The recent case of Red and White Services Ltd v Phil Anslow Ltd & Anor  EWHC 1699 (Ch) considered the issue of proportionality and cost budgeting.
The case involved 2 bus companies with the Claimant alleging that the Defendant had trespassed to its bus slots at a bus station. The Defendant bus company made a counter claim on the basis that this was a completion law claim and the owner of the bus station was brought into the action as a third party.
All parties served their cost budgets. The Claimant’s and the third party’s budgets were each £1.5 million, with the Claimant’s incurred costs at around £103,000.00. The Defendant’s incurred costs were similar to that of the Claimant and their total budget was £288,000.00.
The Defendant sought to argue that the Claimant’s and third party’s budgets were seriously disproportionate given the value of damages was in the region of £80,000.00 to £120,000.00 whilst the Claimant and third party argued that the Defendant’s budget was unrealistically low.
Mr Justice Birss considered the Defendant’s argument and commented that it was relevant to compare the financial level of the claim against the costs in the budgets. By doing this comparison he noted that the Defendant’s budget was also disproportionate and not a good guide and stated
“what this all goes to show, simply based on the way the Defendant is approaching the matter, is that one cannot simply look at this dispute as a money claim for £80,000.00 to £120,000.00. The claim has a higher value and greater significance than can be seen simply by focussing on the likely quantum of damages.”
Mr Justice Birss then considered the Claimant’s and third party’s characterisation of the case and was in no doubt that the land law issues were potentially legally novel. However, he noted that whilst that may justify a modest increase in a costs budget, it could not be a factor to justify the substantial differences between the budgets for the parties. Further, whilst Mr Justice Birss accepted that infringements of competition law had a public aspect, he did not believe that they could be used as a trump card to justify a very high budget.
Mr Justice Birss then considered the multi-party factor and noted that it was a matter for the Defendant to have chosen to join both of the independent companies and therefore the fact that the two budgets together meant that the Defendant could be bearing a cost risk of £3 million was not a matter of great significance on the facts of this case.
It was held that the cost budgets of £1.5 million were not just on the high side, but were disproportionate and Mr Justice Birss ordered the appropriate overall figure in this case for the Claimant and the third party to be £800,000.00.
It is also interesting to note that Mr Justice Birss also took into consideration a previous cost budget estimate filed by the Defendant which totalled £400,000.00 before they filed a much lower budget prior to the CCMC. Mr Justice Birss used this as an indication as to what the Defendant thought was a proportionate amount at one stage.