The recent news surrounding the ongoing legal proceedings between Coleen Rooney and Rebekah Vardy litigation was one of those very rare occasions where a dispute regarding legal costs hits the national press. Understandably, there was a focus on the sheer level of costs and the continuing bad blood between the parties, however, a very interesting point was raised in the preliminary issues hearing that related to the prescribed wording on the precedent H budget form. Whilst it may have been of little interest to national tabloid editors, it is worthy of note for anyone dealing with civil legal costs.

The issue

Rooney’s solicitors served and filed a budget (in precedent H form) during the course of the litigation that was significantly lower than the corresponding bill of costs. That by itself is not unusual; often parties will underestimate what their final fees will come to. However, the distinction here is that Rooney’s solicitors knowingly filed a budget that was too low. They were acutely aware that the figures they put in the budget as costs which they had incurred up to that point were in fact significantly lower than the actual costs that had already incurred.

The issue that the court had to decide was whether Rooney’s solicitors had committed misconduct.

Rooney’s legal teams argued that they were fully entitled to complete the budget as they did because this was in line with (their interpretation of) the prescribed statement of truth on the precedent H form which states as follows:

“This budget is a fair and accurate statement of incurred and estimated costs which it would be reasonable and proportionate for my client to incur in this litigation”.

They accepted the costs they had incurred would not be viewed as reasonable and proportionate, and believed that the wording of the statement of truth meant they were required to limit the figures to something that was reasonable and proportionate, even if the figures were very different to the actual costs they had incurred.

Vardy’s legal team argued that this was not simply a misinterpretation of the statement of truth, but Rooney’s solicitors were deliberately misleading and that this amounted to misconduct.

Judgement

Senior costs judge Andrew Gordon-Saker, sitting in the Royal Courts of Justice, stated as follows : ‘It is not in issue that Mrs Rooney’s lawyers put in her budget incurred costs at significantly less time than had actually been incurred, despite the fact they were criticising Mrs Vardy’s lawyers for spending more time.’

He said: ‘The costs included within Precedent H were those that the conducting solicitor at the time viewed to be proportionate in the litigation.’

The judge went on to say: ‘Given the lack of clarity in the wording of the statement of truth [in the budget] and the competing interpretations that have been argued, I cannot say that Mrs Rooney’s solicitor’s interpretation amounted to unreasonable or improper conduct. There is logic in Mr Dunne’s argument that a solicitor who had concluded he could only include reasonable and proportionate costs in the incurred [costs form]…would assume that the other party have done the same.’

The judge said he would ‘criticise Mrs Rooney’s lawyers in embarking on a resolute attack on Mrs Vardy’s incurred costs’ when the ‘costs shown on their client’s budget as incurred costs was in fact only part of the piece.’

He added: ‘However on balance, and I have to say only just, I cannot say given the uncertainty of the wording of the statement of truth and the assumption Mrs Rooney’s solicitors could have made as to the basis of Mrs Vardy’s costs that the failure to be transparent was significantly unreasonable or improper within the definition provided by the Court of Appeal.

‘It may well be that the rule committee may wish to look at the statement of truth in Precedent H to see whether it is sufficiently clear.’

Our view

Our experience at Phoenix is that this interpretation of the statement of truth is not shared by the vast majority of those in the legal costs industry. Whilst Coleen Rooney’s solicitors managed to avoid a ruling of misconduct that was because they received the benefit of a small amount of doubt and ambiguity with the wording on the precedent H form. If parties are entitled to undermine the inherent transparency required in a budget then the whole purpose of budgeting is going to be called into question.

Rebekah Vardy’s legal team have launched an appeal against the judgement.