CPR 3.13(3) | Costs Budgeting Ordered In Child PI Claim Valued At £10m+

• 10 October 2021: PXT suffered serious injuries, including a severe traumatic brain injury, when struck by the Defendant’s vehicle.
• 9 November 2022: Claim issued with no value attributed on the Claim Form.
• 22 June 2023: Liability compromise approved on 85/15 basis in the Claimant’s favor. Directions given for resolution of quantum issues.
• 12 July 2023: Deadline for Claimant to serve estimate of costs from June 2023 order to the next CMC.
• July 2023: Claimant and her mother moved from Lewisham to larger rental accommodation in Edgware.
• 24 November 2023: Claimant provided detailed breakdown of incurred costs to date.
• December 2023: Claimant provided updated costs information in support of request for further payment on account.
• February 2024: Further interim payment application by the Claimant.
• By 2 May 2024 hearing: Claimant served updated costs information showing incurred costs over £850,000 and estimated costs to the next CMC of £262,000. Total incurred and estimated costs exceeded £1.1 million.
• 2 May 2024: Application hearing regarding costs budgeting. Next CMC anticipated in May 2025.

Issues to be decided

The key issue was whether the court should order the parties to file costs budgets at this stage, with the Claimant’s costs to be managed by the costs budgeting regime, or whether this should wait until the next CMC in around May 2025.

As the Claimant was a child, the automatic costs budgeting provisions did not apply. However, the court has discretion under CPR 3.12(1A) and 3.13(3) to order costs budgeting in cases where it would not automatically take place.

The Defendant argued there were serious concerns about the significant increase in the Claimant’s incurred and estimated costs, and the overall high level of costs. It submitted costs management was necessary to ensure the costs did not become excessive and disproportionate.

The Claimant opposed the application, arguing that the complexities and uncertainties in the case, especially regarding the Claimant’s prognosis and long-term needs, meant it was not suitable for costs budgeting at this stage. It submitted the court should wait until the next CMC in 2025 to decide the issue.

The court therefore had to weigh up whether ordering costs budgeting now would promote the overriding objective and save expense, or whether budgeting should be deferred given the particular features of the case.

Parties’ arguments regarding the costs budgeting application

The Defendant submitted that:

• There were significant concerns about the major increase in the Claimant’s incurred and estimated costs since the initial information was provided in 2023. The costs had approximately doubled and now exceeded £1.1 million.
• The overall level of costs was very high and gave rise to real concerns they would be excessive and disproportionate if not controlled.
• Specific issues included the hourly rates claimed by the Claimant’s solicitors (30-59% above Guideline Hourly Rates), potential over-involvement of solicitors in day-to-day care and rehabilitation matters, insufficient delegation of work, and concerns about the amount of time spent on considering documents.
• Costs budgeting was necessary and appropriate to manage the costs and reduce the risk of disproportionate costs being incurred. It should be ordered as soon as practicable rather than waiting until mid-2025.

The Claimant argued that:

• The case was not suitable for costs budgeting at this stage due to the complexities, uncertainties over prognosis, and PXT’s young age. It was difficult to accurately estimate costs over a long period.
• The reasons the CPRC exempted claims by children from automatic budgeting applied here, as it would take years for the Claimant’s condition to stabilise and for a proper prognosis to be given. Budgeting so far ahead was not sensible.
• There were many unknowns regarding PXT’s long-term prognosis and needs, especially how her brain injury would affect her development through adolescence. A clear prognosis was not expected until 2026 at the earliest.
• Other complicating factors included difficulties with schooling, the family’s relocation, and mental health issues for both PXT and her mother. These created additional uncertainties.
• The court should wait until the CMC in 2025 to decide if budgeting was appropriate, when matters may be clearer. Ordering it now would just create an additional layer of costs.

In deciding the application, the court had to balance the need to control costs and avoid disproportionate expense with the particular challenges of the case and uncertainties over the long-term position. The key factors and judgment are summarized in the next section.

Court’s decision and reasoning

The court decided the claim should be costs managed by costs budgeting and this should be done as soon as practicable rather than waiting until the next CMC in 2025.

The key reasons were:

1. While budgeting over very long periods like 5-10 years is not generally sensible, here a prognosis is expected by 2026. Budgeting to the next CMC in 2025 and then to an expected trial in 2027 is feasible and reasonable, even if the timetable slips. The case is not like those the CPRC had in mind when exempting children’s claims.
2. The court has real concerns about the significant increase in incurred/estimated costs to date and the overall high level of costs. There is a serious risk of disproportionate costs being incurred without budgeting.
3. While the case is complex with some uncertainty over prognosis, these factors are not so extreme as to preclude effective budgeting. The court can make reasonable assumptions and the parties can seek budget variations if needed. Complexity alone does not prevent budgeting.
4. The increase in costs and level of estimated future costs had not been properly explained and gave rise to serious concerns about disproportionality and unreasonableness. The hourly rates, time spent on documents, and potential over-involvement in care/rehabilitation matters were specific issues.
5. Ordering budgeting is likely to save substantial expense and ensure costs are proportionate, in line with the overriding objective. Although detailed assessment may still be needed, budgeting will narrow issues, reduce points of dispute, and make assessment shorter and cheaper.
6. While the claim value may exceed £10 million, very high value alone does not preclude budgeting. The rules permit budgeting in claims over £10m if the court considers it appropriate. Even high value claims must be conducted proportionately.
7. Although budgeting will cause some short-term expense, this is likely to be modest and outweighed by the significant benefits and savings. The concerns over lack of budgeting substantially outweigh any countervailing factors.

“Having considered all the points made by Mr. Hutton, closely and carefully developed as they were, and issues arising as to the utility, practicality and the expense of costs budgeting and on weighing up all the relevant matters I am satisfied, that I should make an order for costs management by costs budgeting and for reasons which are apparent from the above, that such costs budgeting should start soon.”