Litigation Costs Budgets do not necessarily cap Costs Recovery

If a party to litigation deals with their case in a reasonable and proportionate manner then the default position will be that nothing more than approved budgeted costs can be recovered.

In a case heard before Mr Justice Warby sitting in Truro at the end of 2016 the High Court outlined circumstances where recovery would not be capped because of the way that the Defendant had litigated in a mendacious and disproportionate way.

The Claimant was considered to be the successful party on its claim for damages for false imprisonment, slander and harassment. The Defendant’s counterclaim was dismissed. The Claimant’s costs budget was approved in the sum of approximately £128,000, but the Judge was prepared to allow £150,000 as the appropriate payment on account “To reflect various ways in which the Defendant’s conduct of the action has increased the Claimant’s costs beyond the budgeted amount, by generating work which (reasonably) had not been anticipated or budgeted for”. The work that had not been anticipated or budgeted for included causing the 5 day trial estimate to overrun, an adjourned hearing and the necessity for the Claimant’s solicitor to lodge a fifth Witness Statement.

This was a case where it was relatively straightforward for the Judge to conclude that indemnity costs should be awarded because the “central allegation” by the Defendant was found to be false and malicious. However, in concluding that the costs were not limited by the costs budget, it was necessary for the Judge to identify the particular ways in which the Defendant’s conduct had increased the Claimant’s costs beyond the budgeted amount. This Judgment suggests that a departure from the costs budget is only likely to be warranted where the conduct of the unsuccessful party is at the extreme end of the scale.

Anton Barkhuysen v Sharon Patricia Hamilton [2016] EWHC 3371 (QB).

Please note that this information is provided for general knowledge only and therefore specific advice should be sought for individual cases.

For further information, please contact Philip Eyre