BDW Trading Ltd v Lantoom Ltd  EWHC 2744 (TCC) concerns the supply of allegedly substandard stone by the Defendant, a supplier of stone from its quarries, to the Claimant, a house builder.
Issues were dealt with prior to a pre-trial review (PTR), leaving the only matter outstanding at the PTR (heard on 2 October 2020) being the parties’ costs budgets (see “The Application” below).
By way of background, costs budgets had been approved at the first case and costs management conference (CCMC) in October 2019. In March 2020, the Claimant sought an increase of £90,000 for the disclosure phase. This was because the Claimant’s costs budget was based on an assumption that fewer than 50,000 documents would be produced, with no more than 15,000 inspected. However, it transpired that the true figures were 250,000 and 70,000 respectively.
The Claimant asserted that this amounted to a “significant development”. The Defendant initially did not agree to the increase sought but, when the Claimant applied for revisions to the directions, including an increase in the budget, this was agreed by consent order (whereby both parties’ budgets were increased).
The Second Wave
Disclosure took place in April 2020 and witness statements were exchanged in June 2020. The Claimant sought a £55,000 increase for the witness statement phase. The Defendant refused, averring that the increase was already captured in the previously agreed increase in the disclosure phase, and that the budget for witness statements would be nearly doubled and was not reasonable or proportionate.
The Claimant applied for an increase (which, by the time of the application had grown to £70,000) for the witness statement phase, and an increase (of £106,000) for the expert report phase. This was done on a “Precedent T” citing, in respect of witnesses, the greater number of documents which were considered with the witnesses, the greater number of statements in the “first round of witness statements” (3 to 6), the number of “supplemental statements” (6), and the impact of Covid-19.
In relation to experts, the Claimant’s precedent T cited inter alia the greater number of documents which the experts had to review, and the need for the Claimant’s experts to visit additional sites, being those visited by the Defendant’s experts (which the Claimant has not anticipated).
The Defendant submitted that the developments were not significant, saying the Claimant had merely underestimated the documents, the significant aspect of that was already reflected in the agreed increases for the disclosure phase.
However, the Judge accepted that four to five times more disclosure than anticipated was a significant development. Further, the consequences of this was not captured by the Claimant’s increase in the disclosure phase – there are “knock-on effects of the avalanche of documents“ beyond the disclosure phase.
The Judge found that the Defendant had, already, accepted that the greater disclosure was a “significant development” in the litigation: “It was implicitly, if grudgingly, accepted as such by the defendant when it agreed to the consent order of 28 April 2020, which also uplifted the defendant’s costs budget for the disclosure phase, following the same logic”.
The Judge noted that, while the additional witness evidence was “not prolix, repetitive or irrelevant”, the increase claimed was excessive – £50,000 was allowed.
As for the experts phase, the perusal of more documents than expected flowed from the “significant development”, but the visiting of more sites by the Defendant’s experts than the Claimant had expected “falls the other side of the line from the plethora of documents. The visiting by experts of more sites than expected does not appear to me to be a direct consequence of the additional documents.”
The Judge undertook a “broad brush apportionment” of the increases relating to the documents (which he allowed) and the site visits (not allowed).
This is another case where a decision has been made as to what constitutes a significant development. Interestingly it re-iterates that a ‘significant development’ could have a knock-on effect on multiple phases. Given that disclosure takes place soon after a party’s budget is approved, parties are well-advised to revisit the budget at that stage to check that the assumptions underlying the budget remain good.
Upwardly varying a budget provides security to the receiving party. The case for costs management – reviewing costs against the Approved Budget to ensure that the Approved Budget continues to reflect the costs of the work that has been, and will need to be, undertaken – and for varying a budget, where a significant development warrants such revision, is self-evident and compelling.
Briefly, on Covid-19 – the additional time occasioned by virtual meetings is likely offset by the saving of travelling time – in other words, for the purposes of budgeting, the impact of “Covid-19 cuts both ways”.