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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Richard v The British Broadcasting Corporation (BBC) & Anor [2017] EWHC 1666 (Ch) (13 June 2017) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2017/1666.html Cite as: [2017] EWHC 1666 (Ch)

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Rolls Building
		13th June 2017

CHIEF MASTER MARSH:

1. I am hearing this morning a costs management conference that was directed by Mann J in his order dated 5^th May 2017. I invited counsel for the claimant and the BBC at the outset to deal first with the question of whether I should make any comment about the Claimant's incurred costs and also to address me, generally, on the question of proportionality. This judgment concerns only incurred costs, it having been agreed between the court and the parties that the court will take into account the submissions made about proportionality but there is no requirement for a reasoned judgment at this stage.
2. The court's power to make a comment about a party's incurred costs is contained in CPR 3.15 and the power is repeated in a similar form in Practice Direction 3E. There is no doubt that it is a discretionary power and the discretion is a very broad one. Neither the rule nor the practice direction gives any guidance about the circumstances in which a comment may be, or should be, made.
3. A comment about incurred costs is to be taken into account in any subsequent assessment proceedings (rule 3.15(4)). Although a comment must be taken into account, that falls some way short of it being binding on the Costs Judge. On a detailed assessment, the Costs Judge will have far more information than the judge at the Costs Management Conference. It seems to me that a Costs Judge is entitled, having take a comment into account, to disagree with it or to put it to one side, if on the detailed assessment a fuller picture emerges.
4. When dealing with costs management, the court is required to approve only the totals for future costs for each budget phase although it will have regard to the constituent elements in the budget. The court is expressly required not to undertake a detailed assessment in advance but rather to "… consider whether the budgeted costs fall within the range of reasonable and proportionate costs." (PD3E 7.3) [my emphasis]
5. Although not all of the 11 standard phases will need to be approved in every case, and often the first two phases will only comprise incurred costs, the court has a substantial task to undertake where there are disputed elements in both budgets. The exercise is necessarily a summary one that often has to be undertaken briskly. This is consistent with setting budget figures for prospective costs that are within an acceptable range. Both the notion of a 'budget' which looks into the future, which is unknowable, and a 'range', indicate that the approval can only be undertaken at an impressionistic level, unless the litigation is of a standard type where the scope for non-standard budget phase levels is more limited. In a claim like this one, the variables that may affect the level of future costs are considerable.
6. This leads me to conclude that a degree of caution is appropriate when the court considers whether to make a comment about incurred costs. It is asked to do so in the context of the overall costs management exercise and the restraints that are clearly stated in PD3E para.7.3. The exercise of producing budgets and their review is, necessarily, an exercise based on limited information, even in relation to incurred costs; the amount of information that is to be included in the budget is very limited indeed.
7. In this case the Claimant has supplemented the information contained in his budget with additional information and it is the BBC's case there are clear pointers towards the costs that have been incurred being both unreasonable and disproportionate. Indeed, in Mr Eardley's skeleton argument (he appears for the BBC) he observed that the Claimant's incurred costs are unreasonable and grossly disproportionate and invited the court to register its strong disapproval. However, unlike where the court is asked to make an order and a draft order is supplied in advance, the terms of the precise terms of the comment the court was asked to make were not revealed.
8. In the course of the hearing, I asked Mr Eardley to formulate what comment or comments he would like the court to make and he suggested the court should say something along the following lines:

"The incurred costs based on information available appear to be excessive and disproportionate".

9. I have indicated that the court should exercise a degree of caution. Here the figures that have been incurred are substantial. In aggregate they amount to £1,167,144.83. The pre-action costs total £526,437.97 and the issue and pleadings costs are £324,611. The difficulty for the court, however, is that, although those figures appear to be substantial in absolute terms, it is quite impossible for the court today to form any meaningful view about whether those costs can properly be characterised as being unreasonable and/or disproportionate, let alone to be significantly or substantially unreasonable and/or disproportionate.
10. To my mind there is little or no value in the court recording a general comment about incurred costs along the lines that the incurred costs are "substantial" or they are "too high". If the court wishes to record a comment that the incurred costs are "excessive" or they are "unreasonable and disproportionate" it will wish to be sure that the comment is made on a sound footing, rather than impression, because commenting is quite unlike the exercise of approving a figure per phase for future costs. The court will also wish to consider the utility of making a comment unless it is specific and well-founded.
11. There is no significant benefit to be gained in the court making the sort of anodyne comment that the BBC proposes. A comment is not a finding of fact, but merely a matter to be taken into account. Making a comment does bear the risk, however, that on a detailed assessment disproportionate weight might be given to it, although the comment is based on limited information.
12. The costs judge, on a detailed assessment, will have the benefit of a full review of all the work that has been carried out. That is a far safer basis for a review to be taken. I am not persuaded that a comment should be made for the reasons I have given. I am also concerned that a comment could unfairly skew a detailed assessment at a later stage. That consideration, set against there being no real benefit to the BBC in making such a comment, other than a short term tactical advantage, leads me to conclude that in the exercise of my discretion I should reject the BBC's request .
13. I do not accept Mr Eardley's submission that there is a danger that, if a comment is not made, a Costs Judge will proceed on the basis that the costs are both reasonable and proportionate. That is a fanciful suggestion, given that Costs Judges are experienced in dealing with costs in many different types of claim and drawing conclusions about reasonableness and proportionality in a wide range of different circumstances.
14. I decline to make any comment on the Claimant's budget.
LATER

