Costs Budgets Guidance

Costs Budgets Guidance – High Court reduced Defendant’s future costs by 40%

On 10 June 2015, the High Court handed down its judgement in the matter of Stocker v Stocker [2015] EWHC 1634 (QB), with Warby J opining that there required to be “…a progressive acceptance of the need for greater costs control…” in defamation cases.

The matter involved an action by the claimant against his former wife for defamation in relation to comments expressed during a Facebook exchange with the claimant’s then partner and in an e-mail. In the course of the Facebook exchange, it was contended by the claimant, the defendant had alleged that the claimant had tried to kill the Defendant by strangling her, that he had threatened her and breached a non-molestation order, both of which he was arrested for and, further, that he had been arrested countless times and was accordingly and by inference “a dangerous and thoroughly disreputable man”.

It was alleged that these allegations had been transmitted to 21 named individuals who had authorised access to the claimant’s then partner’s Facebook page, and were thus visible to all 110 of her friends, and by extension and the operation and nature of Facebook, to many friends of her friends.

As regards the e-mail, whilst making largely the same allegations as the Facebook exchange, it was contended that the same also alleged that the claimant had also threatened to harm the defendant’s friends and their property, that he was “…a vile, angry misogynist who was psychologically unwell and unfit to look after children…” and who had subjected the defendant to mental, physical and sexual abuse during their marriage.

It was consequently alleged that the exchange and e-mail had both frightened and distressed the claimant’s partner, impacted on proceedings in France over the custody of her children and, for a time, caused serious damage to his relationship with her. The relationship subsequently ended, however it was not alleged as a direct result of the exchange or e-mail, but for other reasons.

In dealing with the costs budgets of both parties, the claimant’s budget inclusive of contingencies had been agreed at £260,624.30, representing £92,134.00 incurred costs with the balance of £168,490.30 representing future, estimated costs, and the defendant’s budget (which was not agreed) totalling some £575,441.39, comprising £225,536.00 incurred costs and future, estimated costs of £349,905.00 (including the costs of the budgeting process; section 7.2 PD 3E).

The defendant submitted that matters such as this were more complicated than might originally have been considered, as

a) they (as a firm) had been involved in a large number of cases such as this where the defendant was sued over a small scale publication in the context of an existing dispute and that their experience suggested that there was no correlation between the scale of publication and the cost of a proper defence but to the contrary, such cases were often more expensive than those involving large-scale media publications; b) that cases such as this involve greater reputational risk and stress for defendants, and the financial consequences of losing would be more keenly felt; c) that there were difficulties in resolving such claims by means of striking out applications, which may simply result in greater cost; d) that until the advent of the Defamation Act 2013 coming into force claims could be brought even where there was no harm, thereby sanctioning inherently disproportionate litigation against defendants; e) The law and procedure remain technical and complex, requiring specialist representation.

Thus, it was argued for the defendant that it would be inappropriate to undertake the budgeting process in this matter by reducing the costs to match what it was considered was the perceived importance of the case, this matter being one of relatively modest scale, but with high costs.

Warby J concurred with this view, noting

“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 agreed 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 content 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.”

Continuing his guidance, he noted the imperative in the vast majority of cases to give effect to the rules which placed an obligation upon the court to ensure that, whilst providing budgets within which parties should conduct their litigation and not restrict that party’s ability to effectively conduct the same, litigation was nonetheless undertaken at both reasonable and proportionate cost, and thus the balance required to be struck.

“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 are unquestionably far beyond anything that could reasonably be thought proportionate to the importance of the issues at stake…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.”

It was, however, submitted on behalf of the defendant, that the defence of defamation cases could, despite the very small financial amounts potentially involved, could be both time-consuming and costly. However, Warby J again noted his concerns that costs of this class of litigation, if unchecked and accepting that there must be some equality of arms between the parties, provided a further indication as to the sorts of approaches which litigants could expect in future costs budgeting exercises in like matters.

“In my judgement it is not necessary for such cases to consume as much time, or 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 subverted controlling the costs and procedural complexity of defamation litigation, rather than a justification for allowing higher costs.

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.”

Addressing the defendant’s budget, Warby J then proceeded to make no allowance in respect of the defendant’s contingencies which he considered to be unlikely to occur, providing the caveat (pursuant to his previous judgement in the matter of Yeo) that if any unanticipated applications were required to be made in the future, such could be dealt with outside of the ambit of the budget, and thereafter reduced the estimated future costs from the £333,144.57 (exclusive of the costs of the budgeting process) to £197,000.00, concluding

“This exceeds the claimant’s agreed future costs estimate by very nearly £30,000 and are thus appropriately reflects the somewhat greater burden on the defendant in the case such as this. It would in my judgement 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.”

This judgement represents a clear indication from the High Court that, in the absence of the current rules providing for a simplified Small Claims procedure in defamation cases, the Courts are empowered to and will take it upon themselves to robustly budget fees.