Henry v NGN – The Defamation Proceedings Costs Management Scheme.

This is the first time the courts have examined what constitutes ‘good reason’ for the court to depart from a party’s budgeted figure under the pilot Defamation Proceedings Costs Management Scheme. Ms Henry was a member of Haringey’s social work team assigned to the tragic case of Baby P. The Claimant was subject to a number of defamatory articles in various newspapers.

The Sun had published a series of articles and encouraged readers to sign an online petiton calling for the Claimants dismissal.

The Claimant was totally exonerated.

The case settled upon payment of an undisclosed sum of damages and an apology.

The Claimant was entitled to recover her costs.

The parties had submitted their costs budgets under Practice Direction 51D during the proceedings and these had been approved by the Judge at a Case Management Conference (CMC).

The Defamation Proceedings Costs Management Scheme PD51D states;

  • Each party must prepare a costs budget or revised costs budget;
  • In advance of any CMC or Costs Management Conference (COMC);
  • For service with the pre-trial checklist;
  • At any time as ordered to by the court;
  • Each party will include separately in its costs budget reasonable allowances for intended activities, disclosure, witness statements, expert reports, mediation or any other steps necessary for the case;
  • Specified contingencies, e.g. application on meaning , specific disclosure applications , resisting applications;
  • Disbursements, such as court fees, counsel’s fees and any mediator or expert fees;
  • The parties will update their budget for each subsequent CMC or COMC and for the pre-trial review. This should enable the judge to review the updated figures, in order to ascertain what departures have occurred from each side’s budget and why;
  • Solicitors are expected to liaise on a monthly basis that the budget is not exceeded and if it is or is likely to be exceeded, either may apply to the court to fix a COMC;

Costs budgets were approved in September 2010 for both sides. The Claimant’s base costs estimate was £539,847 and Defendant’s £531,746 so they were remarkably similar.

The case proceeded and ultimately did not go to trial. The Claimant’s solicitors failed to notify the Defendant that they were exceeding their costs budget and by the end of the case had exceeded their budget by £270,000.

Under paragraph 5.6 of PD 51D The court when assessing costs will look at the budgets and when assessing costs on the standard basis, has to be satisfied that there is “good reason” to depart from the budget if it is to allow a higher figure.

The fact that the Defendants had amended their defence many times, made numerous disclosure applications and served many supplemental lists which had led to increased costs whilst the Claimants had the courts sympathy was not a good reason to depart from the budget. An application could have been made to the court as above but wasn’t.

The judge gave permission to appeal but its is doubtful whether the decision will change if the appeal is gone forward with. It is important to keep an eye on the costs budget and make an application to the court if necessary to avoid such a disastrous consequence.

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