Author: Daniel Murray

Behave unreasonably in litigation and pay the price. A reminder from the High Court

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The High Court has delivered an important reminder to parties, of the potential repercussions in respect of costs if they act unreasonably throughout the litigation.  

In VV v VV [2022] EWFC 46, Mr Justice Peel stated “I am satisfied that it is appropriate for W to make a contribution towards H’s costs. It does not seem to me to be unfair to invade her needs based award to an extent. She should not be entirely protected from costs consequences.”

The case was a divorce dispute, for which the default position in respect of costs is usually that the parties should bear their own costs. Pursuant to section 28.3 (6) FPR however, the Court may make a costs order against one, or both parties. The factors to be taken into consideration when making any potential awards are listed in section 28.3 (7) FPR and are as follows:

(b) any open offer to settle made by a party;

(c) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(d) the manner in which a party has pursued or responded to the application or a particular allegation or issue;

(e) any other aspect of a party’s conduct in relation to proceedings which the court considers relevant; and

(f) the financial effect on the parties of any costs order.”

Rule 4.4 of Practice Direction 28A states that:

“The court will take a broad view of conduct for the purposes of this rule and will generally conclude that to refuse openly to negotiate reasonably and responsibly will amount to conduct in respect of which the court will consider making an order for costs. This includes in a ‘needs’ case where the applicant litigates unreasonably resulting in the costs incurred by each party becoming disproportionate to the award made by the court”.

Following the division of assets, H sought an order for costs from W in the sum of £450,000. £400,000 of W’s costs had already been paid by H, and a lump sum payment of £750,000 which was awarded to W meant that the net outcome of the judgement was that H would have covered in full the costs incurred by W.

After considering the facts of the case, H was awarded £100,00 towards costs, to be offset against the lump sum payment to W of £750,000. The judge was critical of the fact W had fell short of her financial proposal by over a figure of £5 million and had failed to succeed on 2 key evidential points. One of which had cost H significant sums.

It was stated that this costs award would have been higher had it not been for H’s own unreasonable conduct, which included a failure to fully disclose financial assets.

The case serves as an important reminder to parties, that their behaviour can have a significant impact on their costs recovery, regardless of whether or not your opponent has also acted unreasonably.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com.  

Reference to Part 36 offers at CCMC’s. What is the position?

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The provisions of CPR 36.16 (2) specifically state that:

‘The fact that a Part 36 offer has been made and the terms of such offer must not be communicated to the trial judge until the case has been decided’.

There are a small number of exceptions to this rule, which are listed in CPR 36.16 (3), but what is not explicitly dealt with, is the position as to whether offers can be disclosed to an interlocutory judge.

Barring an agreement to make reference to any offers pursuant to CPR 36.16 (3) (C), a party wishing to make reference to an offer may therefore be forced to make an application to rely on such information. This was the position and point of principle discussed in the recent case of FKJ v RVT & Ors [2022] EWHC 411 (QB). Here, the Honourable Mrs Justice Collins Rice heard an appeal from an earlier decision by Senior Master Fontaine, who had rejected such an application.

In the grounds for their appeal, the Appellant’s relied heavily on the reference to ‘trial judge’ within the construction of CPR 36.16, to suggest that the bar on the communication of offers did not extend when the judge overseeing preliminary issues or case management would not be presiding over the final hearing. Although in submissions, the Appellant had acknowledged that whilst there was no unqualified entitlement to refer to such offers, even where it was known that the judge hearing preliminary issues was not the trial judge.

Support was gathered in these submissions from White Book commentary on Rule 36.16, which includes the following:

Interim Hearings – As stated in r.36.16(2), the general rule restricts disclosure to the ‘trial judge’ and it has long since been understood that it does not prevent disclosure to a judge dealing with interim matters in the course of which it may be both necessary and desirable for the judge to know of offers made (Williams v Boag [1941] 1 KB 1, CA). Nowadays, of course, parties and their solicitors should be aware of the need for different approaches to references to offers depending on whether the judge conducting the CMC [case management conference] or other interim hearing is, or could be, the trial judge. This is of particular importance where the designated civil judge is conducting the pre-trial proceedings or in specialist courts where case management is undertaken by judges rather than masters or district judges.

Mrs Justice Collins was not swayed by this reference, on the basis that the decision in Williams v Boag preceded the provisions of Part 36 by a number of years. She was also not convinced that further authorities relied upon, provided sufficient assistance to overturn the initial decision and satisfy the criteria required by CPR 52.

