Capping defamation costs

Henry v BBC [2005] EWHC 2503 (QB)

In the allocation questionnaire in defamation proceedings against the BBC, the BBC estimated its costs to the end of the trial at £290,000. The claimant’s estimate was £360,000, excluding her CFA success fee, any ATE premium and VAT. The claimant’s solicitors subsequently increased their estimate to £694,000, again excluding the success fee, any ATE premium and VAT, with the result that assuming a success fee of 100% the potential exposure of the BBC in respect of the costs of the action, inclusive of VAT, was £1.6m. In these circumstances the BBC sought the protection of a cost-capping order. Although the judge thought the case was a prime candidate for a cost-capping order, the application was made only a week before the trial of the action and therefore was made too late. The BBC could and should have been informed of the escalating costs far sooner, especially in view of the existence of a CFA which might well double the costs exposure of the BBC. It was hoped that in future, where a litigant encountered difficulty in obtaining information about his opponent’s costs position, an application would be made pursuant to paragraph 6 of the Costs Practice Direction for an order for an estimate. While the judge had every sympathy for the predicament in which the BBC, through no fault of its own, found itself, it did not follow that it would be right at that stage of the proceedings to impose a costs cap. Any cap would have to be prospective. The imposition of a costs cap so close to trial would in effect penalise the claimant, or perhaps more accurately the legal advisers, when the purpose of a capping order is to enable the capped party to plan ahead the appropriate level of expenditure to bring the case to trial at a cost which is in line with the amount of the cap. It would be wrong to use the cost-capping jurisdiction in a way which would deny the claimant the benefit of the CFA to which she was statutorily entitled. The application was made too late. The judge also gave another reason why he would not make a cost-capping order: he did not feel qualified to determine without assistance from a costs judge the amount of the brief fees, the charging rates and how much work between the application and the end of the trial would be reasonable and proportionate. The exercise was more suitable for a costs judge, or at least a judge sitting with a costs judge.