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Court of Appeal overturns Senior Costs Judge in landmark decision on costs budgeting

The Court of Appeal has considered the decision of Master Hurst in this leading Costs Budgeting case.

SYLVIA HENRY v NEWS GROUP NEWSPAPERS LTD [2013] EWCA Civ 19

The Claimant social worker had brought libel proceedings against The Sun newspaper after it published articles concerning her involvement in the cases of Victoria Climbié and Baby P. The proceedings were settled and the Claimant was entitled to recover her costs on the standard basis. Both parties had exceeded their budgets. The Claimant's solicitors had gone over by almost £300,000, largely as a result of witness statements and disclosure.

Master Hurst's Decision

Master Hurst had to decide whether there was a "good reason" to depart from the Claimant's budget. He found that there was not...

" It is clear that the Claimant did not keep either the Defendant or the Court informed of the fact that its budget was being exceeded... The fact that both sides exceeded their budgets does not assist the Claimant... The provisions of the Practice Direction are in mandatory terms... Whilst ... I have no doubt that the Claimant could make out a very good case on detailed assessment for the costs being claimed, the fact is that the Claimant has largely ignored the provisions of the Practice Direction and I therefore reluctantly come to the conclusion that there is no good reason to depart from the budget. "

Appeal

In overturning this decision Lord Justice Moore-Bick said...

"[Budgets] are intended to provide a form of control rather than a licence to conduct litigation in an unnecessarily expensive way. Equally, however, it may turn out for one reason or another that the proper conduct of the proceedings is more expensive than originally expected."

He did however go on to point out that the the rules coming into force on 1 April 2013 differ "in some important respects" to those of the defamation costs management pilot, under which Henry v NGN was conducted...

"In particular they impose greater responsibility on the court for the management of the costs of proceedings and greater responsibility on the parties for keeping budgets under review as the proceedings progress. Read as a whole they lay greater emphasis on the importance of the approved or agreed budget as providing a prima facie limit on the amount of recoverable costs... although the court will still have the power to depart [from it] if it is satisfied that there is good reason to do so."

The Court found that the Senior Costs Judge had taken too narrow a view as to what amounted to "good reason" to depart from the Claimant's budget.

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