When Courts deal with multi-track actions (generally with a value of £25,000 and over) parties represented by solicitors are required to file and serve on the other parties a Budget which is also known as a ‘Precedent H’ form. These budgets which appear in a prescribed form should be discussed by the parties in advance of a hearing called a Costs and Case Management Conference where the Court will assess the figures for each stage and a total sum. The stages cover the whole process of a claim from pre-action correspondence, claim being started right up to the trial. Additional stages allow for negotiation and contingencies. In giving its approval to these figures, the Court deems figures relating to each of the stages of the budget specified and the final figure to be reasonable and proportionate if the case is taken to trial.
The approved budget provides the paying client with some indication about the costs figure they might recover if successful or have to pay if unsuccessful. However, in the event of the latter, the budget filed on behalf of the client may not necessarily set out the liability the client owes to their solicitor. That is usually a matter of the professional retainer and costs advice provided by the solicitor.
There are a number of issues raised in a recent case heard by the Senior Costs Judge, Master Gordon Saker [https://www.bailii.org/ew/cases/EWHC/Costs/2022/B6.html] sitting in the Senior Court Costs Office at the Royal Courts of Justice that is of interest.
Work not carried out within the budget
The budget has been designed to include all the stages of litigation. In completing the form, the solicitor ought to include all the work that has been and is likely to be carried out. Often, due to the unpredictability of litigation, the work carried out, however, necessary is not always included it the budget. Where there is likely to be a departure from the budget, the solicitor can make an application to the Court setting out reasons for seeking an increase with an amended budget for approval. In such circumstances, it would be prudent to seek agreement from the opposing side(s).
A party to the proceedings may ask the Court to examine the Budget when the claim has concluded. The Court will generally examine the issue of costs within the limitations of the budget. There are circumstances in which a Court will depart from an approved budget if satisfied there is a good reason. Such work would have to be ‘reasonably carried out’ and may be unusual in the ‘amount and nature.’ The Court would make such an assessment on a case by case basis.
It is the responsibility of the solicitor to advise their client that the budget has been exceeded and that these costs may not be recovered from the opposing side(s). A simple explanation to the client that costs have been exceeded is not enough. In these circumstances, a client should be told that the budget is being exceeded (possibly by a wide margin) and such costs are unlikely to be recovered from the opposing side.
If a solicitor does not advise their client that the budget has been exceeded and that the costs incurred are over and above the figures stated at each stage, there is a real danger that the client will have moved from pursuing a claim where costs were deemed to be reasonable and proportionate to a point where no further costs can be recovered.
This case stresses the importance of a solicitor advising their client of not just costs advice throughout the claim but to also revisit each stage of the budget. Master Gordon Saker stated: “I think it very surprising that a solicitor would not tell their client that the budget had been exceeded and that the costs in excess of the budget would not be recoverable. At that point the client is moving from pursuing a claim in which reasonable and proportionate costs will be recoverable to a claim where no further costs will be recoverable in respect of some or all of the phases.”
Our litigation solicitors are not just experienced in dealing with claims of a substantial value and complexity but on advising on costs throughout a claim. We are also highly experienced in dealing with proceedings at the Senior Court Costs Office which examine not just the costs being recovered from a losing party in a litigation but also where a client wishes to challenge the costs of their former solicitor.
If you feel you have been affected by any of the issues discussed in this article, please get in touch with Sunil Patel, by email on spatel@jpclaw.co.uk, by telephone on 020 7644 7278, or connect with him on LinkedIn.
