COSTS BUDGETING & HIGH VALUE CASES
Chief Master Marsh sitting in the Chancery Division of the High Court was dealing with the case management of a matter where the claimant was bringing an action against its former Chief Executive Officer in relation to entitlement to shares and his conduct, as well as other matters, and the defendants brought actions against other parties seeking declaratory relief and financial remedies relating to the second defendant’s departure from her job.
The first Case Management Conference was not reached until a year after proceedings had been issued and at that Case Management Conference there were two major issues, that is whether the matter should be subject to costs budgeting and whether there should be a split trial.
The Master refused to order a split trial stating that:-
- there was unlikely to be any significant saving in time spent at trial;
- there was unlikely to be any significant costs saving compared with the likely increase in costs if both trials went ahead;
- there would be a major increase in stress on the witnesses in attending two trials;
- it was likely that a first trial would lead to a situation where the court needed additional evidence which would only be available in the second trial anyway.
Although the value of the action was now £13 million the claim form had limited it to £10 million and thus the starting point was that the matter was within the costs budgeting regime, £10 million being the maximum that the scheme automatically applies to at present.
The Master ordered that the matter remain within the costs budgeting scheme stating:-
- it was desirable that costs budgeting take place given the nature of the claim and the matter in which it was being conducted;
- combined costs of £4.14 million meant that issues of proportionality had to be considered in any event and that factor made costs budgeting desirable;
- it was not possible to conclude that the litigation could be conducted justly and with proportionality in the absence of costs management;
- although costs budgeting was taking place at a relatively late stage there were significant future costs to be incurred;
- the court should take into account the size in absolute terms of the costs and £4.14 million is an expensive piece of litigation;
- the potential inequality of arms between the parties, although here the Master found that there was no evidence of any such inequality of arms;
- the difference between the budgets, which here was £700,000.00
It should be noted that even in a case where costs budgeting does not apply, proportionality does apply, although obviously then it would only be dealt with at the end of the case as there would be no budgeting stage.