Sylvia Henry (Claimant/Appellant) v News Group Newspapers Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Moore-Bick,Lord Justice Aikens,Lady Justice Black |
| Judgment Date | 28 January 2013 |
| Neutral Citation | [2013] EWCA Civ 19 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2012/1895 |
| Date | 28 January 2013 |
[2013] EWCA Civ 19
Lord Justice Moore-Bick
Lord Justice Aikens
and
Lady Justice Black
(sitting with Costs Judge Campbell as Assessor)
Case No: A2/2012/1895
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE SENIOR COURTS COSTS OFFICE
(Senior Costs Judge Hurst)
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr. Simon Browne Q.C. and Miss Joanna Hughes (instructed by Taylor Hampton Solicitors) for the appellant
Mr. Alexander Hutton Q.C. and Mr. Adam Wolanski (instructed by Reynolds Porter Chamberlain LLP) for the defendant
Hearing date : 4 th December 2012
Background
This is an appeal by Ms Sylvia Henry against a decision of Senior Costs Judge Hurst on a preliminary issue arising in the course of a detailed assessment of costs. Ms Henry, a senior social worker employed by Haringey Council, was the victim of a sustained and vitriolic campaign by the 'The Sun' newspaper following the death of the child known as "Baby P". That campaign, the object of which was to force Ms Henry out of her job and to prevent her from obtaining any further employment in connection with children, led her to take proceedings for defamation against the publisher of the newspaper. They were eventually settled on payment of a substantial sum (the amount of which is undisclosed), a statement in open court and the publication of an apology in a prominent position in the paper. That apology acknowledged that there was no truth in any of the defamatory statements made by 'The Sun' and that its campaign against the appellant was entirely unjustified.
As part of the settlement the respondent agreed to pay the appellant's costs of the proceedings to be assessed on the standard basis if not agreed. A consent order in Tomlin form was made to give effect to the settlement, which included a term to that effect.
Costs Management – Practice Direction 51D
The concept of costs budgeting as a form of case management is not new, but it obtained prominence as a potentially valuable means of controlling the costs of litigation following the publication in May 2009 of the Preliminary Report of Sir Rupert Jackson at the end of the first stage in his review of civil litigation costs. In paragraph 3.5 of chapter 48 of the report he described the essence of costs budgeting as being
"that the costs of litigation are planned in advance; the litigation is then managed and conducted in such a way as to keep the costs within the budget."
It is clear from the discussion in section 3 of chapter 48 that at that stage Sir Rupert regarded costs budgeting as closely related to costs capping, an approach which was beginning to find favour in some quarters.
In response to concerns over the effect on the media of the costs of defamation proceedings a pilot costs management scheme was introduced in October 2009 in relation to defamation proceedings. That scheme is now embodied in Practice Direction 51D (the Defamation Proceedings Costs Management Scheme), which applies to all defamation proceedings started in the Central Office of the Royal Courts of Justice and the Manchester District Registry on or after 1 st October 2009 and is to run until 31 March 2013. Its purpose is set out in paragraph 1.3, which provides as follows:
"The Defamation Proceedings Costs Management Scheme provides for costs management based on the submission of detailed estimates of future base costs. The objective is to manage the litigation so that the costs of each party are proportionate to the value of the claim and the reputational issues at stake and so that the parties are on an equal footing."
The practice direction requires each party to prepare a costs budget for consideration and approval by the court at the first case management conference and a revised cost budget at various stages of the proceedings thereafter. Under paragraph 5 the court has a responsibility to manage the costs of the litigation as well as the case itself in a manner which is proportionate to the value of the claim and the reputational and public interest issues at stake, a task which it is expected to fulfil by taking account of the costs involved in each proposed procedural step when giving case management directions. Solicitors are expected to liaise monthly to check that their respective budgets are not being exceeded (paragraph 5.5); if they are, either party may apply to bring the matter back before the court for a costs management conference.
Paragraph 5.6 lies at the heart of this appeal. It provides:
"When assessing costs on the standard basis, the court –
(1) will have regard to the receiving party's last approved budget; and
(2) will not depart from such approved budget unless satisfied that there is good reason to do so."
In the present case costs budgets were prepared by both parties for the first case management conference which took place before Master Eastman on 20 th September 2010. The totals of the two budgets were remarkably similar, but the amounts included for the various stages of preparation for trial differed considerably. The Master approved both budgets, but thereafter neither party sought approval to any revised budget, although shortly before trial the respondent applied for a costs management conference.
The detailed assessment
Although they were able to settle the proceedings, the parties were unable to reach agreement on the amount of costs recoverable by the appellant, who therefore commenced detailed assessment proceedings. The respondent took objection to the appellant's bill of costs on the grounds that it exceeded the budget that had been approved by Master Eastman. In those circumstances the parties agreed that the following question be tried as a preliminary issue:
"Whether there is good reason for the court to depart from the court approved costs budget as approved on 20 September 2010, following which:
(i) in the event that the court finds that there are no good reasons to depart from the budget the court will at that hearing determine the sums recoverable by reference to the budget;
(ii) in the event that the court finds that there are good reasons why the budget should be departed from the court will determine by how much the budget should reasonably be exceeded and will if necessary provide directions in respect of the remaining budget items."
It will be appreciated that the only question that actually arose for determination was whether there was a good reason in this case to depart from the appellant's approved budget.
On the hearing of the preliminary issue the appellant contended that the way in which the defendant had chosen to conduct the proceedings had caused her to incur a substantial amount of costs that could not reasonably have been predicted at the time when the budget was prepared. That provided a good reason for departing from it. The respondent argued that there was no good reason to depart from the budget because the appellant had failed to comply with the requirements of the practice direction: her solicitors had failed to keep the respondent's solicitors informed of the costs being incurred and had failed to obtain the court's approval for a revised budget when the costs overran. It also argued that the appellant's budget was in any event flawed from the outset and that she should bear the consequences.
In his judgment the judge set out in some detail the parties' competing submissions about the way in which the case had developed and its effect on the amount of work that the appellant's solicitors had been required to carry out. However, he quickly came to the conclusion that in order to test the competing arguments properly it would be necessary to hear the solicitors give evidence, a process which would have taken an inordinate amount of time and would not have greatly assisted him in deciding whether there was good reason to depart from the approved budget. However, he was clearly not impressed by the respondent's argument that its conduct of the case had caused the appellant nothing more than minor inconvenience.
As to the appellant's bill, the judge expressed himself to be in no doubt whatsoever that, if it were to be the subject of detailed assessment, those representing the appellant would be able to argue very strongly that the costs incurred were both reasonable and proportionate, but, as he recognised, that was not the question he had to decide. He expressed his conclusion on the question whether there was good reason for him to depart from the approved budget as follows:
"67. It is clear that the Claimant did not keep either the Defendant or the Court informed of the fact that its budget was being exceeded. Although Mr Browne does not accept the Defendant's analysis of the costs budget, saying that the Claimant's costs lawyer arrived at lower figures in his analysis, the fact is that the budget has been exceeded by a very significant amount, and there has been no attempt by the Claimant to pass this information on. The fact that both sides exceeded their budgets does not assist the Claimant. The Defendant kept the Claimant informed, but the Claimant gave no indication to the Defendant.
68. The provisions of the Practice Direction are in mandatory terms. Each party must prepare a costs budget or revised costs budget (paragraph 3.1), each party must update its budget (3.4), solicitors must liaise monthly to check that the budget is not being or is likely to be exceeded (paragraph 5.5). The objective of the Direction is to manage the litigation so that...
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