In the case of Xtellus Capital Partners Inc v Dl Invest Group Pm S.A. [2025] EWHC 2168 , Judge Bird found that the Defendant’s unreasonable conduct during the proceedings justified ordering that the Claimant’s costs be assessed on the indemnity basis for all phases of the case.
The Claimant had applied to vary its approved budget because its actual costs exceeded the approved amounts, but the Judge considered whether it was necessary to decide that application since the assessment would be on the indemnity basis.
CPR 3.18 governs departures from approved budgets when costs are assessed on the standard basis; it does not apply where the assessment is on the indemnity basis.
CPR 44.4(3)(h) requires the court, on detailed assessment, to have regard to the receiving party’s last approved or agreed budget. Budgets therefore remain potentially relevant even on an indemnity basis assessment, and the Court may depart from them without requiring a “good reason’.
However, the Judge decided that it was best not to deal with the budget variation application at this stage. He gave two reasons:
- On an indemnity assessment the Court can depart from approved budgets, so leaving the matter to a detailed assessment would not prejudice the Claimant; and
- Deciding the variation now would involve applying the “reasonable and proportionate costs” test, which is appropriate for the standard basis, not for the indemnity basis.
In conclusion, an application to vary an approved budget is not automatically necessary where costs are to be assessed on the indemnity basis. The Court may instead leave the issue to be resolved at the detailed assessment stage.
Katie Spencer is a Paralegal in the Costs and Litigation Funding Department at Clarion Solicitors and can be contacted on 07741 988 925 or at katie.spencer@clarionsolicitors.com.