A High Court judge has warned parties in litigation not to treat costs budgeting as a game after describing one firm’s costs estimate as ‘completely unrealistic’.
The Honourable Mr Justice Coulson made clear he was criticising the costs department of international firm Kennedys after an estimate that came in £150,000 less than the actual figure.
Kennedys is representing a hotel owner defending an £820,000 claim from a restaurant in the hotel following a gas explosion in 2014 which closed the restaurant for four months.
The judge said that in contrast to the claimant’s detailed pleaded claim, the hotel’s defence ‘could not be more basic’, describing it as a combination of bare denials and non-admissions of the kind the Civil Procedure Rules was designed to sweep away.
‘It is, bluntly, an insurer’s defence straight out of the 1970s,’ said Coulson.
In Fincharm Ltd v Churchill Group Ltd, The court heard the claimant had revised the cost budget downwards so it came to around £244,000.
In contract, the defence estimated through its Precedent R – which requires parties to comment on the other side’s costs – that the claimant case should cost less than £90,000 altogether.
Coulson said the defendant’s Precedent R was of ‘no utility’ and was designed ‘to put as low a figure as possible on every stage of the process, without justification, in the hope that the court’s subsequent assessment will also be low’. He added the estimate was an ‘abuse of the cost budgeting process’.
As an example, the judge said the defendant’s estimate of £10,600 to cover the cost of disclosure was ‘unjustifiably low’. An estimate of £5,300 for the claimant’s preparation of three witness statements and the consideration of two defendant statements was ‘simply incredible’ where the case hinged so much on the background and circumstances of the explosion.
Whereas the claimant sought almost £70,000 for trial preparation, the defendant estimated this cost at £10,000, a sum which Coulson said was ‘again unjustifiable’.
The judge said he was obliged to disregard the claimant’s Precedent H and allowed the revised costs budget of £244,000.
He added: ‘Some parties seem to treat cost budgeting as a form of game, in which they can seek to exploit the cost budgeting rules in the hope of obtaining a tactical advantage over the other side.
‘In extreme cases, this can lead one side to offer very low figures in their Precedent R, in the hope that the court may be tempted to calculate its own amount, somewhere between the wildly different sets of figures put forward by the parties. Unhappily, this case is, in my view, an example of that approach.’