Red and White Services Ltd v Phil Anslow Limited and another  EWHC 1699 (Ch) (23 May 2018)
A court found the Claimant's and Third Party's budgets to be disproportionate, reducing them from £1.5 million to £800,000 each. However, the Defendant was not beyond reproach, with the Judge commenting that their budget had been pitched at an unrealistically low level.
The budgets related to a competition law claim, the Claimant runs bus services and uses 7/8 slots in the Cwmbran Bus Station. The Defendant is a rival bus service also using slots within the bus station. The Third Party is the freeholder of the bus station.
The Claimant claimed against the Defendant for trespass with regards to access to the bus station slots. Consequently, the Defendant responded with a competition law claim; brought against the Claimant as a counterclaim and against the Third Party as a Part 20 claim. The counterclaim was rooted in the leases granted by the Third Party to the Claimant.
The matter was listed for a 10 day trial in July 2019; there were to be two economist experts and seven witnesses. Directions were made; however the costs budgets remained in dispute.
The Defendant’s budget totalled £288,000, the Claimant’s and Third Party’s totalled £1.5 million each.
The Defendant submitted that the Claimant’s and Third Party’s budgets were disproportionate given the level of damages; likely to be in the region of £80,000-£120,000. Whilst they recognised that competition law matters can cost as much as had been budgeted by the Claimant and Third Party, such cases were generally worth a lot more than this particular matter. Therefore the budgets were disproportionate.
The Defendant relied upon Willis v MRJ Rundell & Associates Ltd and Grovecourt Ltd  EWHC 2923 (TCC); where Coulson J found that even though the budgets had been agreed between the parties they were disproportionate having regards to the sums in issue and he refused to make a costs order. The Defendant submitted that the court had 3 options:
- Declare that the budgets were disproportionate and order that the parties prepare ‘fresh’ ones
- Make a costs management order setting much lower proportionate figures
- Refuse to make a costs management order
Unsurprisingly the Claimant and Third Party disagreed with the Defendant and submitted that their budgets were realistic estimates of the costs required to bring the case to trial. Moreover, that the Defendant's budget was unrealistically low and simply an attempt to make the Claimant’s and Third Party’s budgets appear disproportionately high. The Claimant and Third Party invited the court to approve their budgets “as realistic estimates of the likely cost”.
The Claimant and Third Party outlined that this was not a modest claim for damages and that the competition claim had serious implications; potentially impacting upon both of their services. They added that an infringement of competition law is a matter of public law as well as private law and is a very significant matter for commercial undertakings.
When considering proportionality, Mr Justice Birss, found that when solely compared to the sums in issue even the Defendant’s budget was disproportionate. However:
“The claim has a higher value and greater significance than can be seen simply by focussing on the likely quantum of damages.”
Despite the above, he went on to say that taking in to account the claim value and also its overall significance a costs budget of £1.5 million was disproportionate.
“Costs proportionate to the issues in a claim like this ought to be lower.”
The issue therefore was how to make the costs of all parties proportionate. Sending the case away on the basis that the budgets were disproportionate would be of no help; furthermore, declining to make a costs management order helps neither party and may only serve to prolong uncertainty.
The Judge stated that if the court could reach an overall proportionate figure then this would be the most appropriate course of action. In reaching his figure, Mr Justice Birss outlined:
“Inevitably, in order to do this, the court cannot do anything other than take quite an approximate approach to estimating a proper overall level for the future costs of one party. In my judgment the appropriate overall figure in this case for the claimant or the third party should be £800,000. That is double the initial estimate from the defendant and that is what I will do.”
Consequently, the court made an order approving the future costs of the Claimant and Third Party in a sum not exceeding £800,000 respectively and giving directions for them to file revised budgets in line with that order. Interestingly, and somewhat unusually, the order did not specify how the total sum should be split between the phases within the budget.