23 May 2022
In Collins and Others v Ticketmaster UK Ltd v Inbenta Technologies Ltd [2022] Costs LR 123, costs estimates were ordered in place of costs budgets consequential to an application made by the claimants and part 20 defendant which sought costs management after budgeting had previously been dispensed with.
Decision at first case management conference
Even though the claim fell within the bracket for budgeting, the general consensus at the first case management conference had been that costs budgeting should be disapplied. At this point, the parties submitted that costs management was neither necessary nor appropriate. A further order mirrored this stance when the part 20 defendant was joined to the matter, keeping a consistent pattern between the claims.
Basis for application
A change of heart by the claimants and part 20 defendant was brought about by the defendant incurring considerable costs with no control by way of costs budget. His Honour Judge Pearce (sitting as a judge of the High Court) described how he was “drawn to an invoice dated 6 January 2020 from a law firm acting for the defendant to the defendant itself giving legal fees for that month discounted by 20% at a figure of just shy of $300,000, some way in excess of £200,000. As the applicants say, if that kind of cost is being run up regularly on a monthly basis, then the total costs for the defendant could easily be £5m or, indeed, more.”
Response of the defendant
The defendant contended that the application was “in the manner of an abuse of process” and “whilst it is true that the Civil Procedure Rules give the court a wide power to vary orders, the authorities show that the parties are not at liberty simply to come back before the court to refight battles that have already been determined”.
The defendant also resisted the application on the basis that the litigation had been proceeding for quite some time and, even though a number of phases had still not commenced, considerable costs had been incurred, particularly in the disclosure phase. It cited “the true purpose of costs management”, which was “the court’s exercise of its powers to control costs that have yet to be incurred”.
Court’s scope to revisit decision and the overriding objective
Despite the application being unsuccessful, the court partially agreed with the grounds for application insofar as there was no reason why it could not revisit its decision on whether or not to make a costs management order.
HHJ Pearce elaborated further by stating: “It would be different if there had been a contested hearing on that issue and the court had reached a reasoned conclusion as a result of submissions. It therefore follows that, as a matter of principle in my judgment, the applicants for this order do not need to show a change of circumstances in order to justify the court making an order.”
However, the court took account of the overriding objective, in particular the costs of complying with the costs management regime in circumstances where the benefits of a costs management order would be far less than if one had been sought earlier.
Decision
A compromise of costs estimates from all parties, which were ordered in respect of those phases that either had not yet begun or only had limited costs incurred so far, was deemed “sensible” by the judge, who opined that the claimants and part 20 defendant were entitled to know where the defendant was going in terms of likely costs.
The content and layout of the ordered estimates would essentially highlight the same costs as the estimated sections of a costs budget.
HHJ Pearce concluded that the estimates would “give the court the power to express an opinion as to the reasonableness and/or proportionality of any costs that it was estimated were to be incurred in the future. That is not to encourage any party to invite such an expression of opinion but it is, it seems to me, an available power that I could, if necessary, exercise”.
Estimates replacing budgets going forward?
The way this case ran its course and the initial disapplication of costs management is fairly unusual, which suggests that costs budgets are likely to remain the default position when the relevant criteria are met.
Arguably there are lessons to be learnt from this failed application – being too hasty to dispense with costs budgeting can come back to bite the parties eventually.
Anna Lockyer is an Associate Costs Lawyer at Clarion in Leeds