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Costs budgeting and litigants in person – are they still compatible?

02 October 2020
Are we entering a world where the costs budgeting process, intended by Rupert Jackson LJ to provide financial certainty for litigants, is not relevant in cases involving litigants in person? 

CJ & LK Perk Partnership v Royal Bank of Scotland
High Court (QB)
17 September 2020

With the anticipated increase in the number of litigants in person as a possible effect of the forthcoming whiplash reforms, Anna Poynton takes a look at the decision in CJ & LK Perk Partnership v Royal Bank of Scotland (2020) and the finding that costs budgeting was not appropriate in this case.  

Background and findings

The claimants in this commercial action were litigants in person but had instructed counsel under the direct access provisions. This was a case where costs budgeting would normally apply with the court having discretion over whether or not to order a claimant to file a costs budget. In this case, the claimants argued that they should not be required to file a costs budget. Their rationale was that as no solicitor was involved on their behalf, this was not a conventional arrangement and should fall outside of the requirement for cost budgeting. In particular, there would be periods when counsel would not be involved for the claimants and predicting costs for litigants in person would be much more difficult than usual with a significant risk of under budgeting. The claimants suggested that the dipping in and out of the case that takes place where a direct access barrister is involved makes it much more difficult to predict the likely cost.

The judge responsible for case managing the claim held, that while a costs budget would assist in any ultimate settlement by providing added visibility as to the costs position, the real issue was whether there was a significant benefit to the defendant in the claimants filing a costs budget when weighed against the difficulties faced by litigants in person in seeking to estimate the costs necessary to be inserted into the budget in such a way which made the figures realistic. There would be difficulties for the claimants in particular in estimating the costs associated with disclosure and witness statements. The judge found that this may lead to applications to vary the budget which would increase costs unnecessarily. 

The judge therefore held that it was not appropriate to direct the claimants to file a costs budget in this case.

Comment

This decision highlights potential problems for the future. Defendants are protected in lower value claims where fixed recoverable costs apply to both parties and there is total transparency in the costs process. In higher value cases where costs are budgeted, defendants have visibility earlier in the litigation timetable about the likely costs exposure, which assists when calculating reserves.. As government reforms continue, the number of these cases may well increase and this will in turn lead to an increase in the number of litigants in person bringing claims.  If the costs budgeting process is to be disapplied in cases brought by unrepresented claimants, defendants will be blind as to the costs the litigants in person are incurring. This brings a corresponding risk that commercial decisions on offers or whether or not to take cases to trial will become more difficult. This decision may also have the unexpected consequence of increasing the need for the detailed assessment of costs, when cases conclude, something that costs budgeting is intended to reduce. 

A secondary issue is the how the use of counsel will be viewed both by litigants in person and by the courts when assessing costs. Direct access to the ‘helping hand’ of counsel may encourage litigants in person to litigate. How much reliance on counsel will be seen by the courts as reasonable? Will the courts adopt a "swings and roundabouts" approach by allowing the bulk of costs to come from counsels’ fees, provided the costs of litigants in person costs are relatively low? With litigants in person, will proportionality be used to compare their costs in the round with those of the defendants’ solicitors who may have little or no reliance on counsel? 

Seemingly minor decisions in a lower court can set the hares running. That may well be the case here. 

To discuss this case or for further information on any other costs related matters, please contact Anna Poynton, Director at Anna.poynton@dwf.law

Further Reading