Defamation Proceedings Costs Management Scheme


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Costs lawyers and law costs draftsmen not engaged in defamation proceedings may be forgiven for not getting too exited about the 57th Update to the Civil Procedure Rules extending the Defamation Proceedings Costs Management Scheme for another year. However, to do so would be a big mistake.  It would equally be a mistake for those who do not work in costs law to think the scheme is of no interest.

This pilot may well be the blueprint for costs management in all multi-track claims in the future. The relevant practice direction for the pilot is being amended. Previously the key section (5.6) read:

The judge conducting a detailed or summary assessment will have regard to the budget estimates of the receiving party and to any view previously expressed by the court pursuant to paragraph 5.3. Unless there has been a significant change in circumstances the judge will approve as reasonable and proportionate any costs claimed which fall within the last previously approved budget. Save in exceptional circumstances the judge will not approve as reasonable and proportionate any costs claimed which do not fall within the last previously approved budget.

What this means is that so long as the costs come in “on budget” then unless there has been a significant change in circumstances the costs claimed will be allowed. The budget acts as a cap on what will normally be allowed.

This section is now being changed to:

When assessing costs on the standard basis, the court—

(1) will have regard to the receiving party’s last approved budget; and
(2) will not depart from such approved budget unless satisfied that there is good reason to do so.

In my view, this is a fundamental change. This seems to suggest that the budget figure might be allowed even if that level of costs has not been incurred. Arguably, of course, this would require a change to the indemnity principle. However, we already have fixed fee rules elsewhere that allow for greater costs recovery than may reflect the level of costs incurred.

What place for detailed assessment if a party is claiming costs of no more than the budget?

On the other hand, does the change from “unless there has been a significant change” to “unless satisfied that there is a good reason” represent a watering down of the test when a party seeks more than the budget?

Here are the amendments, coming into force on 1st October 2011:

(1) In paragraph 1.1(1), for “1 October 2009 to 30 September 2011” substitute “1 October 2011 to 30 September 2012”.

(2) In paragraph 2(3), in the inserted paragraph 6.5, for “following” substitute “which substantially follows”.

(3) In paragraph 5.1, after “the reputational” insert “and public interest”.

(4) In paragraph 5.3, for “either by agreement between the parties or after hearing argument,”, substitute “to the extent the budgets are not agreed between the parties,”.

(5) After paragraph 5.3 insert—

“5.3A For the avoidance of doubt, the court cannot approve costs incurred before the date of the first costs management conference. However, the court may record its comments on those costs and should take those costs into account when considering the reasonableness and proportionality of all subsequent costs.

5.3B When approving or disapproving a budget, the court will not attempt to undertake a detailed assessment in advance, but will consider whether the budgeted totals for each stage of the work are with the broad range of reasonable and proportionate costs.”

(6) In paragraph 5.5, after “is not being” insert “or is likely to be”.

(7) For paragraph 5.6 substitute—

“5.6 When assessing costs on the standard basis, the court—
(1) will have regard to the receiving party’s last approved budget; and
(2) will not depart from such approved budget unless satisfied that there is good reason to do so.”

(8) For the “Precedent HA” substitute “Precedent HA” at Annex C.


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