Subsequently Mrs Justice Collins determined that, ‘authorities … cited … provide limited assistance, analogous at best. Unless there are clearer authorities …, I am inclined to agree that the question of principle remains outstanding, however surprisingly. In an appropriate case, it may be necessary to resolve that question definitively one way or the other. I do not, however, consider the present appeal to be that case, …’.

It appears to be therefore, that unless the rules committee or another authority clarify the position, the most sensible course of action would be for a party wishing to rely on an offer during the budgeting or case management process to make an application to the Court, absent any agreement, and seek to sway their view based on the facts of the case.

Whilst at most CCMC’s there may be no need at all to refer to Part 36 proposals, it can be envisaged that they may be useful when a party seeks to hang their hat on the ‘sums in issue’ limb of the proportionality criteria, when attempting to sway the Court that the budgeted sums claimed are proportionate or disproportionate.

There are of course several factors which determine whether legal costs are proportionate, in this writer’s experience the factor which seemingly plays the biggest role in setting an appropriate costs budget, is the level of the costs budget in comparison to the claim value. Parties wishing to take this approach should therefore proceed with caution until there is further commentary on the issues.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com.

An important reminder to litigators to seek to recover interest on costs

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With households and businesses feeling the pinch more than ever in the current financial climate and following the Bank of England’s announcement on 5 May that base interest rates had increased to 1%, the highest level in 13 years, it is important that litigators bear in mind the recovery of interest on their legal costs.

On sums above £5,000, interest is awarded pursuant to s.17 of the Judgments Act 1838 in the High Court. In the County Court, the equivalent powers come from S.74 of the County Courts Act 1984. In the County Court however, generally interest is not payable on sums under £5,000.

Post settlement, the general position is that interest will begin to run from the date an entitlement to costs arises, at a prescribed rate of 8% pursuant to the Judgments Debts (Rate of Recovery) Order 1993, SI 1993/564. Increased awards can be made in certain circumstances however, including when Part 36 offers are beaten at trial.

In addition to interest recoverable post judgment, there is a discretion available to both the High Court and the County Court to award interest at an alternative date. This discretion arises from CPR 40.8 and CPR 44.2(6)(g), and the County Courts (Interest on Judgment Debts) (Amendment) Order 2019, SI 2019/903, art 2.

It is this potential discretionary award for pre-judgment interest which litigators should be most aware of and be armed with submissions to the Court when attending hearings, to recover any losses they may have incurred in financing the litigation.

The date from which any pre-judgment interest will run is again at the Court’s discretion, and it was acknowledged by Lord Neuberger in the Court of Appeal in Simcoe v Jacuzzi UK Group plc[2012] EWCA Civ 137, that there is no ‘perfect date’ for deciding the date from which it should run and a broad brush approach should be taken.

Case law has suggested various starting points as being appropriate, with the date costs were incurred until the date post judgment interest becomes payable, (Richards and Purves v I P Solutions Group Ltd [2016] EWHC 2599 (QB)), the date costs were paid (O’Neill v Avic International Corp (UK) Ltd [2019] EWHC 374 (QB)), and the dates of Solicitor’s invoices were paid, all previously being used as the starting point.

The amount of pre-judgment interest awarded is typically between 1 and 4% above base interest rate, with an increase of 2% being a common award. However, the rate awarded can vary and the amount awarded will depend on the class and type of party involved in the action. For example, first class borrowers with access to capital markets might expect to receive a lower amount of interest.

You can find out more about our services here or you can contact the Costs and Litigation  Funding team at CivilCosts@clarionsolicitors.com.

The use of the Damages Claim Portal now mandatory for all claims for damages commencing in the County Court

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In a move which is very much in line with the Master of the Rolls vision for online digital justice, the use of the Damages Claims Portal for all claims for damages commencing in the County Court, is now mandatory for legally represented Claimants from today.

The pilot scheme had previously been in effect from May 2021 and will run until April 2024. The 142nd update to the CPR, which was released on 28 March makes the use of the online system mandatory.

There are a number of exceptions to this requirement, amongst which are, if the Claimant is a protected party, or the case is one to which the Pre-Action Protocol for Personal Injury Claims below the Small Claims Limit applies.

The full list of exemptions and guidance on how to follow the portal process can be found in Practice Direction 51ZB.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com.

