It is important for costs budgets in personal injury claims to be realistic and proportionate. This was emphasised in a High Court hearing in which a defendant successfully argued that the Court should depart from the usual principle that the unsuccessful party pays the successful party's costs.

The decision related to a man's clinical negligence claim concerning mental health treatment. After agreement of his costs budget could not be reached, a costs management hearing led to it being reduced by 53 per cent.

As a result of the reductions, the defendant sought costs orders in his favour. He argued that the Court should exercise its discretion under Part 44 of the Civil Procedure Rules by directing that there be no order for costs in respect of the costs management hearing and that the man pay the costs of the present hearing. He also argued that the man's costs management costs should be reduced by 50 per cent if the claim succeeded.

The man contended that the reductions to his budget should not be viewed as proving that his approach to costs had been unreasonable. He claimed that the exercise had been no different from any other costs management hearing, and an order that the loser pay the winner's costs should be made in the usual way. He pointed out that his revised costs budget was still slightly higher than the defendant's offer.

The Court noted that it had a wide discretion in making costs orders. While it agreed with the man that it would not be appropriate to regularly depart from the usual principle just because one party's costs budget had been reduced, it found that a party that proceeds to a costs management hearing with an overly ambitious budget should not assume that this will have no consequences in terms of costs.

Reaching the overall conclusion that the man's original budget had been 'unreasonable and unrealistic in terms of proportionality', the Court accepted that there should be no costs order for the costs management hearing and that the man should pay the costs of the present hearing. The Court also ruled that any costs management costs the man was eventually awarded should be reduced by 15 per cent.