Jackson reforms fall at first hurdle?

By | 6th February 2013


“When I use a word,” Humpty Dumpty said, in a rather scornful tone, “it means just what I choose it to mean – neither more nor less.” (Alice through the Looking Glass, by Lewis Carroll).

In what must be regarded as a disappointing decision in the Court of Appeal last week in Henry v News Group Newspapers [2013] EWCA Civ 19, the earlier decision of the costs judge was reversed.

The case arose out of the Baby P case and concerned an action for defamation brought by Mrs Henry against The Sun newspaper.The case was settled and the decision appealed was that of the costs judge. Normally, having obtained damages, Mrs Henry would have been entitled to costs but the case was subject to a pilot scheme which required Mrs Henry to file a budget in court for approval. In the event, the actual costs incurred exceeded the approved budget by some £268,000 and the court decided that she could not recover the element for which approval had not been sought.

Not surprisingly, Mrs Henry appealed. What is, perhaps, surprising is that the Court of Appeal allowed her appeal. Unless the decision is overturned in the Supreme Court, this leaves the question of costs in a state of considerable flux just weeks before the new rules on budgets come into effect.

The Court of Appeal decision appears to fly in the face of the Jackson reforms, allowing, as it does, a claimant to recover substantial costs which have not been approved. Although the costs were said to be proportionate and reasonably incurred, the Court of Appeal appears to have ignored the failure by Mrs Henry to follow the terms of the Practice Direction.

Have the Jackson reforms, therefore, fallen at the first hurdle? There is now Court of Appeal authority that departure from the costs regime in the Practice Direction may be permissible, thereby at a stroke, undermining what appeared to be one of the central pillars of the new rules.

Will the Supreme Court ride to the rescue and allow all “the King’s horses and all the King’s men” to put Humpty Dumpty together again? We will have to wait and see.