DAMNED IF YOU DO: DAMNED IF YOU DON’T: AGREEING COSTS BUDGETS AND COMPLYING WITH THE OVERRIDING OBJECTIVE

Are lawyers colluding on fees?”, asked Rachel Rothwell in the Law Society Gazette yesterday.  Rachel was reporting on a concern, albeit a low key one expressed by some judges that parties are “colluding” to keep their fees high in costs budgets. Sometimes it appears that lawyers simply cannot win.

BY AGREEING BUDGETS THE PARTIES ARE COMPLYING WITH THE OVERRIDING OBJECTIVE

The Overriding objective dictates that the parties co-operate and “are required to help the court to further the overriding objective”.  (CPR 3.1). Look at the the judgment in Gotch -v- Enelco Ltd [2015] EWHC 1802 (TCC) Mr Justice Edwards-Stuart

  • “It is therefore time to say, in the clearest terms, that parties and their solicitors can no longer conduct litigation in a manner which does not keep the proportionality of the costs being incurred at the forefront of their minds at all times.”
  • It is no longer acceptable – if it ever was – for parties to pursue issues or applications that have no real impact on the issues that are central to the dispute. Further, it is no longer acceptable for solicitors to carry on a war of attrition by correspondence, whether instructed to do so or not: it is the parties who are the subject of the duty in CPR 1.3, not merely their solicitors”
  • “Whilst English law is an adversarial process, that goes to the issues in the case: not to every aspect of the procedure”
  • Unreasonableness, intransigence and the taking of every point must in my view now be regarded as unacceptable, because conducting litigation in that way flies in the face of the overriding objective as it is now formulated”
  • “If access to justice is to have any real meaning, then the aim of keeping costs to the reasonable minimum must become paramount. Procedural squabbles must be banished and a culture of cooperative conduct introduced in their place.”

BY AGREEING BUDGETS THE PARTIES ARE REDUCING COSTS

The fact that the recoverable  costs of the entire budgeting  process are extremely limited in itself gives the parties a major incentive not to incur great expenditure on the budgeting process.

A BUDGET IS NOT A BILL

Practice Direction 3E, 7.3.

When reviewing budgets, the court will not undertake a detailed assessment in advance, but rather will consider whether the budgeted costs fall within the range of reasonable and proportionate costs.”

The losing party can, and no doubt will, dispute every all unreasonable items on assessment (and possibly some reasonable items as well). From a very early stage it was clear that “agreed” costs budgets are open to challenge. Indeed one criticism of the costs budgeting process is that an assessment of costs is still necessary afterwards.

THE SYSTEM WOULD GRIND TO A HALT IF BUDGETS WERE NOT AGREED

Put simply if parties adopted a wholly aggressive and unco-operative approach to budgeting (contrary to both the Overriding Objective and the guidance set out in Gotch, and many other cases, the whole costs budgeting system would grind to a halt. We have already seen temporary suspension and some cases being excluded from budgeting.

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