Supreme Court finds in favour of Claimant Solicitors seeking an equitable lien over costs

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In a favorable judgment for Claimant Solicitors, the Supreme Court has decided by a narrow 3:2 majority that the Claimant’s Solicitors were entitled to an equitable lien over their clients’ compensation for their costs.

The Facts

The case centered around proceedings brought against Ryanair by Bott & Co Solicitors, a North West firm who handle a high volume of delayed flight compensation claims. The Defendant had been leapfrogging the Claimant’s Solicitors once a claim was submitted and settling matters with the Claimants, who in turn were not passing on costs due to Bott & Co. The Claimant’s Solicitors acted on Conditional Fee Agreements in the cases, with costs being 25% of the total compensation amount awarded to the client plus VAT, plus an administration fee. Costs were to be deducted from the compensation before it was paid to the Claimants. Bott brought proceedings, seeking both an equitable lien over the compensation and injunction to prevent Ryanair taking this approach in cases where notice that they had been retained had been provided.

The Decision

In determining the key issues, consideration was given to the Court’s earlier decision in Edmonson v Haven [2018] UKSC 21. Here the Supreme Court examined the role of the solicitor’s equitable lien in the context of modern litigation, where access to justice is a central underlying goal and out of court settlements and alternative dispute resolution are encouraged. In Edmonson, the Court had decided that the solicitor was entitled to an equitable lien over the settlement fund because the work had made a significant contribution to the settlement of the client’s personal injury claim. That case flowed from the position whereby a Claim Notification Form had been submitted through the Pre-Action Protocol for Low Value Personal Injury Claims. This, in the words of Lord Burrows ‘implicitly overruled’ the Court of Appeal’s decision in Meguerditchian v Lightbound [1917] 2 KB 298, which decided that the trigger for an equitable lien was whether proceedings had been issued.

Being bound to follow the decision in Edmonson, Lord Burrows for the majority, stated that ‘the appropriate test for a solicitor’s equitable lien is whether a solicitor provides services (within the scope of the retainer with its client) in relation to the making of a client’s claim (with or without legal proceedings) which significantly contribute to the successful recovery of a fund by the client’. It was decided that although the majority of flight compensation claims are settled without any dispute, the act of advancing the Letter of Claim by Bott & Co, was sufficient to satisfy this test.

The decision of the Court also centred around promoting access to justice, with the logic being that this would be promoted further if Solicitors were comfortable knowing that they had the security of a lien to recover their costs. Lady Arden for the majority stated that ‘effective access to justice has become a foremost animating principle of the equitable lien’.

In their dissenting judgements, Lord Legatt and Lady Rose based their decisions, amongst other reasons, on the fact that there was no real prospect of a dispute in these types of cases.

The result

The fact that the requirement for a dispute does not form part of the test for establishing an equitable lien, opens the door for the application of this case to a greater number of cases, particularly as litigation continues to be driven to become more streamlined. The decision, as acknowledged by Lord Burrows in his judgement, is ‘at the outer limits of a solicitor’s equitable lien’, but nonetheless provides Solicitors with a greater degree of certainty and ensures there should be firms willing to undertake relatively low value work on behalf of Claimants in the future, which can only be a good thing.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com  

Your Bitcoin is no good here, ‘I need something more real’ orders the High Court

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Further guidance has been given on several issues in relation to security for costs, in the recent case of Tulip Trading Ltd v Bitcoin Association for BSV, which is one of the cases currently ongoing and involving the creator of the crypto currency, Bitcoin.

The guidance comes following an initial hearing whereby an order granting security on grounds of impecuniosity had been made. It was agreed between the parties that the amount to be ordered as security for the Defendant, and the liability for and amount of the costs of the security applications would be determined on written submissions without a hearing.

Principles

Master Clark, delivering judgment, summarised several principles in relation to the quantifying of security. He confirmed that the relevant principles were those set out in the 2021 White Book at 25.12.7, and summarised in Pisante v Logothesis [2020] EWHC :

“(i) The appropriate quantum is a matter for the court’s discretion, the overall question being what is just in all the circumstances of the case. In approaching the exercise, the court will not attempt to conduct an exercise similar to a detailed assessment, but will instead approach the evidence as to the amount of costs which will be incurred on a robust basis and applying a broad brush (see also Excalibur Ventures v Texas Keystone [2012] EWHC 975 (QB) § 15).

