Newsletter – December 2021

Costs budgeting is the Marmite of the civil procedural rules; judges seldom have a neutral view of the process. Such polarised judicial opinions have always proved problematic for practitioners. In advance of a hearing, how can one tell:

1. Whether the judge is a costs enthusiast, or, conversely, if they despise the process and will want to keep the hearing as short as possible?
2. If the judge believes all lawyers are overpaid and is therefore likely to slash the budget?
3. What experience the judge has of costs issues and, more specifically, how much budgeting they have done?

So what are practitioners to do? I regularly see Precedent Rs prepared on the assumption that the more “outrage” conveyed about the opposing party’s costs, the more likely the court will be persuaded to reduce the fees. It is common practice for Precedent Rs to be littered with phrases such as “staggering”, “incredulous” and “wholly excessive”.

Whether this is effective will depend on the tribunal. Certainly, this aggressive strategy achieved greater success when budgeting was first introduced – judges with little experience of budgeting were more easily swayed. However, for senior judges or judges for whom budgeting is now second-nature, OTT language is likely to have the opposite effect. If they believe the complaints in the Precedent R or skeleton arguments are overblown, this could discredit the challenges made overall.

From my own (bad!) experiences, I now tend to see better results achieved where the written and oral advocacy: (i) is put in a more “matter of fact” or balanced way; with (ii) the real criticism reserved for the more significant phases of the budget, or where the amounts claimed are obviously unjustified on any view.

Similar considerations apply to parties seeking to defend their own budgets. Judges appear tired of assertions that defendants are “throwing the kitchen sink of defences” at claims, or that defendants have deliberately “low-balled” their own budget. It is likely to be more effective to: (i) identify in a neutral fashion the detailed issues raised in the pleadings and the work that is therefore required; and (ii) gently suggest that the defendants have underestimated the work required, without casting any aspersions about their motives for doing so (whatever you may actually believe!).

That said, budgeting does not need to be a dull, mathematical exercise. I am always in awe of advocates who can turn mundane hearings on dreary afternoons into an amusing escapade. Getting the balance right remains a difficult endeavour though. Each judge has their own approach to budgeting and their pet-peeves. Although horror stories about budgeting hearings have diminished through time, they remain relatively common.

Part of the problem is that many judges are now beset with “budget-fatigue”. They often prefer keeping budgeting hearings as short as possible, and will not be impressed by lengthy, time-consuming submissions on each and every phase of the budget. As Sir Geoffrey Vos remarked at the ACL’s annual conference, when suggesting that budgeting needs to change: “It was obvious to me that much of the [CCMC] was devoted to costs budgeting and many aspects were about small issues” (see a summary in the Gazette).

Masters have similarly lost faith in the process. As Master Davison observed in Smith v W Ford & Sons (Contractors) Ltd [2021] EWHC 1749 (QB):

“QB masters, Chancery masters and costs judges do not necessarily share this defendant’s expressed confidence that costs budgeting controls costs better, or more effectively, than detailed assessment. This is a large topic and a complex and somewhat sensitive issue. The present hearing is not, perhaps, the forum to debate it at any length”.

The growing expectation that budgeting is doomed due to the judiciary’s dislike for the process may exacerbate the existing problems. Judges had a greater appetite for budgeting when it was the shiny new development held out as the panacea for all cost inefficiencies. This is another reason why being concise may be well-received by judges.

Whilst my suggestions above reflect my own lessons-learned, both good and bad, practitioners’ experiences will differ widely. Self-evidently, there is no “one size fits all” and knowledge of the relevant judge’s approach remains invaluable. Written and oral advocacy for budgeting hearings therefore remains a mixture of an art, a science and pot luck. However, one still gets the impression that there is a large dollop of chance when it comes to budgeting, not least because of the diverse views in the judiciary about its worth as a process.

George McDonald, Barrister, 4 New Square.