‘BUDGETS – ‘cost control not cost reduction’

The facts of this case are as follows; this action began on 20th February 2012 with the granting of a search order and other associated injunctive relief arising out of attempts by the first defendant, Lea Mark Adams, working with the fourth defendant, John Jones, and through the second and third defendants companies or trading names to hijack the business of the first claimant and thereby breaching the contractual and fiduciary obligations owed to both the claimants. Following the granting of the injunctive relief and the search order, the defendants only engaged to a limited extent in the litigation. The defendants absented themselves from participating in the proceedings apart from the occasional e-mail. On the day of the hearing, the Court entered judgment against the defendants and ordered that finally, because they did not participate in the disclosure process which was particularly important in this case, they be debarred from taking part in these proceedings. Notwithstanding, the defendants lack of participation in the case, the claimants still had to prove their losses. The claimants had conducted a considerable amount of work to be able to prove their losses. The judge having gone through all the documentation in support of the same came to the conclusion that the claimants did indeed loose at least two lucrative opportunities due to the wrongful activities of the Defendants. The claimants tried to prove further losses but the problems of investigating those and providing the contemporaneous documents to enable the witnesses to work on and the court to rely upon were not so readily available, which was made worse by the lack of co-operation of the defendants in the litigation in the disclosure process. The Claimants were awarded damages of £4,334,435.00

Now the important bit! the claimants also asked for their costs. The case was run with a costs budget and the judge approved the budget at a grand total of £359,710.35 pence for conducting this case through to trial. In respect of the costs, his honour; judge Brown said as follows ‘as the budget was proportionate to what was at stake: the £4.4 million sum that was awarded. ‘The claimants have laudably kept within that budget and exercised due control over their activities and expenditure in an exemplary fashion’. The statement of costs on 13th May 2013 (which is today) is favourably compared with the costs estimate of 22nd May 2012. The form is signed by the partner of the solicitors and a member of the client company as well, …. the grand total is £351,267.35 pence. In my judgment that is a sum which is, looking at each of the phases, is within the budget that was set and the claimants are to be commended with controlling their budget throughout this particular period, That will be the sum that I would award to be paid within 14 days without the need for detailed assessment, detailed assessment becoming otiose….Here, I am in a position – bearing in mind this is a one-day trial although a lot of activity has taken place – to summarily assess these costs because I have been actively involved in managing this case throughout. I would know more about the costings of this case than any detailed costs judge would have. Therefore, it seems to me quite right that I should assess these costs today with all that knowledge.

A number of points come out from this piece of litigation, first of all, as MRN have previously advised, there is no end to the emphasis there is on getting your budget bang on! It is not sufficient to make vague expectations on how a matter is to proceed. Time and consideration is needed to map out the various steps that are anticipated. Expert knowledge in the field of legal costs is required to decipher the litigation route. BUT, if this is followed through, as illustrated, the fruit can be bountiful. Perhaps, it’s time to look at the budget process not as hurdle on your profit cost recovery, but rather as a tool for effective costs control (albeit annoying tool!).

What is also interesting that comes out from this case is that in this instance, in light of the fact that His Honour Judge Simon Brown actively managed the case throughout; he took the view that he could summarily assess the matter without the need for detailed assessment. Could this be a trend that the judiciary will adopt?

Finally, in terms of being limited to your budget, as is illustrated in light of the Defendant’s conduct in this matter, his honour Judge Simon Brown said ‘…..the costs budgeting, even if the claimants had exceeded their budget would not have come into play as far as this is concerned because it would be upon the defendant to show that the costs they had incurred, whether within or above the budget were unreasonable…’ This obviously allows Claimant solicitors to enjoy a small sigh of relief when exceeding a budget as a result of the conduct of the Defendant.