In October 2019, Colleen Rooney set the internet ablaze when she accused, via a Twitter post, her former friend, Rebecca Vardy, of leaking private information about her to The Sun newspaper. In the Twitter post, Ms Rooney stated that for some time, she suspected that one of the followers of her private Instagram account had provided details from her posts to the tabloids. Believing the leaker was Ms Vardy, Ms Rooney blocked all her other Instagram followers and posted a series of false stories over a few months, including that her basement had flooded, to see if they would be published by The Sun. “And you know what, they did!” she wrote. “I have saved and screenshotted all the original stories which clearly show just one person has viewed them. It’s… Rebekah Vardy.”

Ms Rooney’s covert ‘sting’ earned her the nickname ‘Wagatha Christie’.

Ms Vardy issued an instant denial, stating, “I’m not being funny, but I don’t need the money, what would I gain from selling stories on you?”

In June 2020, Ms Vardy filed a £1 million defamation suit accusing Ms Rooney of libel.

In 2022, following a media-saturated trial, a Judge found it was “substantially true” that Mrs Vardy had leaked Mrs Rooney’s private information to the press. He ordered Ms Vardy to pay 90% of Ms Rooney’s legal costs. The original costs budget presented by Ms Rooney’s legal team and subsequently agreed by the parties was £540,779, but the final costs bill spiralled to £1.8 million.

Ms Vardy returned to court in early October arguing that she should not have to pay £120,000 of Ms Rooney’s costs and that her legal team had committed misconduct by “deliberately” minimising the original costs agreed. However, the Costs Judge dismissed Mrs Vardy’s claim, stating that although Mrs Rooney’s team could have been more transparent, there was no misconduct on their part.

The risk of being handed a massive costs bill is what puts many people and companies off bringing (often perfectly valid) litigation claims. Understanding how the Court calculates legal costs can help you build an accurate picture of the risk of persuing a claim.

What are litigation costs and how are they worked out?

The general rule regarding costs is whoever loses the case must pay the other side’s costs. It is rare to get back 100% of your legal costs; on average, recoverable costs amount to around 60-80% of the total legal bill.

What is costs management?

In his Review of Civil Litigation Costs: Final Report, Lord Justice Jackson provided four elements of costs management:

• The parties must prepare and exchange litigation budgets and, if necessary, as the case proceeds, any amended budgets.
• The Court must approve each party’s budget.
• It is the Court’s responsibility to manage the case so it proceeds within the agreed budgets.
• When the case concludes, the recoverable costs of the winning party are assessed in accordance with the approved budget.

Recoverable costs include Solicitors’ fees, disbursements (such as court fees and expert witnesses), and the fees associated with enforcing the judgment (if applicable). Costs will be assessed on either the standard basis or indemnity basis. Standard costs must be reasonable, proportionate, and necessary; indemnity costs only have to be reasonable. In the case of indemnity costs, these tend to be awarded if the losing party has acted unreasonably; for example, they failed to meet Court deadlines or refused to participate in mediation.

The Court will also consider the following when calculating legal costs:

• The circumstances of the case.
• Costs orders already made.
• The receiving party’s last approved or agreed budget.
• The value of the claim.
• The complexity and importance of the matter.
• The time spent on the case.
• The location of the work.
• Hourly rates of the Solicitors and Barristers.
• Conduct of the parties.
• Non-court methods undertaken to try to resolve the dispute.

When it comes to working out the final costs on a standard basis, the last approved or agreed budget, which will provide an estimate of future costs, will be critical. The Court will use this figure unless there is a robust reason not to.

How does the Court examine a cost dispute?

In West v Stockport NHS Foundation Trust & Demouilpied v Stockport NHS Foundation Trust, the Court of Appeal stated that when assessing a bill of costs the judge should:

a) Examine the bill of costs line by line and assess the reasonableness of each item. If appropriate, proportionality should be assessed at the same time.

b) If the total reasonable figure is considered disproportionate, a further assessment should be carried out by reference to:

i) particular categories of cost, such as disclosure or expert reports;

ii) specific periods where particular costs were incurred; or

iii) particular parts of the profit costs.

c) Deductions of the bill can be made; however, this must not include any unavoidable costs such as court fees.

d) Following these reductions, the resulting figure is the final amount of the costs assessment and no further proportionality review should be conducted.

Concluding comments

At the time of writing, Mrs Vardy’s case was set to return to court for a line-by-line assessment as set out in the Stockport NHS Foundation case mentioned above. Given that some of the hourly fees charged during the original hearing were said by the Costs Judge to be too high, Mrs Vardy will probably not have to pay the full 90% of £1.8 million.

Getting legal help

To learn more about how our team can assist you with creating a costs risk management plan or dispute resolution, please email us at [email protected] or phone 0121 249 2400.

The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article, please contact 43Legal.