Costs Budget Variation Promptness

A three-year delay in submitting revised costs budgets proved fatal to the majority of claimed variations, despite the court accepting that significant developments had occurred across multiple phases of the litigation.

A party seeking to vary an approved costs budget under CPR 3.15A must satisfy two mandatory threshold requirements: first, that there has been a significant development in the litigation since the last approved budget; and second, that particulars of the proposed variation have been submitted promptly to the other parties and the court. Only if both are met does the court proceed to exercise its discretion on quantum. [26-27, 32, 38]
The requirement for ‘prompt’ submission of a revised budget is a mandatory component of the jurisdiction to vary. The purpose of costs management is prospective control of future costs, not retrospective approval of incurred costs. Delaying submission until after costs are substantially or fully incurred, even if convenient in a paused litigation, generally defeats this objective and will not satisfy the promptness test. [25, 32-34, 87-88, 96]
A ‘significant development’ for the purposes of CPR 3.15A is a change to the status quo that could not reasonably have been anticipated when the last budget was approved. It connotes an event or series of events that materially alters the scope, complexity or likely cost of the litigation. A party’s own miscalculation, overspend, internal resourcing changes, or subsequent increases in legal fee rates do not constitute such a development. [28, 30, 37, 56, 61, 72]
When assessing whether a development is ‘significant’, the court considers its impact on the litigation as a whole, including the claim’s size and complexity, and the likely additional costs. The amount of additional expenditure is not determinative, but a development leading only to modest additional costs in proportion to the relevant budget phase is unlikely to be significant. [28, 31, 66]
Where a revised budget is sought long after the relevant costs have been incurred, it becomes difficult for the court to distinguish between costs properly attributable to a significant development and an attempt to remedy an initial miscalculation or overspend. This undermines the costs management regime and is a factor against finding the promptness requirement has been met. [25, 88, 92]