(ii) In some cases, the court may apply an overall percentage discount to a schedule of costs having regard to (a) the uncertainties of litigation, including the possibility of early settlement and (b) the fact that the costs estimate prepared for the application may well include some detailed items which the claimant could later successfully challenge on a detailed assessment between litigants. There is no hard and fast rule as to the percentage discount to apply. Each case has to be decided upon its own circumstances and it is not always appropriate to make any discount.

(iii) In deciding the amount of security to award, the court may take into account the “balance of prejudice” as it is sometimes called: a comparison between the harm the applicant would suffer if too little security is given and the harm the claimant would suffer if the amount secured is too high. The balance usually favours the applicant: an under-secured applicant will be unable to recover the balance of the costs which is unsecured whereas, if the applicant is not subsequently awarded costs, or if too much security is given, the claimant may suffer only the cost of having to put up security, or the excess amount of security, as the case may be (see also Excalibur § 18).

…(v) In determining the amount of security, the court must take into account the amount that the respondent is likely to be able to raise. The court should not normally make continuation of their claim dependent upon a condition which it is.

Issues as to the amount

There were three issues of principle which arose between the parties as to the amount of security which was to be awarded:

(1) whether the starting point should be that no reduction will be made on assessment;

(2) whether the court should consider and take into account the likelihood that costs would be awarded on the indemnity basis;

(3) the extent to which the court should take into account the Guideline Hourly Rates applicable to summary assessment.

With regards to the first principle, Master Clark refused to award the entirety of the costs as claimed, and distinguished from caselaw relied upon by the Defendants. It was determined that these were not relevant authorities on the basis that security had been granted under the non-residence condition (CPR24.13(2)(a)) and the Judge had applied a discount to the amount awarded to reflect a sliding scale of risk of non-enforcement.

The relevance of a potential final indemnity costs order was given little weight by Master Clark, who was unwilling to determine the security amount on this assumption, as he was unwilling to determine the merits of the claim at that stage.

It was determined that the case was of such significant complexity and value (over $4 billion) to attract rates in excess of the guideline hourly rates, and as such it was confirmed that these were of limited assistance.

Amount of security to be ordered: discussion and conclusions

It was determined that security for70% of the Defendants incurred and estimated costs would be ordered once all issues had been considered.

Once this had been determined, the Defendants sought security in one of the two usual methods; through payment into the Court, or via bank guarantee given by a reputable first class London bank.

The Claimant however, proposed that security be given by the transfer of digital assets to their own Solicitors. Namely, two forms of Bitcoin, with the proviso that a 10% buffer in addition to the value of the security be transferred and written confirmation of the transfer be provided, along with the public addresses of the Bitcoin. The 10% buffer was proposed to address the volatility in the value of Bitcoin.

Master Clark rejected the Claimant’s proposals, stating:

“The security offered by the claimant would not result in protection for the defendants equal to a payment into court, or first class guarantee. It would expose them to a risk to which they would not be exposed with the usual forms of security: namely of a fall in value of Bitcoin, which could result in their security being effectively valueless. The top-up provisions proposed by the claimant do not fully meet this risk,…”

Given the ever growing popularity of crypto currency, the case is unlikely to be the final occasion in which payment using crypto currency or other digital assets as opposed to traditional currency is proposed. Especially given the current Master of the Rolls, Sir Geoffrey Vos’, enthusiasm for the legal profession to embrace technology. Whilst highly uncertain at the moment, the long term stability of Bitcoin is likely to be determined the more it spreads into the mainstream in our economy. Should this occur in the coming years, then perhaps we will be in a position whereby the payment of damages and costs will be ordered by non traditional forms of currency?

Should you have any queries regarding an application for security for costs you can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com

Guidance from the SCCO on approval of costs settlements, assessments under CPR 46.4(2) and deductions from damages

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Important guidance has arrived from the senior costs judge Andrew Gordon-Saker, which outlines the procedure to be followed in the Senior Courts Costs Office where a child or protected party has been awarded the costs of proceedings and an agreement has been reached with the paying party as to the amount of those costs.

The practice note serves as a useful tool to all litigators when concluding matters on behalf of children and protected parties.

A full copy of the guidance can be found here

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com.

Fixed costs when the claimant dies, which section of CPR 45 applies?

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The Court of Appeal has delivered an important ruling in the case of West v Burton [2021] WLR(D)379], on which provisions of CPR 45 apply where the claimant dies throughout the course of a matter in which the fixed costs regime applies. The issue in dispute between the parties was whether it was the lesser provisions, in monetary value, of section III, or the more favourable in this instance, provisions of section II.

