Our Services

Sums in excess of the costs budget were to be presumed to have been unreasonably incurred.

In this edition of our costs news we look at a Solicitor-client matter but with points of wider application when it comes to budgeting. See below decision of the Senior Costs Judge in ST v ZY [2022] EWHC B5 (Costs).

This was a fatal motorcycle accident case where the deceased’s partner (ST) brought proceedings as administratrix of the deceased’s estate, as well as on behalf of herself and her 4 children as dependents. Claims by ST & 3 of the dependants had been discontinued but a loss of dependency claim by C (the only child of the four who was the biological child of the deceased) continued. The case later settled with all relevant damages apportioned to C’s claim.

In approving the settlement, the Court ordered that the Defendant should pay ST’s costs of the claim “advanced only on behalf of [C] as a dependant and as an Administratrix of the Deceased’s Estate”. An assessment of C’s solicitor-own client costs was also ordered (because she was a protected party).  Costs between the parties were settled and the below issues arose in respect of the assessment of solicitor-client costs.

Issues:-

1. Whether the retainer (entered into with ST) only covered ST’s personal claim and not those of her dependants, meaning that there would be no enforceable retainer in respect of C’s loss of dependency claim.
2. Whether the bill included costs outside the scope of the costs order, namely costs relating in whole or in part to the discontinued claims.
3. Whether costs incurred in excess of the budget should be presumed to have been incurred unreasonably as between solicitor and client (under CPR 46.9(3)). The sums in excess had been conceded in the between the parties costs agreement.

Held:

1. Properly construed, the wording in the retainer did cover the claim of each of the dependants. There was therefore an enforceable retainer for C’s loss of dependency claim.
2. The bill did include costs outside the scope of the costs order, i.e. items which should have been excluded (as related wholly to other claims) or divided (as related partly to other claims). It was ordered that the bill be redrafted.
3. The excess costs were unusual in amount and although the client had been advised generally of her liability for a shortfall in costs, she had not been advised that “as a result” (of them being unusual in amount) the costs might not be recovered between the parties.  Therefore, those sums in excess of the costs budget were to be presumed to have been unreasonably incurred. The judge expressed his surprise that a solicitor would not tell their client that the budget had been exceeded and that the costs in excess of the budget would not be recoverable.

Senior Costs Judge Gordan-Saker with this judgment sets a persuasive precedent dealing excess costs resulting from costs budgeting.  Caution is urged throughout the budgeting stage process of a claim not to exceed that budget.  Here at Partners In Costs we have always offered comprehensive costs budgeting management services to ensure our clients don’t go over the agreed budget phases.  The warning from this highlight the need for a solicitor to constantly update their client on the costs position and the way to make this task easier is to have a partnership with your costs firm.

We recently featured the case of BCX v DTA [2021] EWHC B27 (Costs) where Costs Judge Brown commented that clients should be advised what costs are unlikely to be recovered inter partes.

Adrian Hawley

Head of Engagement and Strategic Development.

24.02.22