This week, it has been reported that courts have the power to apply costs management to litigants in person(LiP). [i]
The decision of Chief Master Marsh in Campbell v Campbell [2016] EWHC 2237 (Ch), which was handed down last week, deals with some important issues in relation to the costs incurred by a LiP and the nature of costs budgeting in general.
The case involved commercial dispute between two brothers relating to jointly owned companies.
The claimant in Campbell was instructing solicitors when the costs management hearing was ordered, but by the time the hearing took place on 21st July 2016, he had become a LiP. His counsel continued to represent him on a direct access basis. He also had assistance from a firm of solicitors and intended to obtain assistance from junior counsel.
The claimant’s costs budget of 5th August 2016 provided for future expenditure up to the end of trial of slightly in excess of £315,000, having already incurred costs of £547,621. Both sides asked the court to make a costs management order in respect of the claimant’s costs.
In paragraph 1 of his judgment, Chief Master Marsh addressed two issues. Firstly, the extent to which the costs management regime under CPR 3.12 – 3.18 applies to the costs of a LiP, and, secondly, the scope of LiP costs recoverable under CPR 46.5 where a LiP obtains legal assistance from a solicitor and a member of the bar.
Master Marsh initially stated that the court’s jurisdiction to costs manage a LiP was unclear. After examining several provisions of the CPR, he concluded, however, that he had the power to do so.
Marsh used CPR 3.12(2) as a starting point. CPR 3.12(2) explains the purpose of costs management as:
“The purpose of costs management is that the court should manage both the steps to be taken and the costs to be incurred by the parties to any proceedings so as to further the overriding objective.”
He noted that the objective is expressed in general terms and in no way indicates that a claim involving LiP’s may not benefit from costs management.
Whilst CPR 3.13 expressly exempts LiP’s from the requirement to file and serve a budget, the editors of the White Book 2016 suggest that in spite of this exemption it is open to a LiP to file and exchange a budget if they wish.
CPR 3.15(2) provides that “…the court may manage the costs to be incurred by any party in any proceedings” which, again, gives no indication that different provisions should apply to LiP’s.
The claimant also sought a declaration from the court that the cost of solicitors from whom he intended to seek advice, but not instruct to have conduct of the case, would be recoverable, along with the fees of junior counsel the solicitors would instruct. It was not disputed that the direct access QC’s fees would be recoverable.
Marsh said there was no reason to construe CPR 46.5(3) narrowly so as to prevent a LiP recovering the cost of assistance in the course of their conducting the claim. In paragraph 32 of his judgment, he says:
“The direct access scheme, whether it is used for advocacy or other assistance, provides a litigant in person with expertise which may be essential to be able to progress a claim in an orderly manner and is likely to be of assistance to the court for that reason. Similarly, it is clearly contemplated that a litigant in person may pay for and recover the cost of ‘legal services’ relating to the conduct of the proceedings. In a complex claim, the litigant in person may wish, for example, to obtain assistance with disclosure or the drafting of witness statements. This is part of the unbundling of legal services contemplated by Lord Woolf.”
This judgement has affirmed that in appropriate cases, courts have the power to costs budget the costs of LiP’s. This is most likely to apply where the case is complex/the costs are large and the LiP was previously using legal assistance. Courts can make a costs management order in relation to LiP’s costs, and LiPs can recover costs where they obtain assistance from lawyers short of them having conduct of the case.