Both at first instance and at the initial appeal it had been decided that it was the provisions of section II of CPR 45 which ought to apply, as was argued on by the claimant. The reasoning being that claims brought by personal representatives were excluded from the protocol.

The unanimous decision was delivered by Sir Nigel Davis, who confirmed he had not found the decision altogether easy. It was said that “for the purposes of the Protocol, the claimant throughout is regarded as the person who was involved in the road traffic accident.”

“Furthermore, r.45.29A and r.45.29B are in terms confined to claims started under the Protocol. I consider, accepting the submissions of Mr Williams, that in this case the claim that was settled was that of Mr West. But Mr West was not himself the person who started the claim, within the meaning of the Protocol. Indeed, as executor he never could have started such a claim, given the provisions of paragraph 4.5(3) of the Protocol. Consequently, this was not a claim, for the purposes of assessing costs, within the ambit of CPR r.45.29A or r. 45.29B. Accordingly, costs fall to be assessed by reference to section II.”

“It further follows that I agree with the judge that the outcome would have been the same even had the claim not exited the portal. The provisions of section III would not have come into play; and this would still have remained a section II case.”

Thus, the earlier decisions were upheld and a more favourable costs award made. It will be interesting to see if the rules committee now sets out the position in express terms, as alluded to by Sir Nigel in his conclusions. The decision will however lead to more advantageous awards not only in low value RTA claims, but in low value EL/PL cases also, to which the same provisions apply.

This article was featured in our July 2021 newsletter, see the full newsletter here.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com.

The application of Cost Budgeting in Asbestos claims, a convention not easily disapplied

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Further guidance has been given by the Asbestos Masters in the High Court as to the conventions regarding Cost Budgeting in mesothelioma and other asbestos disease cases.

The extempore judgment in Smith v W Ford & Sons (Contractors) LTD [2021] EWHC 1749 (QB) commented on the traditional convention, not rule of law, that Cost Budgeting be dispensed with in asbestos disease cases, which has been reinforced by the introduction of PD 3E paragraph 2(b). This indicates that in all cases where there is limited or severely impaired life expectation (five years or less remaining) the Court will ordinarily disapply costs management.

Asbestos cases, for those unfamiliar with them, usually have the CMC listed much sooner than other Multi Track matters and can be listed within weeks or even shorter sometimes, of issue. The period for settlement following issue can often be as short as a few months. Despite the differences in life expectancy of the Claimants, no distinction is made in listing between mesothelioma and asbestosis cases, and fatal cases. In view of this, the listing arrangements cannot accommodate the often hotly disputed, budgeting process.

In the aforementioned case, submissions were made at the CMC on behalf of the Defendant that the usual convention should be disapplied and the case should cost managed. The submissions were made in three parts. Firstly, that the Claimant was deceased. Secondly, that the case was a heavily contested trial, and not a ‘straightforward’ disposal hearing. Thirdly, that it amounted to a general encomium in favour of costs budgeting.

It was observed by Master Davison who delivered the judgment, that all of the factors were considered by the Asbestos Masters and by the senior judiciary who devised the convention, and it deemed that ‘the factors that are generally in favor of costs budgeting were judged to be subordinate to the factors that I have mentioned’.

Interesting comments as to the interlink between Cost Budgeting and Detailed Assessment followed the decision in the second part of paragraph 9 of the judgment. Master Davison commented that QB Masters, Chancery Masters and Costs Judges do not necessarily share this defendant’s expressed confidence that costs budgeting controls costs better, or more effectively, than detailed assessment. Acknowledgment was given that this was a ‘complex and somewhat sensitive issue’.

The decision in respect of the application of Cost Budgeting in these types of cases comes as no surprise, and it seems that the hurdle to be cleared for applying the cost budgeting process remains a high one. The latter comments however come as more of a surprise, with it being this writer’s opinion, and the consensus amongst many a Legal Costs professional that cost management has reduced the issues in dispute once it comes to the Detailed Assessment process. The forum of any debate as to the issue, and whether the opinion is shared amongst Masters in other divisions of the High Court remains to be determined at a later date.  

You can find out more about our services here or you can contact the Costs Team at CivilCosts@clarionsolicitors.com.

Persimmon Homes Ltd v Osborne Clark LLP – A warning to act promptly when revising costs budgets

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The High Court has delivered the most significant judgment since the implementation of the use Precedent T for budget revisions in October 2020, and the provisions of CPR 3.15A.