15. Dealing with the witness statement phase, as a matter of first impression, the estimated time by the claimant, giving a total of £138,375, seems surprisingly high. I, of course, take into account the proportionality factors and I acknowledge that this is a case of some real importance. There is a public interest in this case and it is a case of some real complexity. It is right to record at this stage that, unusually, this claim has been fully docketed to a High Court judge and has been given a listing category of A. Both those matters are, in effect, an imprimatur of importance and complexity.
16. I, therefore, bear those factors closely in mind when looking at the very significant amount of time that is estimated.
17. I also take into account that, perhaps, slightly unusually, the review by counsel of the witness statements is included in this phase rather than the trial preparation phase, which is more usual, and it is estimated that there will be two conferences in relation to witness statements.
18. I, therefore, conclude that, notwithstanding my initial concerns, a significant proportion of the estimated time falls within the range of reasonable and proportionate costs. I note that the BBC's budget is significantly lower, but that is not in any way determinative and it is possible for parties to take a different view about the likely amount of time that may be involved. I will not take into account the possibility of supplementary witness statements as no permission has been given and it would not be right to do so.
19. Taking those factors into account, I will allow a total figure for estimated costs of £115,000
LATER

20. So, as to the trial preparation phase, I am wholly unconvinced that 440 hours of solicitors' time are either reasonable or proportionate. The ten-day trial we are considering here is not an unduly long trial by the standards of this Division. It is to be expected that the Claimant's trial preparation costs will be larger, by some degree, than the other parties because of the role that the Claimant plays, but I would expect to see that time reflected in a junior fee earner's time not in senior fee earner's time. By this phase of the claim, the witness statements are finalised and the notion that there are further factual enquiries to make is a slightly surprising one at this very late stage.
21. Taking all those factors into account, I will allow a figure which is in excess of the amount which the BBC has offered, which I do not consider to be an entirely realistic figure, but it is going to be not very much greater than that amount. I will allow £95,000.
LATER

22. I am asked to decide whether the claimant's costs in relation to the preparation of its budget and dealing with the costs management can be declared to be exceptional and, therefore, the cap in practice direction 3E para.7.2 can be ignored.
23. There is no guidance as to what "exceptional" means in these circumstances. In other words, it is not absolutely clear how far out of the norm the circumstances have to be to become exceptional.
24. The factors put forward by the claimant here are, first, that two budgets were prepared in advance of the CMC in early May on the basis of a split trial, with the consequence, subsequently, that further work has had to be undertaken. Secondly, there has been redrafting of the budgets following on from that hearing, which was a hearing at which the parties were ready to deal with costs management, but it was deferred pursuant to the order of the judge. Thirdly, at today's hearing, there has been a request by the BBC for comments to be made, that application being rejected. That is a factor which I should take into account.
25. It seems to me that it is proper to regard the circumstances here as exceptional. I do not consider that "exceptional" means wholly exceptional, but it means something to the effect that the circumstances are significantly out of the norm. The fact that a case may involve further unexpected work is not of itself a circumstance which is exceptional, but the factors I have indicated, taken together, and in particular the issue relating to comments, should take this case into the exceptional category and I will, therefore, lift the cap.
LATER

26. Dealing with the trial phase, first of all, the question of whether I should take account of South Yorkshire Police's budget is a matter that has been discussed during the course of today. As a starting point, it seems to me that costs budgeting is not a directly comparative exercise and there can be good reasons, in many cases, why one budget is higher or lower than another budget. There can be market considerations or, indeed, just simply a different view is taken by the party preparing the budget about the likely amount of time.
27. Furthermore, in this case, it seems to me that counsel's fees for South Yorkshire Police are surprisingly low and I can well envisage that fees considerably higher than the figures that they have given me would come within the range of reasonable and proportionate costs.
28. I do have some concerns about the number of fee earners attending the trial. I do have in mind the amount that I have allowed for the claimant. Taking a broad view, some adjustment I think can properly be made in a downward direction, but it is a not a significant adjustment. It takes into account the number of fee earners, which I consider to be excessive, and the possibility that counsel's fees are outside the range of reasonable and proportionate costs. I will allow £310,000 for this phase.
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