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You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Elvanite Full Circle Ltd. v Amec Earth & Environmental (UK) Ltd. [2013] EWHC 1643 (TCC) (14 June 2013) URL: https://www.bailii.org/ew/cases/EWHC/TCC/2013/1643.html Cite as: [2013] BLR 473, [2013] 4 Costs LR 612, [2013] CILL 3385, [2013] TCLR 7, [2013] EWHC 1643 (TCC), [2013] 4 All ER 765 |
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QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
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Claimant |
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- and - |
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AMEC Earth & Environmental (UK) Limited |
Defendant |
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Anneliese Day QC (instructed by Weightmans LLP) for the Defendant
Hearing date: 3 June 2013
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Crown Copyright ©
The Hon. Mr. Justice Coulson:
1. INTRODUCTION
2. A BRIEF PROCEDURAL HISTORY
"The defendant has not yet made any application for further enlargement of the Costs Management Order made on 31 May 2012, but any such application if made will be strongly resisted by the claimant."
No such application was made and the matter proceeded to trial and judgment.
(a) Is the defendant entitled to its costs on an indemnity basis?
(b) If so, what is the relevance (if any) of the existing costs management order?
(c) If not (so that the costs are assessed on the standard basis), can the defendant recover more than £268,488 either by seeking to amend the costs budget after judgment, or by asserting good reasons to depart from the existing costs budget?
3. THE LAW
1. Costs Management Orders
"Modifications of Relevant Practice Directions
2…
Estimates of Costs to be set out in detailed costs budgets
(3) Section 6 of the Costs Practice Direction is modified by substituting for paragraph 6.5 the following –
6.5 In proceedings within the scope of the Costs Management in Mercantile Courts and Technology and Construction Courts – Pilot Scheme provided for in Practice Direction 51G, the estimate of costs must be presented as a detailed budget setting out the estimated costs for the entire proceedings in a standard template form, which substantially follows the precedent described as Precedent HB and annexed to that Practice Direction.
Filing of Costs Budgets
3.2 Each party should include separately in its costs budget reasonable allowances for –
(1) intended activities: e.g., disclosure (if appropriate, showing comparative electronic and paper methodology), preparation of witness statements, obtaining experts' reports, mediation or any other steps which are deemed appropriate to the particular case;
(2) identifiable contingencies, e.g., specific disclosure application or resisting applications made or threatened by an opponent; and
(3) disbursements, in particular court fees, counsel's fees and any mediator or expert fees.
Purpose of Costs Management
4.1 The court will seek to manage the costs of the litigation, as well as the case itself.
4.2 The objective of costs management is to control the costs of litigation in accordance with the overriding objective. (See rule 1.1.)
…
4.4 If the court decides to make a costs management order it will, after making any appropriate revisions, record its approval of a party's budget and may order attendance at a subsequent costs management hearing (by telephone if appropriate) in order to monitor expenditure.
…
Revision of Approved Budget
6. In a case where a costs management order has been made, at least seven days before any subsequent costs management hearing, case management conference or pre-trial review, and before trial, a party whose costs budget is no longer accurate must file and serve a budget revision showing what, if any, departures have occurred from that party's last approved budget, and the reasons for any increased budget. The court may approve or disapprove such departures from the previous budget.
…
Effect on Subsequent Assessment of Costs
8. 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."
"[Pursuant to the new Rules] although the court will still have the power to depart from the approved or agreed budget if it is satisfied that there is good reason to do so, and may for that purpose take into consideration all the circumstances of the case, I should expect it to place particular emphasis on the function of the budget as imposing a limit on recoverable costs. The primary function of the budget is to ensure that the costs incurred are not only reasonable but proportionate to what is at stake in the proceedings. If, as is the intention of the rule, budgets are approved by the court and revised at regular intervals, the receiving party is unlikely to persuade the court that costs incurred in excess of the budget are reasonable and proportionate to what is at stake."
"However, it will rarely, if ever, be appropriate to depart from the budget if to do so would undermine the essential object of the scheme."
"In my view, in an ordinary case, it will be extremely difficult to persuade a court that inadequacies or mistakes in the preparation of a costs budget, which is then approved by the court, should be subsequently revised or rectified, for the reasons given by Mr Wygas. The courts will expect parties to undertake the costs budgeting exercise properly first time around, and will be slow to revise approved budgets merely because, after the event, it is said that particular items had been omitted or under-valued. I also agree that any other approach could make a nonsense of the whole costs management regime."
2. Indemnity Costs
(a) Indemnity costs are appropriate only where the conduct of a paying party is unreasonable "to a high degree. 'Unreasonable' in this context does not mean merely wrong or misguided in hindsight": see Simon Brown LJ (as he then was) in Kiam v MGN Ltd
[2002] 1 WLR 2810.
(b) The court must therefore decide whether there is something in the conduct of the action, or the circumstances of the case in general, which takes it out of the norm in a way which justifies an order for indemnity costs: see Waller LJ in Excelsior Commercial and Industrial Holdings Ltd
v Salisbury Hammer Aspden and Johnson [2002] EWCA (Civ) 879.
(c) The pursuit of a weak claim will not usually, on its own, justify an order for indemnity costs, provided that the claim was at least arguable. But the pursuit of a hopeless claim (or a claim which the party pursuing it should have realised was hopeless) may well lead to such an order: see, for example, Wates Construction Ltd
v HGP Greentree Alchurch Evans
Ltd
[2006] BLR 45.
(d) If a claimant casts its claim disproportionately wide, and requires the defendant to meet such a claim, there was no injustice in denying the claimant the benefit of an assessment on a proportionate basis given that, in such circumstances, the claimant had forfeited its rights to the benefit of the doubt on reasonableness: see Digicel (St Lucia) Ltd
v Cable and Wireless PLC [2010] EWHC 888 (Ch).
4. IS THE DEFENDANT ENTITLED TO INDEMNITY COSTS?
5. IF THE DEFENDANT HAD BEEN ENTITLED TO INDEMNITY COSTS, IS THE COSTS MANAGEMENT ORDER IRRELEVANT?
6. CAN THE DEFENDANT IN THIS CASE RECOVER MORE THAN THE SUMS IN THE COSTS MANAGEMENT ORDER?
1. General
2. Amendment/Revision of the Costs Management Order
3. Is There Good Reason to Depart from the Approved Budget Pursuant to Paragraph 8?
7. INTERIM PAYMENT ON ACCOUNT OF COSTS
8. CONCLUSIONS