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Partial budgets for high value and complex litigation are recommended

The rules set out in CPR 3 determine whether a claim is case managed and a precedent H Costs Budget is required, with the normal practice being that the full claim is costs managed. That said, the rules do allow the courts to order that parties prepare partial budgets and in the case of Deutsche Bank AG v Sebastian Holdings Inc & Anor [2021] EWHC B4 (Costs) (8 March 2021), Senior Costs Judge Gordon-Saker recommended that parties in highly complex and high value litigation should ask the court to make costs management orders for specific phases, if such a request is warranted.

The substantive matter in this case involved millions of documents, 54 witness statements and 50 experts reports running to over 6,500 pages. The trial ran for 44 days and the judgment was 428 pages long. There were 3 Queen’s Counsel, 1 Senior Counsel and 5 Junior Counsel involved, whose opening and closing written submissions ran to almost 4,500 pages.

Senior Costs Judge Gordon-Saker was dealing with a bill of costs for the experts phase only. The Claimant’s experts’ fees amounted to over £22 million and the court set down a 12 day assessment for that one phase only. Although on this occasion the costs were awarded on an indemnity basis, the Judge recognised that the assessment process had been expensive, he made his recommendation that for cases of this nature costs management of specific phases would assist – “it may be that a better solution in a case such as this, where the expert evidence will be very substantial, would be for parties to invite the court to make a costs management order in relation to the costs of all or some of the experts. Cases such as this are, of course, rare – CPR 3.12 (1A)”

As the claim’s value was well in excess of £10 million, there had been no automatic reference to costs management at the case management stage. As no form of restriction of costs had been imposed, it was left to the role that assessment brings at the conclusion of the claim to deal with the recovery of costs. This can lead to lengthy and protracted disputes regarding costs due to there having been no opportunity for the costs to have been assessed, managed or controlled throughout the lifetime of the claim.

Senior Costs Judge Gordon-Saker recommendation suggests parties are able to invite the court to order that costs management applies to any claim in accordance with CPR 3.12 (1A). Additionally, CPR 3.13 (4) allows the court to order for substantial cases, that budgets are limited in the first instance to only part of the proceedings. This ensures that costs have been subject to a form of assessment, which tends to promote an earlier settlement without any need for a detailed assessment, which in turns results in swifter payment of the costs at the conclusion of the case.

The Key Points

  • Claims over £10 million are not automatically budgeted.
  • Parties are able to invite the court to order costs budgets, either full costs budgets or partial costs budgets.
  • Partial budgets can be submitted, but only if the court has ordered partial budgets.
  • Settlement of costs can be quicker for budgeted claims.

Sue Fox is the Head of Costs Management at A & M Bacon. You can contact her on 01733 359036, or by email Sue.Fox@aandmbacon.co.uk

Published 07.05.21

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