The case

In Persimmon Homes Ltd and Anor v Osborne Clarke LLP and Anor [2021] EWHC 831 (Ch), the developer Claimant’s brought an action for negligence arising from the drafting of agreements and ancillary advice relating to the development of land. The Defendants had issued a claim for unpaid fees against the Claimant and the matters were being heard together.

A Costs Management Order had been made in December 2019, with the Claimant’s budget approved in the sum of £1.445m and was proceeding to a third CCMC in January 2021. Prior to the third CMC, an application was made to vary the approved costs budget by the Claimant on 21st December 2020 to increase their costs by circa £1.339m. The Precedent T had initially been submitted to the Defendant on 3rd December 2020.

The application was made on the basis that there had been 3 significant developments in the litigation, which were not anticipated when the case was initially cost managed. The costs of preparing a Request for Further Information and considering responses, costs of two additional CMC’s and the biggest issue, in relation to disclosure was that the budgets were based on model A & B in the disclosure pilot scheme, with model C eventually being used.

The framework for an application to vary an approved costs budget is outlined within CPR 3.15 A as many practitioners may be aware. Within this framework is an obligation on the parties, using the form prescribed by PD 3 E (Precedent T) to:

  • Revise its budgeted costs upwards or downwards if significant developments in the litigation
  • submit any revised budget promptly to the other party for agreement.
  • Confine the particulars to the additional costs occasioned by the significant development.
  •  submit the particulars of variation promptly to the court, together with the last approved or agreed budget, and with an explanation of the points of difference if they have not been agreed.

The Court may then approve, vary or disallow the proposed variations, having regard to any significant developments, or may list a further costs management hearing. Where an order is made by the Court, it may vary the budget for costs related to that variation which have been incurred prior to the order for variation but after the costs management order.

Master Kaye identified that to successfully persuade the Court to approve any variation, the threshold of a variation arising from a ‘significant development’ and being submitted promptly must be satisfied before any discretion as to the scope of the variation itself can be considered. The application to vary therefore involves a two-stage process. 

In relation to the first alleged significant development, Master Kaye noted that the request for variation had been submitted ten months after the request was made and four months after all costs in relation to it had been incurred. The Claimant’s submissions that an application to vary can be made after all costs were incurred were rejected, and it determined that whilst “there may be some incurred costs at the point at which an application is made, in respect of which the court may be persuaded to exercise discretion.…. CPR 3.15A (6) was never intended to and is not open season to come back and vary a costs budget after the event.” The application was therefore deemed too late.

Similar observations were also made in relation to the sought variation in relation to the costs of additional CMC’s. With Master Kaye taking issues with the fact that whilst the further hearings were not contemplated at the time the initial hearing took place, the application to vary did not come until 4 months after the order fixing the hearing was made. It was commented that “the absence of promptness in making the applications not only affects whether the application to vary meets the threshold test but has consequences from a practical perspective…… it may have been possible, had an application been made earlier in the year, to identify in advance of incurring all the costs factors which might have persuaded the judge prospectively that they amounted to a significant development that warranted a revision to the last approved costs budget. Prospectively it may then have been possible to persuade a judge that there were additional to be incurred costs said to arise from the RFI/RRFI and CMCs before the costs were incurred thus enabling the court to prospectively manage and control the costs. The very purpose of the variation process.”

The third, and biggest limb of the proposed variation in relation to disclosure was also rejected by Master Kaye. Issue was taken again with the timing of the application in view of the fact the Claimants were aware of the changes in respect of disclosure at earlier CMC’s yet failed to react to the situation. The application was made over 12 months following the switch to model C and therefore was not prompt. Stressing again the need to act prospectively, not retrospectively, Master Kaye confirmed that “Cost budgeting is about setting prospective costs and CPR3.15A is to enable the court to approach the question of variations and amendments in a practical and purposive way not to oust the role of the costs judge”.

Conclusion

The case highlights the extent of the obligations on the parties brought about by CPR 3.15, to revise budgets upwards or downwards throughout the litigation. Throughout the judgement Master Kaye highlighted that the additional costs will be determined by the costs judge at assessment, however the success of such submissions considering this judgment will be interesting to see. To protect their position, parties must assess the content of their approved budgets, and in particular the assumptions which were provided with them at the time of costs management and ensure that any deviations result in the preparation of a Precedent T, at the same time work is being carried out to deal with such deviations. This is the best way to ensure you protect your costs position.

You can find out more about our services here or you can contact the Costs Team at CivilCosts@clarionsolicitors.com.