In a recent Judgment, Mr Justice Toulson has outlined the importance of the costs management process. Commenting in Findcharm Ltd v Churchill Group Ltd, he outlined how some parties ‘treat cost budgeting as a form of game’ where it is common for ‘one side to offer very low figures in their Precedent R, in the hope that the court may be tempted to calculate its own amount, somewhere between the wildly different sets of figures put forward by the parties.’
The case itself was a complex matter involving a restaurant business operated by the Claimant within the Defendant’s hotel. A gas explosion occurred at the hotel, causing the restaurant to close for a period of around four months. The Claimant’s claim was for £820,000.00 plus interest, of which a substantial part was for business interruption and loss of profit.
The parties filed their respective budgets. The Defendant’s budget was agreed for the sum of £79,371.23. The Claimant’s budget totalled £244,676.30, and the parties filed their Precedent R documents.
The Defendant’s Precedent R reduced the Claimant’s budget to £46,900.00 for future estimated costs, and approximately £90,000.00 in total. Mr Justice Coulson, on assessing the usefulness of the Defendant’s Precedent R, was scathing. He outlined that the document was ‘completely unrealistic’ and ‘It is designed to put as low a figure as possible on every stage of the process, without justification’. The Judge was critical of the costs department of the Defendant for preparing such a document.
The Judgment gives detail on the various phases and the offers put forward by the Defendant in the Precedent R. Mr Justice Coulson allowed the Claimant’s budget in full.
The introduction of the Precedent R document was required to prevent parties from filing excessive ‘Points of Dispute’ type documents in response to their opponent’s budget, effectively limiting the parties to a one page document outlining brief justifications for the offers made. It is clear from this ruling that the Judges are aware of the tactics that some parties may seek to employ in the costs budgeting process, and that the Courts are keen for parties to put forward realistic offers and make genuine attempts to agree costs budgets without the need for court interference.