Case management – Costs – Discretion – Claimant assignees bringing claim in Technology and Construction Court against defendant contractor – Court holding case management review – Whether court fixing window of four months prior to disclosure of documents – Whether court having discretion to order exchange of costs budgets – Ruling made
The claimant assignee brought proceedings against the defendant contractors in respect of alleged defects at a large development on the site of a former children’s hospital. The claim was for damages in the region of £18m based principally on the actual or estimated costs of remedial works. The defendant issued third party proceedings against the architects and certain subcontractors. As part of a case management review (CMC) in the Technical and Construction Court (TCC), the defendants asked the court fix a ‘window’ of time before disclosure of documents in the case. The claimant resisted that application on the ground that they required disclosure before they could engage in any meaningful mediation.
CPR r 3.12(1) provided: “(1) This section and Practice Direction 3E apply to all multi-track cases commenced on or after 1 April 2013 except — (a) cases in the Admiralty and Commercial Courts … (c) such cases in the Technology and Construction Court and the Mercantile Courts as the President of the Queen’s Bench Division may direct, unless the proceedings are the subject of fixed costs or scale costs or the court otherwise orders. This section and the Practice Direction 3E will apply to any other proceedings (including applications) where the court so orders”.
A question arose as to the court’s powers to order the filing and exchange of costs budgets in cases where the claim was worth in excess of £2m (under the old regime) or £10m (under the new regime). The claimant argued that the court had no discretion to order the production of cost budgets in the present case, because the words “or the court otherwise orders” in the original CPR 3.12(1) operated only to allow the court to disapply costs management provisions from a multi-track case that would otherwise fall within CPR 3.12. The court had no discretion to order costs management in cases which were excepted from the rule by CPR 3.12(1)(a) to (c). Furthermore, the words “this Section and the Practice Direction 3E will apply to any other proceedings…where the court so orders” did not give the court the necessary discretion in the present case because “other proceedings” could only be a reference to non-multi-track claims.
Held: The ruling was made.
(1) The fixing of the trial date was a critical element of any CMC in the TCC and had to be as soon as reasonably possible in order to ensure that costs did not get out of control, but not so soon that the parties had no time to reflect or pause for breath in the preparation process. It was usually inappropriate for the court at a CMC to build in a special window of three or four months to put the court proceedings on hold whilst the parties engaged in alternative dispute resolution (ADR). Such a course would inevitably delay the trial date by the period of the window which would in turn increase the costs of the case. The fixing of any lengthy window for purposes unconnected with the preparation for trial was bad case management. Staying the whole proceedings to allow ADR or mediation to take place was an even worse option as it could create uncertainties and the potential for tactical games-playing. A sensible timetable for trial that allowed the parties to take part in ADR along the way was a sensible case management tool. A stay or a fixed window was likely to lead to delay, extra cost and uncertainty, and should not ordinarily be ordered. Parties had to take all proper steps to settle litigation whilst at the same time preparing the case for trial. It was not an either/or option. Therefore, the court would not order a window of four months prior to disclosure in the present case: Roundstone Nurseries Ltd v Stephenson Holdings Ltd [2009] EWHC 1431 (TCC) and Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576; [2004] 1 WLR 3002 considered.
(2) The words: “or the court orders otherwise” in CPR 3.12(1)(c), given their natural meaning, gave the court the discretion to disapply the application of the original CPR 3.12, and also to disapply the exemptions. The words “any other proceedings” meant any proceedings, of any type, and therefore included multi-track proceedings, in accordance with a statement by the Chancellor of High Court and the President of the Queen’s Bench Division on 18 February 2013, that it was envisaged that costs management orders would be made in all cases except where there was good reason not to do so. It was also in accordance with the overriding objective and the stated purpose of costs management. The court’s discretion under CPR 3.12(1) was unfettered and extended to all cases where the claim was for more than £2m (old regime) or £10m (new regime). If there was an application for the filing and exchanging of costs budgets, the court had to weigh up all the particular circumstances of the case in order to decide whether, in the exercise of its discretion, such budgets should be provided. There was no presumption against ordering costs budgets in claims over £2m or £10m, and no additional burden of proof on the party seeking the order. Such an exercise of discretion had to take into account all the relevant material, without prejudging or making any specific assumptions one way or the other. The court had a complete discretion to decide whether costs budgets should be filed and exchanged in the present case.
Nicholas Baatz QC and Frances Pigott (instructed by Squire Patton Boggs) appeared for the claimant; Adam Constable QC and Richard Coplin (instructed by CMS Cameron McKenna) appeared for the defendant; Joanna Smith QC and Michael Wheater (instructed by Plexus Law) appeared for the third party; Kate Livesey (instructed by Norton Rose Fulbright) appeared for the fourth party; Fiona Sinclair QC (instructed by Mills and Reeve LLP) appeared for the fifth and sixth parties.
Eileen O’Grady, barrister
