REUTERS | Mohamed Nureldin Abdallah

Signia Wealth v Marlborough Trust Company: a growing enthusiasm for costs budgeting?

The widely reported chief Chancery master’s decision in Signia Wealth Ltd v Marlborough Trust Company Ltd & another indicates a marked departure in approach by the court from the early days of the Jackson reforms and costs budgeting.

We can all recall the early flurry of exemptions from budgeting to include an initially much lower quantum threshold, coupled with various exemptions in types of cases/courts where budgeting was applicable. At its inception, there was a clear reluctance from the courts and practitioners to costs budgeting, but, in this case, the court has clearly indicated that budgeting is seen to be both working and desirable.

There does seem to be growing judicial enthusiasm. In a speech earlier this year, Queen’s Bench Master Cook said:

“The experience of the clinical negligence masters is that there are now signs that parties are adapting to the costs management process. We are seeing a significant increase in the number of cases where budgets are agreed or where a number of the phases are agreed.

“By requiring the parties to focus on the total budget per phase and requiring cash offers to be made where agreement cannot be reached the arguments are more focused. This leads to shorter hearings and in return enables more efficient use of court resources.”

Meanwhile, in his final report on the Civil Courts Structure Review in July, Briggs LJ reported that, while the introduction of budgeting does not seem likely due to the number of detailed assessments (in part because of the efforts of many to get out of the regime), “the prevailing judicial view is that, although it is taking time to bed down, the costs management process is a very worthwhile addition to the court’s case management powers”. Practitioners were not so keen, unsurprisingly.

This is not necessarily matched by all judges, of course. Asked their view on how costs management was working, “It depends on which judge you’re before” was the most popular answer cited by Association of Costs Lawyers members in a survey back in May.

In Signia, Chief Master Marsh ordered that the case be cost-managed after its £13m value was not disclosed in the claim form. Regardless of that slip, Chief Master Marsh also found that there were “positive reasons why cost management is desirable”, and, with estimated costs of more than £4m, he said it was “plain that issues of proportionality are engaged”.

So, it would appear that the court’s initial reluctance at least to costs budgeting could be a thing of the past. Although it is true to say that a different approach to the claim form may have resulted in the case falling outside of costs budgeting, a mistake that one would hope is unlikely to be repeated, such a divergent result is not guaranteed.

It remains unclear whether or not the chief Chancery master could still have adopted costs budgeting in Signia had the quantum been clear from the outset and had the parties actively sought to avoid budgeting (noting that both parties filed budgets regardless of the suggestion that budgeting should not apply to the case).

Given the sound reasoning as to why budgeting should apply, it will be interesting to see the approach adopted in the next complex and hotly contested matter where damages are sought close to but above the damages threshold of £10 million.

This judgment lays down a clear marker that costs budgeting is both seen to be working, and is a desirable process in cases of this nature regardless of the threshold.

 

Association of Costs Lawyers Masters Legal Costs Services LLP Francis Kendall

Leave a Reply

Your email address will not be published. Required fields are marked *