Recent Ruling May Assist in Costs Budgeted Cases

In a very recent ruling in the case of Discovery Land Company LLC & Ors v Axis Specialty Europe SE [2021] EWHC 2146 (Comm), Peter MacDonald Eggers QC has ruled that:

“Expenditure which is within a reasonable and proportionate range is still reasonable and proportionate even if it is not at the lower end.”

This is in contrast to the ruling in the case of Kazakhstan Kagazy plc v Zhunus [2015] EWHC 404 (Comm) in which Mr Justice Leggatt held that:

“What is reasonable and proportionate [to recover from the other party] must be judged objectively. The touchstone is not the amount of costs which it was in a party's best interests to incur but the lowest amount which it could reasonably have been expected to spend in order to have its case conducted and presented proficiently, having regard to all the relevant circumstances.”

Peter MacDonald Eggers QC also said:

“Certainly in the context of costs management, the court should allow some flexibility to the parties to ensure that their conduct of the action is not unnecessarily and potentially unfairly hampered by an unrealistically low assessment or by only the lowest assessment of what would constitute reasonable and proportionate expenditure.”

In many cases there has been a conflict between the need to keep costs down to the ‘lowest amount’ and the requirement and wish to do the best job for the client.  Hopefully, with this new ruling, more emphasis will be placed on what it is reasonable and proportionate to incur in order to conduct a matter in a manner which will provide the best outcome rather than necessarily the least expensive outcome.

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