Budgets – Case Updates

Sharp v Blank Ors [2017] EWHC

This significant case involved nearly 6,000 Claimants in an action against former directors of TSB and Lloyds Bank.  One of the key areas considered related to establishing what was deemed a ‘significant development’ to justify a revision to an agreed budget.  The Judge considered that there were 7 relevant issues in this case:

(1) Extension to trial timetable – there is ‘no doubt that the extension to the trial timetable is a significant development’ (para 79).  Further, he noted that ‘the mere fact of a longer trial timetable, with a delayed start date and longer breaks is not, of itself, a sufficient basis upon which to approve an increase to the budget’.

(2) Disclosure – ‘if an application for specific disclosure results in a large number of documents (in this case 984 additional documents) that must be reviewed and assimilated, this may be a significant development in litigation’.

(3) and (4) Expert related work – The Defendants sought an increase to their budget phase of £212,956 due to the service of the Claimants’ expert report which consisted of 74 pages and 676 pages of exhibits and appendices. The Claimants served the expert report without permission from the Court.  The Judge confirmed that this was a significant development (paras 87-88).

(5) Third Party Disclosure – due to the Defendant’s limited involvement in the application, this did not suffice as a significant development.

(6) Additional questions to experts – there must be more than merely a modest increase in the anticipated cost of work within a phase to amount to a significant development.

(7) Expert witness relied upon by Claimants – The Defendant argued that an additional tranche of expert evidence within the Claimants’ expert witness report, which did not appear in the first report, amounted to a significant development.  The Judge averred that it was a development, but not one which was substantial.

There are some important points to take away from this case in terms of what is deemed a significant development (dependant on the facts of each case).

Ali & Anor v Channel 5 Broadcast Ltd [2018] EWHC 840

This case emphasises the importance of filing a costs budget.  The Claimant failed to beat a Defendant’s Part 36 offer at trial and the Defendant was awarded 50% of their costs in accordance with CPR 36.23 (2).  The Defendant had failed to file a costs budget – had they done so they would have been awarded their costs in full.

RNB v London Borough of Newham/Nash v Ministry of Defence [2018]/Jallow v Ministry of Defence [2018] EWHC

The Appeal case in RNB v London Borough of Newham, which was due to be heard, has now been settled.  As a quick summary, Master Campbell reduced hourly rates for incurred costs and then found that it was a ‘good reason’ to reduce budgeted costs also.

However, two further cases have come to light on this point.  In Nash v Ministry of Defence [2018] EWHC B4 (Costs) Master Nagalingam noted that non-budgeted rates were not a good reason to depart from the approved budget.  He went on to say that ‘hourly rates hold no special status and are not to be given any elevated status on an assessment of costs with regards to estimated costs subject to a costs management order’. This case will prove to be a useful tool for Claimant practitioners.

In Jallow v Ministry of Defence [2018] EWHC B7 (Costs) Master Rowley confirmed that ‘once the phase total has been approved the underlying figures are no longer relevant’.

So far it appears the Court is finding that a reduction to hourly rates on assessment is not a good reason to depart from an approved budget.

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