Simpson v MGN Ltd & Anor

Where a costs management order has been made, approved or agreed phase budgets ordinarily constrain recoverable costs. A revised budget should be submitted where significant developments increase the cost of a phase, but failure to do so does not automatically justify assessing costs at nil. The court must impose a sanction that is just and proportionate, having regard to the Civil Procedure Rules 1998, the relevant practice directions and the overriding objective. Failure to serve a costs statement must also be taken into account, but does not mandate refusal of a costs order. The court may instead allow reasonable costs subject to deductions reflecting the default, its effect on the proceedings and any additional costs caused.

The claimant succeeded on preliminary applications concerning the defamatory meaning of words complained of and the defendant’s plea of justification. The court struck out the plea of justification and refused permission to amend it. The claimant then sought his costs.

The defendant accepted that the claimant was ordinarily the successful party, but argued that no costs should be awarded because the claimant’s budget contained no approved sum for the preliminary issue and because he had failed to serve a costs schedule. The issues were how Civil Procedure Rules 1998 CPR 3.18 and the relevant practice directions applied, and what proportionate sanction should follow.

Costs budget point. The claimant’s costs budget contained a proposed contingency for the preliminary issue, but the Master recorded the contingencies as “N/A”. The figure was neither agreed nor approved, and was not disapproved. The defendant’s corresponding budget had been agreed.

1. Under CPR 3.18, approved or agreed phase budgets ordinarily constrain recovery. Where a phase has been budgeted at nil, good reason is required before any costs are awarded. A significant development should prompt a revised budget under PD3E paragraph 7.6, submitted for approval if it is not agreed and time permits.
2. The judge declined to decide whether CPR 3.18 directly governed the unusual situation in which the receiving party’s proposed budget was neither approved nor agreed. Assuming that it did, there was good reason to depart from the budgetary position. The Master had not assessed the claimant’s proposed figure as unreasonable; the claimant had submitted a revised budget in good time for agreement; and the defendant responded only shortly before the hearing.
3. Assessing recovery at nil would have been an unjustly disproportionate sanction. The court instead assessed costs on assumptions adverse to the claimant and deducted the additional costs caused by the failure to obtain prior approval. This provided a sufficient incentive to comply with the practice direction.
4. Costs statement point. PD44 paragraphs 9.5 and 9.6 give the court discretion as to the consequences of failing to serve a costs statement. They permit, in an appropriate case, an order for no costs, but do not prescribe that result. Here the statement enabled detailed scrutiny, while its non-service caused delay and additional expense. A deduction, rather than total refusal, was proportionate.
5. The claimant recovered £10,500 inclusive of VAT. The assessment allowed 90% of reasonable standard-basis costs, limited the claim to one counsel, and made a further deduction for the procedural defaults.