COSTS BUDGETS IN FACEBOOK DEFAMATION CLAIM: AN IMPORTANT EXAMPLE IN PRACTICE

In Stocker -v- Stocker [2015] EWHC 1634 (QB) Mr Justice Warby considered the costs budgets of both sides in a defamation case. It provides a useful, and important, example of the practical implementation of cost budgeting in practice.

“It would in my judgment be absurd to suggest that such a sum is insufficient to allow a proper defence of this claim”

THE CASE

The claimant was suing his former wife for defamation in relation to exchanges made on facebook and in an e-mail. The judge considered various applications and then the costs budgets.

THE JUDGMENT ON COSTS BUDGETS

Costs budgets

  1. The Claimant’s budget, including all contingencies, is agreed in the total sum of £260,624.30. Of that sum, £92,134 represents incurred costs. Provision is made in the Contingencies for two categories of expert: a foreign law expert and a Facebook expert. The former (estimated cost £13,050) will not be required. At one point it was thought that the claim in respect of the Email, which was published in France, might require evidence of French law. The Defendant no longer pursues that objection to the claim. A Facebook expert probably will be required, however, if the parties cannot agree the relevant facts. Thankfully, the anticipated costs are modest at some £4,420. If such an expert is needed my current view is that a single expert would suffice.
  2. The Defendant’s budget amounts in total to £575,441.39, of which £225,536 is incurred and £333,145 estimated. This budget, which is well over double that of the Claimant, is the subject of a number of attacks on his behalf. I have set out at the end of this judgment the Defendant’s budget together with my approved totals.

Submissions

  1. Ms Addy relies on a letter dated 3 March 2015 from her instructing solicitors. Although the budgets now before me are dated 29 April 2015, that does not of itself undermine the points then made. Those points fall under three broad headings. First, it is suggested that there are three errors of principle in the approach to completing the Precedent H form: (a) the form includes the maximum of 3% of the budget for the costs of budgeting, but must also include budgeting costs in the figures for the CMC and PTR; (b) figures for expert evidence have been included, as well as, separately, a contingent cost for an application to adduce such evidence; (c) some contingencies have been included which are unlikely to occur and hence, according to my decision in Yeo (above) should not be included. Secondly, the Claimant challenges a number of the assumptions used to arrive at the costs estimates. I shall refer to the relevant points to the extent necessary in explaining my conclusions. Thirdly, whilst accepting the hourly rates used, the Claimant questions the number of hours estimated as required to complete the various stages. In this regard the Claimant has provided counter-offers.
  2. In response, the Defendant relies first of all on a number of general points set out in a witness statement of Ms Varley of Mr Price’s firm (“DPSA”). Ms Varley says:-

i) DPSA has been involved in a large number of cases such as this where the defendant is sued over a small scale publication in the context of an existing dispute. Experience suggests there is no correlation between the scale of publication and the cost of a proper defence. Rather the contrary, such cases are often more expensive than those involving large-scale media publications.

ii) Such cases involve greater reputational risk and stress for defendants, and the financial consequences of losing are more keenly felt.

iii) There are difficulties in resolving such claims by means of striking out applications, which may simply result in greater cost.

iv) Until the Defamation Act 2013 came into force Parliament permitted claims to be brought even where there is no harm, thereby sanctioning inherently disproportionate litigation against defendants.

v) The law and procedure remain technical and complex, requiring specialist representation. There has never been any attempt to create a defamation small claims court.

  1. For all these reasons, it is suggested on the Defendant’s behalf that the court should be wary of depriving the defendant of the opportunity to defend the claim by the means properly available to her by too strict an approach to costs budgeting. Ms Varley adds that when the court is considering a defendant’s costs budget it must – she submits – do so on the basis that the defendant will succeed at trial on the basis of the matters alleged in her defence, and an order for all her costs will be made. It is said that the Defendant’s costs budget is set at a conventional level for a 10 day High Court defamation trial involving the factual and legal issues arising on the statements of case.

