While cost management is an everyday feature of modern commercial litigation, it was unusual to see the humble Precedent H splashed across the headlines this week. The dispute between Coleen Rooney and Rebekah Vardy has been a case that just keeps on giving from the newspapers' point of view.
The latest instalment, and perhaps now the last, has seen the parties arguing over the amount Vardy should pay to Rooney in respect of her legal costs. It's no surprise that this subject brought the parties back to court given the sums involved; Rooney's costs stood at over £1.8m.
Away from the headlines, the dispute raises questions about the effectiveness of the cost management under the Civil Procedure Rules (CPR) in providing costs transparency to litigants. Comments from Senior Costs Judge Andrew Gordon-Saker indicate a need for greater certainty over the approach parties are expected to take when preparing budgets.
Budget versus reality
It seems likely that Rooney's lawyers always intended to throw everything into their client's case but understood that the associated costs might not be considered by the court to be reasonable and proportionate. This is relevant because the statement of truth on Precedent H requires the signatory to confirm that the budget is a "fair and accurate statement of incurred and estimated costs which it would be reasonable and proportionate for [the] client to incur in this litigation."
Plainly, it would have been difficult for Rooney's solicitor to sign such a statement on a budget featuring anticipated costs in excess of £1.8m.
It is reported that the costs stated in the cost budget totalled just £540,779.07, less than a third of what it later turned out to be spent. No wonder then, that Rebekah Vardy's team sought to challenge the costs claimed, especially given an order made in October 2022 provided that Rooney ought to be paid 90% of her costs. The additional problem for Vardy was that costs were ordered against her on the indemnity basis. This requires the court to consider whether any of the costs claimed were unreasonably incurred or unreasonable in amount, but it will not have regard to proportionality (as it would on the standard basis).
Lack of transparency
On behalf of Vardy, it was argued that Rooney's solicitor committed misconduct by understating the incurred costs in the cost budget without informing the other party.
In response, it was said that the certificate on the Precedent H specifically required the party to state the proportionate incurred and estimated costs, that was what was done and there was therefore no misconduct. Indeed, counsel for Rooney attempted to turn the tables, pointing to the conduct of Vardy and arguing that additional costs had been incurred solely as a result of her improper conduct, including a failure to engage in efforts to try and avoid proceedings.
While the judge noted the lack of transparency over Rooney's costs, he was not willing to go so far as to say this amounted to unreasonable or improper conduct.
A need for change?
Rather than take aim at Rooney's solicitor, the judge highlighted to the "lack of clarity" in the wording of the statement of truth on the Precedent H and suggested the rule committee might wish to look at the point.
It is one of the primary advantages of costs management under the CPR, that the budget provides a clear indication of what a party is potentially on the hook for, should they be unsuccessful in the litigation. It focuses minds, allows a cost benefit analysis to be undertaken and can assist in bringing parties to the negotiating table. It must at least be possible that Vardy would have been more hesitant to continue with her claim, and more open to engagement in settlement negotiations, had she had the benefit of a true indication of her opponent's costs and the risks that she took by proceeding.
The approach taken by Rooney's solicitor may have a certain logic to it in light of the statement of truth required such that it did not not amount to misconduct. However, it clearly went against the underlying purpose of cost budgeting and the principles of the overriding objective, given that Vardy remained so entirely in the dark as to her potential cost liability. That much should already be clear from the existing content of and guidance around the CPR.
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