Significant Developments

Significant Developments And The New Precedent T

The Civil Procedure (Amendment No. 3) Rules 2020 and the 122nd Practice Direction Update come into effect on 1 October 2020… the most notable change is the introduction of the new formal procedure for varying your costs budget and imposition of a mandatory duty on parties to do so where there is a significant development in the litigation.

Kings Security Systems Ltd v King & Anor

Costs Budgeting And Incurred Costs | To Comment Or Not To Comment

In Richard v The British Broadcasting Corporation (BBC) & Anor [2017] EWHC 1666 Chief Master Marsh urged a “degree of caution” when considering whether to make a comment about incurred costs at a costs management hearing, saying “To my mind there is little or no value in the court recording a general comment about incurred costs along the lines that the incurred costs are “substantial” or they are “too high”. If the court wishes to record a comment that the incurred costs are “excessive” or they are “unreasonable and disproportionate” it will wish to be sure that the comment is made on a sound footing, rather than impression, because commenting is quite unlike the exercise of approving a figure per phase for future costs. The court will also wish to consider the utility of making a comment unless it is specific and well-founded.”

These sentiments have been echoed by Master Kaye in a decision handed down last November, but only just published.

Marbrow v Sharpes Garden Services Ltd

The Cap On Recoverable Costs Of Costs Budgeting And Other ‘Interesting’ Points

Master Gordon-Saker determined three issues which arose in the course of a , namely:

i) whether the caps on recoverable costs of budgeting provided by sub-paragraphs 7.2(a) and (b) of Practice Direction 3E of the Civil Procedure Rules 1998 include or exclude value added tax;

ii) whether the Claimant was entitled to recover the sum of £2484.48 in respect of interest paid under a disbursement funding loan; and

iii) whether the Claimant’s entitlement to interest should run from 3 months after the date of the order for costs.

Utting v City College Norwich

CPR 3.18(b) | Underspend Does Not Constitute Good Reason To Depart From An Approved Budget

Master Brown (costs judge) has joined the debate about the effect of an underspend in a costs budgeted case.

“I agree with [DJ Lumb] that if an underspend were to be a good reason for departing from a budget it would be liable to substantially undermine the effectiveness of cost budgeting. As the Judge effectively observed, solicitors who had acted efficiently and kept costs within budget would find their costs subject to , whereas less efficient solicitors who exceeded the budget would, absent any other “good reason”, receive the budgeted sum and avoid

“even if ‘underspend’ were a “good reason” for the purpose of CPR 3.18 it does not follow that there should be a deduction from the sums claimed. Plainly, the fact that a party has spent less than its budget for a phase does not mean there is therefore in fact a good or appropriate reason for any further reduction and I was not satisfied that there was any additional “good reason” for any such reduction.”

HEATHFIELD INTERNATIONAL LLC V AXIOM STONE (LONDON) LTD

CPR 3.14 | Late Costs Budget | Relief From Sanctions Denied

Relief from sanctions was refused to the second Defendant (“D2”) in this case following the late filing of its costs budget.

Having initially failed to file its budget prior to the CCMC (which was adjourned) D2 then failed to file it less than 21 days prior to the adjourned hearing.

To compound matters, D2 then left it until the day before the adjourned CCMC to file and serve its application for relief.

Finding that there had been “an abysmal approach on D2’s part to conducting this litigation efficiently” HHJ Simon Barker QC refused relief from sanctions result in D2 being treated as having filed a budget comprising only the applicable court fees.

No good reason

CPR 3.18(b) | Is Underspend Good Reason To Depart?

In March last year we reported on the decision in Salmon v Barts Health NHS Trust [2019] wherein HHJ Dight held that if the sum claimed on assessment in any given phase of a bill is lower than the budgeted figure for that phase, because the anticipated work had not been completed and/or by virtue of the indemnity principle, this is, in and of itself, capable of being a ‘good reason to depart’ under CPR 3.18(b) thus opening that phase to a traditional line by line assessment.

Lejonvarn v Burgess & Anor [2020] EWCA Civ 114

Speculative Claims, Indemnity Costs And The Effect Of An Approved Costs Budget

Following the dismissal of all claims by the High Court in this construction dispute, and an award of costs on the standard basis to the appellant (defendant), the Court of Appeal had to determine three issues, namely:

a) Whether it was a case in which the respondents’ pursuit of what were said to be “speculative, weak, opportunistic or thin claims” could properly be described as out of the norm such as to warrant an order for indemnity costs.

b) Whether the respondents’ failures to accept and subsequently to beat the appellant’s Part 36 offer, made at a very early stage in the proceedings, also meant (either separately or taken cumulatively with the pursuit of these particular claims) that an order for indemnity costs was warranted.

c) The relevance, if any, of the fact that the appellant’s approved costs budget was said to be £415,000, but that any assessment on the indemnity basis would start at the appellant’s actual costs figure of not less than £724, 265.

MXX V UNITED LINCOLNSHIRE NHS TRUST [2018] EWHC B23

Costs budgeting and hourly rates: another case of miscertification

This was a decision regarding alleged mis-certification of a costs budget. The case bore similarities to the facts in Tucker v Griffiths and Hampshire University Hospitals NHS Trust, another decision of Master Rowley. Both parties were critical of Master Rowley’s decision in Tucker, the defendant complaining that it was too lenient and the claimant contending that it had been too harsh as a finding of misconduct under CPR 44.11 had not been warranted on the facts.

Seekings & Ors v Moores & Ors [2019] EWHC 1476 (Comm)

Defendant fails to demonstrate significant developments under PD3E s7.6 to secure budget increase

The was an application by the defendant in a business dispute to upwardly revise his costs budget under PD3E s7.6 by reason of various ‘significant developments’ in the litigation including additional costs involved in answering a request for further information and an increase in the number of documents that had been required to review. The application was unsuccessful primarily due to the fact that the increased costs had, it was held, arisen due to the defendant’s own actions in failing to properly clarify his case, despite two court orders to do so. Furthermore, the extent to which his legal team were required to review disclosure documentation was something which should reasonably have been anticipated.

BARTS HEALTH NHS TRUST v HILRIE ROSE SALMON

CPR 3.18(b): Good Reason To Depart?

HHJ Dight finds on appeal that the fact that the sum claimed on assessment in any given phase of a bill is lower than the budgeted figure for that phase, because the anticipated work had not been completed and/or by virtue of the indemnity principle, is itself capable of being a ‘good reason to depart’ under CPR 3.18(b). Once CPR 3.18(b) had been invoked it was then open to the paying party to challenge the figure which was then being claimed by the receiving party, and they did not have to assert a further good reason to enable the court to do so.