Budget variation can only occur as a result of "significant developments", which the claimants said was an unsuccessful application by the defendant to have the question of limitation tried as a preliminary issue. They said this added a year to the procedural timetable, causing unforeseen additional expenditure.

Turner J – who sat with Senior Costs Judge Gordon-Saker as assessor – noted that it was not clear whether the power to vary a budget can be applied retrospectively. In Sharp v Blank in 2017, Chief Master Marsh ruled that it did, but the judge said that decision was not binding on him.

He assumed “for the sake of argument” that he had the power, stressing that he was not “purporting to reach any concluded view on the issue”.

That was because he did not consider that the claimants had shown there had been significant developments.

Turner J said: “At first blush, one might be tempted to assume that the defendant's unsuccessful limitation application fell into this category. However, although the application can fairly be said to have been unforeseen, it is less clear that the consequences were significant…

“I agree with the defendant that the claimants have failed to produce adequate evidence justifying the categorisation of the delay as being a significant development. Their approach to calculating the figures is based on the assumption that the costs of group co-ordination will have increased pro rata over time.

“However, as the defendant points out, the heavy lifting of group-co-ordination is already covered by budgeted costs and, upon closer examination, the additional costs of the delay are likely to prove to be modest.

“Similarly, the increased costs of the CMC/CCMC are based on the assumption that the entirety of the work which would have been done in the adjourned hearing was duplicated. Again, I consider that this is pitching the case significantly too high.”

Turner J also observed that the claimants had spent a lot more than was budgeted for in certain elements.

“I recognise that the costs budgeting process must be much broader than that which is involved in an assessment. Nevertheless, in this case, I am unable to take the leap of faith which would be required to categorise the delay caused by the determination of the limitation issue as being a development which was significant.

“In any event, the court has a discretion as to whether or not to allow a variation even where there have been significant developments.”

The judge said the justifications for the “very considerable” increases were “painted with such a broad brush as to preclude proportionate scrutiny”.

It was also harder to justify varying the budget given that the phase had ended and all of the costs already incurred.

As a result, Turner J declined to vary the phase 1 budget and said the claimants would instead have to demonstrate they had good reason to depart from it at the assessment stage.

The court was also asked to adjudicate on five disputed elements of the claimants’ phase 2 budget, and on each one found that the claimants were asking for too much.

For example, on group co-ordination, the claimants incurred £1.1m before the start of phase 1 and £474,659 during it, against the budgeted figure of £250,000. They expected to spend a further £437,493 in phase 2, meaning a total to the end of that phase of just over £2m.

“This is redolent of a degree of financial incontinence. The claimants' breakdown anticipates 1,659 hours of fee-earner time and £24,300 in counsel's fees.” The defendant offered £30,000.

Turner J said that, with the register of claimants now closed, it was unlikely that much work would be required to maintain it, with keeping the claimants informed of developments the main job.

“The cost of doing that will doubtless exceed the figure suggested by the defendant. However, the number of hours which the claimants' solicitors anticipate is clearly too high.

“Again the relevant factors are: the hourly rates, the number of hours anticipated and the substantial amount already incurred. A reasonable and proportionate figure for the budgeted work would be £200,000.”

Benjamin Williams QC (instructed by Irwin Mitchell and Hugh James) for the claimant. Roger Mallalieu QC (instructed by BLM) for the defendant.

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