ASSOCIATED NEWSPAPERS LIMITED v BUCKINGHAM GROUP CONTRACTING LIMITED & Ors.

Costs budgeting is a broad-brush exercise. The court assesses whether budgeted costs fall within the range of reasonable and proportionate costs, having regard to the value, complexity, importance and other relevant circumstances of the litigation.

The court may examine the constituent parts of a budget to test the proposed deployment of lawyers and the estimated work, but must avoid micromanagement and does not approve hourly rates. Where a budget is disproportionate, the court may require a revised budget and may reduce the overall estimate without allocating reductions phase by phase.

The court considered costs budgeting at a Costs and Case Management Conference in proceedings concerning alleged defects and differential settlement affecting a commercial printing facility.

The claimant sought damages from the building contractor. The contractor brought a Part 20 claim against professional indemnity insurers concerning the alleged design responsibility of an insolvent engineering company and related coverage issues. The parties agreed the budgets of the contractor and insurers, but the claimant’s budget remained for determination.

The central issue was whether the claimant’s proposed budget was reasonable and proportionate under the applicable costs-management principles.

1. Costs management principles. Where budgets have been filed and exchanged, the court must generally make a costs management order unless satisfied that the litigation can be conducted justly and at proportionate cost without one. Unagreed budgeted costs are reviewed by considering whether they fall within the range of reasonable and proportionate costs, rather than by conducting a detailed assessment in advance.
2. Approach to the budget. The court should adopt a broad-brush approach. The detailed figures supporting each phase may be examined to assess the reasonableness of the proposed deployment of fee-earners and the estimated work, but the court must avoid micromanagement. Hourly rates are not themselves fixed or approved at the costs-management hearing.
3. Relevant factors. Proportionality required consideration of the sums in issue, the complexity and importance of the litigation, the estimated length of trial, and the other factors identified in CPR 44.3(5) and CPR 44.4(3). The uncertain value of the remedial claim did not prevent the court from assessing proportionality.
4. Application. The claimant’s budget was disproportionate to the issues, despite the likely value and importance of the claim and its relative complexity. The claimant could use experienced lawyers, but needed to consider delegation to more junior solicitors or counsel with lower rates. The substantial level of incurred costs was also relevant when considering the overall budget.
5. Disposition. The budgets of the defendant and insurers were approved because they were agreed or unchallenged and substantially lower than the claimant’s budget. The claimant’s estimated costs were to be reduced by approximately 15%. The court did not allocate reductions phase by phase, but gave the claimant an opportunity to submit a revised budget reflecting that conclusion.