Various Sam Borrowers v BOS (Shared Appreciation Mortgages) No. 1 Plc & Ors  EWHC 2594
Issue – Cost Budgeting
Background –The claim relates to a comprise claims brought by 161 consumers, many of whom were now elderly, infirm or deceased, over being mis-sold a shared appreciation mortgage, sold by the defendants between 1996 and 1998. The claim of the 15 lead Claimants is valued at £7.3m but it was estimated the Defendants’ overall liability could be £50m.The matter proceeded to a Costs and Case Management Conference in front of Mrs Justice Joanna Smith
The judge made a number of observations in so far as cost budgeting was concerned.
- Counsel’s fees for the Defendant were particularly high. Mrs Justice Joanna Smith found it very difficult to see why a Trial of this sort requires a preparation time by Counsel of more than twice the length of the trial itself. She further commented that whilst a party is of course entitled to spend whatever it wishes in purchasing a “Rolls Royce” service with no expense spared, it cannot expect to recover its costs, over and above that which it would have been reasonable and proportionate to spend.
- Proportionality – When assessing proportionality, the Court considered ‘complexity’ in terms of number of parties but emphasised that complexity in term of proportionality also required that the issues were particularly burdensome, unusual or “heavy.” In terms of ‘reputation’, the issues would need give rise to allegations of dishonesty or deliberate unfair conduct, not press interest and comment.
- Reliability – Mrs Justice Joanna Smith made an important point regarding concessions made during negotiations that these are not to be construed as having presented an original unreliable budget. She drew comparison to the case of CIP Properties v Galliford Try  2 Costs LR 363. In that case, the Claimant’s budget was considered as unreliable as the original estimate of costs had increased threefold by the time of the costs management hearing.
- Contingency – The Court did not allow for a contingency for a potential for a specific disclosure application in line with Yeo v Times Newspapers Ltd  EWHC 209 (QB) in that it was too premature.
Commentary – The findings of the judge highlight a number of points:
- When it is evident that Counsel’s fees are high, it is likely that these are going to be scrutinised by the Court.
- Whilst complexity is a key factor when determining the proportionality of a cost budget, it is imperative to demonstrate particular characteristics of the litigation that present complexity.
- Whilst caution must be given to any previous cost estimate, the Court unquestionably encourages the narrowing of the issues between the parties.