In Queensgate Place Ltd v Solid Star Ltd & Ors (No. 3) (Consequential Matters) [2024] EWHC 2139 (Ch), the court addressed costs budgeting issues. The key issue was the approval of a late-filed revised costs budget. QPL sought to increase their budget to cover a separate Remedies Hearing not accounted for in the original budget. The court declined to approve the revised budget after the Remedies Hearing had concluded but noted that there were grounds for departing from the approved budget on assessment. The judgment clarified that a court may depart from an approved budget on assessment to account for significant developments in litigation that were unclear at the CCMC. It also established that it is inappropriate for a judge to approve budget amendments after the relevant trial has concluded, and that detailed issues of budget revisions may be left to the costs judge to resolve during assessment.
In Irwell Riverside Developments Ltd v Arcadis Consulting (UK) Ltd [2024] EWHC 2110 (TCC), the High Court dealt with, among other issues, a payment on account of costs in a budgeted case and a claim for pre-judgment interest. Having found the claimant to have been successful party, despite losing on some significant issues, Mr Roger Ter Haar KC awarded IRDL 60% of its costs and ordered an interim payment of £592,964.77, calculated as 90% of 60% of their budgeted costs and 75% of 60% of incurred costs. The court also awarded pre-judgment interest at 8% per annum from the date of payment of each invoice, a “commonplace” practice, per the decision of Sir Alastair Norris in Sharp and others v Blank and others [2020] EWHC 1870 (Ch).
In PXT v Atere-Roberts [2024] EWHC 1372 (KB), the court considered a child’s claim for a severe traumatic brain injury which she had suffered after being struck by a vehicle being driven by the Defendant. As the claim was brought by a child, it was exempt from automatic costs budgeting under CPR 3.12. However, the Defendant applied for costs budgeting to be directed under CPR 3.13 due to concerns over the Claimant’s rapidly increasing incurred and estimated costs, which had doubled to over £1.1 million in less than a year. The Claimant argued that the case’s complexity and uncertainty over the child’s long-term prognosis made budgeting inappropriate at this stage. Despite these arguments, Master Brown ordered costs budgets, finding that the risk of disproportionate costs outweighed other factors.
In Cotham School v Bristol City Council [2024] EWHC 824 (Ch), the High Court addressed the issue of whether a litigant in person instructing direct access counsel in Part 8 proceedings should be required to file and serve a costs budget. The case involved an application for a cost capping order, which was refused. The judge instead ordered all parties, including the Second Defendant, a litigant in person, to file and exchange costs budgets. Despite standard directions suggesting otherwise, the court clarified that it has the power under CPR rules 3.12(1A) and 3.13(3) to make a costs management order and require a litigant in person to file a costs budget, particularly where the claim is complex and substantial recoverable costs are likely. The decision emphasizes the court’s discretionary powers in costs management and the importance of considering the potential scale of recoverable costs in such cases.
In Woolley v Ministry of Justice, the claimant brought a personal injury claim against the Ministry of Justice following an assault he suffered while a remand prisoner. At a CCMC HHJ Baucher significantly reduced the claimant’s costs budget. The claimant argued that the judge had erred in law by refusing to consider the defendant’s agreed costs budget when assessing proportionality of his own. He also submitted the approved budget left him with much lower funding than the defendant, failing to keep the parties on an equal footing. The Ministry of Justice contended that comparisons between budgets were of limited relevance. It was for the judge to assess proportionality of the claimant’s budget, which she had done. The High Court allowed the claimant’s appeal, finding that the judge had disregarded a relevant consideration in refusing to hear submissions based on the defendant’s budget. Her language when addressing claimant’s counsel was also criticised and termed “indefensible”.
“…granting relief will not prevent this litigation being conducted efficiently and at proportionate cost: see Denton at [34]. I have already referred to the fact that the breach has not disrupted the progress of these proceedings. Furthermore, the costs budgeting exercise I undertook was specifically directed to proportionality having regard to the value of the claim. Nor has the breach had any knock-on effects on other proceedings by taking up additional court resources.”
“I cannot see how a client who was told nothing whatsoever about the limits on recoverable costs imposed by two costs management orders could properly be said, either expressly or impliedly, to have given informed consent to expenditure in excess of the budgeted figures.”
In all, I am unpersuaded on the material that what has happened here amounts to a significant development, even on the definition given above. Whilst I acknowledge the need to avoid setting the bar too high by excluding matters that could not reasonably have been known, even if they can be said to be internal to the party seeking the variation, I am also conscious that the bar must be sufficiently high to encourage a rigorous approach to costs budgeting at the outset, otherwise a potential paying party cannot have the reasonable assurance that a costs budget is supposed to bring as to its potential liability in the event of an adverse costs order.
“The best indication of what the Claimant is likely to have done, had an estimate been provided in good time, is what the Claimant did do on 17 April 2020, which was to continue to instruct the Defendant. Nor do I have any idea of what the Claimant’s costs, following a change of solicitor, might have been, so it is not possible to limit the cost recoverable by the Defendant to any such figure.”
To avoid the presumption applied by CPR 46.9(3)(c) the solicitor is required to explain to the client that the costs may not be recovered because they were unusual. “Unusual” must therefore be read in the context of a between the parties assessment. That is not to be equated with costs which are merely “unreasonable”. A solicitor is not required to inform the client that particular costs may not be recovered because a court may conclude that they were not reasonably incurred or reasonable in amount.