Important High Court costs ruling in ‘plebgate’ case

12 Aug 2013

All those involved in litigation have been left in no doubt as to the rigid application of new costs rules in the light of a High Court ruling last week in the 'plebgate' case.

In March 2013 Trethowans LLP's Insurance Litigation team reported on what were then prospective changes to costs management in civil litigation cases. The article entitled "Costs Budgeting: An opportunity or a threat?" was published online.

The basic principle behind costs budgeting is very sensible.  Essentially it will no longer be acceptable for cost issues to be left to the end of litigation when the costs have already been spent.

Under the rules and in larger cases all parties are required to exchange and file costs budgets in the form of a new precedent.  If this is not done only court fees will be recoverable; incentive indeed to make sure it is done correctly.  In outline these costs budgets will need to set out in detail what costs have already been incurred as well as those which will be incurred during the future course of the litigation.  It will be important to set out any assumptions on which the estimates are based.

These changes were implemented on 1 April 2013 and since then many interested parties have been watching closely to see how rigidly the rules would be enforced by the courts. In particular there has been much interest in the new rule which states that any party failing to file a costs budget, despite being required to do so, will be treated as having filed a budget comprising only the applicable court fees.

Solicitors acting for Andrew Mitchell MP launched an action against The Sun and publishers News Group Newspapers in March. This came after the tabloid claimed that Mitchell had sworn at a police officer at the gates to Downing Street. The parties were ordered to file costs budgets but Mr Mitchell's solicitors failed to do so in time and as a result the court said that Mitchell would be "limited to a budget consisting of the applicable court fees for his claim". The importance of this ruling can be seen when one considers that the actual costs associated with a case of this sort could be of the order of £500,000 whereas the court fees themselves would only be in the region of £2,000.

The High Court refused to lift the sanction despite hearing evidence as to the reasons for the non compliance. Whilst sympathising with the claimant and his solicitors the Judge said "Budgeting is something which all solicitors by now ought to know is intended to be integral to the process from the start." The Judge went on to say that "The Court must now, as part of dealing with cases justly, ensure that cases are dealt with at proportionate cost and so as to ensure compliance with the rules, orders and practice directions."

According to Kelvin Farmaner, Partner with Trethowans LLP, interested parties will be watching closely to see if this matter is taken to the Court of Appeal. In the meantime, it would be foolish not to take costs budgeting rules very seriously indeed.