Assessment

  1. The starting point is to consider the global costs, and in that context I should address the Defendant’s general points. I accept that it is not possible to approach the costs budgeting exercise in a case of this kind by assessing a case as relatively modest in scale, and the costs as high, and then simply reducing the costs to match the perceived importance of the case. As I observed in Yeo, many would suggest that the costs of litigation in this category become disproportionate at an early stage. There is no avoiding that, in many cases. So I agree that an approach based purely on financial proportionality would run the risk of disabling litigants from fairly presenting their cases. I accept also that the “small” cases such as this, involving relatively few publishees, are not inherently cheaper and can tend to be more expensive than cases over mass media publication. I readily acknowledge the importance of ensuring that the costs budgeting process does not result in a party being unable to recover the costs necessary to assert their rights.
  2. Nevertheless it is vital, in most cases at least, for the court to control the recoverable costs of such litigation. Excessive costs tend to stifle justice, becoming the main issue between the parties. The overall total of the parties’ incurred and estimated costs in this case is unquestionably far beyond anything that could reasonably be thought proportionate to the importance of the issues at stake. If this case reaches a trial then, in the absence of a reasonable Part 36 offer or other settlement offer, one or the other party is going to have to pay the whole of those costs. I know little of the means of these individuals. I am told the Claimant is “wealthy”, but the description is one the aptness of which depends, often, on the perspective of the person applying it. At any rate, few can afford to lose over £830,000 with anything approaching equanimity. In addition, if costs on this scale are allowed in litigation of this kind, many will be deterred from even attempting to vindicate their rights.
  3. The defence of such cases can indeed be very time-consuming and hence very costly. But in my judgment it is not necessary for such cases to consume as much time, or to cost as much, as the Defendant’s budget assumes. An indication of this is the scale of the costs budget of the Claimant. I recognise that it is not possible to cut radically, at a stroke, the costs of this class of litigation. The process, if it is to be successful, must be gradual. But there does need to be, in my view, a progressive acceptance of the need for greater cost control in this area of litigation. The fact, on which the Defendant relies, that there is as yet no small claims court for defamation is a spur to controlling the costs and procedural complexity of defamation litigation, rather than a justification for allowing higher costs.
  4. In my opinion the Defendant’s global costs figure is clearly considerably out of proportion to what is at stake and the nature of the issues, and should be substantially reduced for that reason, as well as in order to ensure a reasonably level playing field as between the parties. In aiming to reduce it appropriately I shall address some points of detail, but not at undue length.
  5. Dealing first with the Claimant’s points about Precedent H it must, in my judgment, be right to say that a party cannot claim the maximum percentage allowed for the costs of budgeting, and also include budgeting costs in the estimated or incurred figures as well. But I am not persuaded that this is what the Defendant’s team have done here. If it is, then it will be a ground for departing downward from the approved figures. I do consider that the Defendant’s figures for expert evidence are inappropriate. In the light of the argument at the hearing and this judgment it is unlikely there will be any need for a contested application as to expert evidence, so I disallow that element of the budget. In my judgment the provision for expert reports is excessive, having regard to the single topic on which this might be required and my provisional conclusion that if any expert on the workings of Facebook is needed, a single expert would suffice. In the course of the hearing I suggested that a member of the company’s staff could probably provide the necessary information. As to the contingencies, the first has occurred. The others seem to me improbable, and I make no allowance for them. If an unanticipated interim application is made that can be accommodated outside the budget: seeYeo at [71].
  6. Turning to the Defendant’s assumptions, the first and most important issue is whether, as the Defendant’s estimates assume, this case requires a 10 day trial. I do not consider that it does. The case ought to be comfortably capable of trial within a 7 day period, which is what both parties estimated in their Directions Questionnaires in November 2014. Thus, whilst I would accept that the principal or sole advocate at trial is likely to spend 12 hours a day on the case during trial, I consider it necessary to reduce the provision for his trial costs by 30% to £42,000. I do not consider it at all reasonable to devote the time of two additional fee-earners for 12 hours a day throughout the trial. I reduce the claim in that respect to a total of £24,000 yielding trial costs of £68,000 as against the budget figure of £118,700.
  7. I can see little justification for spending further time and money on what are already extensive and very expensive pleadings. In my judgment more than enough time and expense has already been incurred on that. The estimated figure for disclosure is in my judgment excessive for a case which does not involve a large amount of documentation. For the reasons given by the Claimant’s team I have reduced it by approximately half. That reduction reflects a reduction in hours spent rather than the rates which, as I have said, are agreed. A provision of £57,900 on witness statements, when added to substantial trial preparation costs, is in my judgment way beyond what this case could justify. The assumption is that 14 witnesses will be called for the Defendant. It is hard to see who these would be but in any event the number of estimated hours (175) devoted to the exercise is disproportionate, and the proportion spent by the senior fee earner too high. Witness statements are meant to be in the witness’s own words, and an assistant solicitor should be able to do the majority of the work. Bearing in mind the time spent on the issue/statements of case phase I consider that allowing some 40% of the estimate for future work on statements tends to err on the side of generosity. I reduce the claim for expert evidence for the reasons already given.
  8. Trial preparation is an intensive exercise but essentially a task for the principal advocate with, in a case like this, some support from a junior colleague. Again, I note how much work has been and will be done at other stages of the case. In the light of that, my view is that a reasonable allowance is 10 hours a day for 8 days for the principal (£40,000), and a further £23,000 for support from an assistant and trainee. This reduces the trial preparation claim to £63,000, equivalent to £9,000 per trial day.
  9. The overall result of these conclusions is to reduce the estimated future costs from £330,000 to some £197,000. This exceeds the Claimant’s agreed future costs estimate by very nearly £30,000 and thus appropriately reflects the somewhat greater burden on a defendant in a case such as this. It would in my judgment be absurd to suggest that such a sum is insufficient to allow a proper defence of this claim. I note also that the sum I have approved for the future is set against a background of far greater incurred costs on the Defendant’s side, which means that the total approved budget is still in excess of £420,000.

Work Incurred Estimated Total Approved
Pre-action costs   0.00   N/A
Issue/statements of case 148,799.46 4,100 152,899.46 148,799.46
CMC 10,315 6,310 16,625.00 16,625.00
Disclosure 40,216.00 13,100 53,316.00 47,000.00
Witness statements 9,709 57,900 67,609.00 35,000
Expert reports 3,435 9,250 12,685.00 7,000
PTR 0 9,100 9,100 9,100
Trial preparation 0 93,250 93,250 63,000
Trial 0 118,700 118,700 68,000
ADR/Settlement discussions 13,061.50 3,020 16,081.50 16,081.50
Contingent cost A: Claimant’s application for disclosure of medical records 0 4,800 4,800 0
Contingent cost B: Application to rely on expert evidence 0 4,480 4,480 0
Contingent cost C: Applications for third party disclosure: D Bligh 0 6,836 6,836 0
Contingent Cost D: Claimant’s application for redaction of statements of case   2,300 2,300 0

Completing Precedent H at 1% of Budget     5,586.81 4,106
Other costs of budgeting and costs management at 2% of Budget     11,173.62 8,212
Totals 225,535.96 333,145.00 575,441.39 422,924

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