The recent decision of Hadley v Przybylo (2023) EWHC 1392 (KB) gives practitioners a steer on what a court is likely to consider what costs cannot form part of a budget. The issue here was not the principle of whether a proportion of the costs in issue were unreasonable or proportionate but whether they were in principle costs for the purpose of a budget in the first place.

Rule 3.12(2) of the Civil Procedure Rules sets out the purpose of costs management, namely: “[…] that the court should manage both the steps to be taken and the costs to be incurred by the parties to any proceedings (or variation costs as provided in rule 3.15A) so as to further the overriding objective.”. As the overriding objective is specifically referred to, this is likely to refer to the two principles of keeping costs proportionate and saving expense (CPR 1.1(1) and (2)(b)).

Master McCloud considered the issue of whether the costs in this case were legal costs which had been incurred in the progression of litigation (which the court accepted was the general principle of what ‘costs’ meant when referring to costs budgets). The court held that there is a difference between costs which may be reasonably incurred but found in hindsight not to be useful, and costs which are inherently ‘non-progressive’. The latter should not be properly claimable in a costs budget. In the Hadley case fee earners had attended rehabilitation case managements meetings and meetings with deputies in the court of protection. Such information could have been obtained by occasional letters to the case manager or relevant deputy. The argument that the fee earners attended as an integral part of producing the Schedule of Loss was considered to be a weak argument.

The message appears to be that the first rule of thumb is that any costs claimed in a costs budget needs to be integral to progressing the litigation. Usually this speaks for itself and is not contentious but it serves as a warning on claiming for work which may not in principle be progressing the litigation.

A copy of the judgment can be accessed here.

James Byrne