Costs budgeting is currently one of the great failures of the Jackson reforms, despite the ever hopeful views expressed by some members of the judiciary. Many explanations can be given but the comments made by Mr Justice Stuart-Smith in his keynote speech at the Costs Law Reports Conference 2016 are revealing:
“the expectation of Jackson LJ and the senior judiciary was that most costs budgets would be agreed, not least because of an appreciation by the other party of the expertise that has gone into its preparation”
If this is true, it was a bizarrely optimistic and naïve view to hold.
Where to begin?
- Schedules of special damages are no doubt prepared with considerable expertise, but in an adversarial system who would possibly expect a claimant’s schedule to be agreed by a defendant simply because of the expertise that went into its preparation?
- Costs budgets rarely give the name of the person responsible for drafting the same. On what basis does an opponent therefore have to believe that any given costs budget has actually been prepared with any degree of expertise? I routinely receive CVs from recruitment agencies stating a costs draftsman with under 2 years’ experience is “experienced” at drafting costs budgets. What opponent would accept the accuracy of such a budget?
- Practitioners know that a court will rarely allow more than an agreed/approved budget. If a party believes they may be the receiving party, they will therefore wish to ensure their budget will be at least as great as the level of costs that they are likely to incur. Budgets are therefore routinely prepared on the basis of a worst case scenario with the resultant figure then being doubled to be on the safe side. This may be a budget that has been prepared with “expertise” but in unlikely to be the basis for something that will be agreed.
- Let us take adopt a generous approach and assume that the majority of litigation is conducted with a degree of “expertise” and, at the end of a case, any Bill of Costs is also prepared with expertise. Why trouble with costs budgeting and detailed assessment at all? Surely the costs claimed will be reasonable simply by virtue of the expertise brought to the case.
You couldn’t make it up.