A judge has penalised a claimant for submitting an “unrealistic” costs budget, saying he hoped it would encourage parties to negotiate them before reaching court.
Master Brown in the King’s Bench Division reduced by 25% the claimant’s entitlement to the costs of the budgeting hearing in the event she was eventually awarded the costs of her claim.
“It may be that sort of percentage deduction encourages [parties] to take reasonable steps to negotiate their costs budget and to achieve settlement – or at least I might hope so,” he said.
Costs in the case is the usual order following costs management, but here the defendants argued that the court should make no order for costs, saying the claimant had not engaged to negotiate her budget.
Reid v Wye Valley NHS Trust & Anor  EWHC 2843 (KB), which was handed down in July but only published yesterday, is a clinical negligence case valued at over £1m and possibly much more.
Here, costs management was carried out having already been case managed, a separation the judge noted was “increasingly the practice, encouraged perhaps by the recent Civil Justice Council paper”.
This is a reference to its costs review published in April, in which the majority of the review group backed allowing judges to deal with costs management separately from case management if appropriate. Last week, the Master of the Rolls said he would move to implement the review’s recommendations.
An advantage of doing this, Master Brown said, was that the parties knew what directions had been made, giving “far greater scope to agree the costs budgets or at least more effectively to discuss and negotiate disputed phases in a way that reflects the directions”.
He continued: “A very considerable amount of court time is taken out dealing with costs budgets. Indeed, the budgeting process has its cost to the parties as well as on court resources generally.
“The short point however is that there is good reason why the court might expect the parties to take reasonable steps to agree the costs, and that carrying out the budgeting after giving directions may facilitate this.”
The judge had reduced the claimant’s budget “substantially”, saying elements of the budget “seemed to be put unrealistically high”.
His concerns included a lack of delegation by the grade A fee-earner – the experts’ phase claimed for 226 hours of their time and just two hours of grade D time, for example – while the budget claimed more than £50,000 for attendance for a solicitor at the 10-day trial, plus disbursements of £5,500.
This “seemed to be substantially outside the range that I would expect to see”, the judge said.
Master Brown accepted the claimant’s argument that to impose “too stringent a costs consequence, to reflect large budgeting reductions and the extent there was a failure to put in a realistic offer, would discourage defendants, or could discourage defendants, from making realistic offers”.
He said: “It would be very regrettable if there really were to be, at the end of a costs budgeting hearing, much in the way of argument about the costs budgeting costs because overall the costs involved are likely to be very small.
“And, taking too strict a line in relation to this matter, would encourage defendants to sit back and not to make realistic offers.” But he stressed that this was not the case here.
Master Brown said he was concerned that the claimant had advanced a budget “without any real constraint or consideration as to whether the claim was reasonable”.
While acknowledging that relatively small sums were at stake, he decided that the costs of the hearing would be costs in the case, save that, should the claimant recover her costs of budgeting, they would be reduced by 25%.
“That seemed to me to meet the broad justice of the matter bearing in mind also that these claims were really pursued to the end.”