Picken J refuses permission to appeal an order rejecting an application to revise a costs budget under s7.6 PD3E, finding that a doubling in value of the claim did not amount to a significant development
CHURCHILL v BOOT [2016] EWHC 1322 (QB)
COSTS BUDGETING : s7.6 PD3E : SIGNIFICANT DEVELOPMENTS
The main ‘headline’ point arising from this 2016 permission to appeal application was Picken J’s observation at para 10 that “a doubling of the size of the claim does not necessarily mean or justify an increase in costs.”
Note, “does not necessarily mean”.
In the context of this particular case, the doubling in size of the claim did not appear to justify any increase in the claimant’s budget.
However, one can easily envisage a case where it might.
For example, if at a CCMC a party’s proposed budget is cut down by the case managing judge on grounds that it is disproportionate to (inter alia) the “sums in issue” it must be right that, if the value of the claim significantly increases at a later stage, the evaluation of what is a “proportionate” range of costs to allow, can, arguably must [see Sharp v Blank & Ors[2017] EWHC 3390 (CH), para 55], be revisited?
Notwithstanding the fact that the “sums in issue” accounts for just 1/5th of the factors to be taken into consideration under CPR 44.5(3), it is often the case in practice that it becomes the overriding factor. Should it not therefore be given its due significance on an application under S7.6 PD3E, at least where proportionality was a feature of the original CCMC?
This was an application for permission to appeal against an order made by Master Eastman on 12 January 2016 when he refused the claimant permission to amend his costs budget pursuant to s7.6 PD3E.
The proceedings were for damages arising from a road traffic accident which had resulted in the claimant sustaining a traumatic brain injury.
A budget was set by Master Eastman in June 2014 in the sum of £114,000. On that same day the Master gave permission for the parties to rely upon expert evidence in the following disciplines: neurology, neuropsychology, psychiatry care, accident reconstruction and employment.
In January 2016 the claimant applied to Master Eastman to revise the budget to a figure of c£240,000 on grounds that:
“Since [the original budget was set] much has happened. It has now become apparent that the original costs budget is not realistic. The original date fixed for trial was adjourned. This has meant that further medical examinations have taken place. There have been joint meetings between the experts. None of them appear to be agreed. It seems that all the experts will have to attend court to give evidence.”
Paragraph 7.6 of PD3E states:
Each party shall revise its budget in respect of future costs upwards or downwards if significant developments in the litigant warrant such revisions. Such amended budgets shall be submitted to the other parties for agreement. In default of agreement, the amended budget shall be submitted to the court, together with a note of (a) the changes made and the reasons for those changes and (b) the objections of any other party. The court may approve, vary or disapprove the revisions, having regard to any significant developments which have occurred since the date when the previous budget was approved or agreed.
The Master concluded that there had been no significant developments in the case, stating:
“The trial has possibly extended from four to five days, but I do not consider that to be significant in a case of this sort. This was always going to be a contested trial. The previous budget allowed £10,000, for example for attendance of the all the experts as needed. It was not at that stage clear or thought that the experts would not be needed. There was provision made for experts’ attendance. An enormous amount of money seems to have been spent above that budgeted for by the claimant on experts’ reports between now and then. A t the time of the last budget, disbursements for experts ran at just shy of £15,000 and with a further £8,500 to be spent. I am told that nearly £53,000 has been spent so far.”
He continued:
“In my judgment, this case has gone out of control and the solicitor managing it, it would appear, had, frankly, no regard to or respect for the budget or what was budgeted or allowed to be spent. The numbers that I am shown in the breakdown prepared by that solicitor, Mr Bennett, proposed to be spent and him wanting budgeting for in respect of experts are ridiculous in my judgment…”
And concluded:
“Putting all this together, I am completely satisfied that this is a budget where there has not been a significant development in any shape or form. What has happened is that this case has taken a course that was predictable and should have been predicted when the original budget was made…”
The claimant’s main ground of appeal was as follows:
The Master erred in law and fact to refuse the application to amend the costs budget and find that there had not been a significant development in the case.
In support of this ground, the claimant said that:
10. ….
I agree with the submission which is made by Mr Lewers, on behalf of the Defendant, that a doubling of the size of the claim does not necessarily mean or justify an increase in costs.
In any event, it seems to me that there is considerable force in the observation which is also made by Mr Lewers, that the so called developments relied upon by the Claimant would have been capable of being envisaged at the time that the original costs budget was set. I see force, in particular, in the point made that provision was provided for the service of a second report by Maggie Sergeant, the care expert. Furthermore, I note that the risk of the Claimant developing Alzheimer’s disease was discussed by Professor Weller, the Claimant’s psychiatry expert, in his first report dated September2012 with, I am told by Mr Lewers (although I have not seen the report myself) an appendix devoted specifically to that topic; in other words, the risk was addressed in a report produced before the time when the costs budget was set.
11. Other matters relied upon by the Claimant in this context include the fact that the trial was adjourned for a period of between six and nine months as a result of an order made in January 2015. Even leaving aside the fact that the adjournment was apparently (or so I am told by Mr Lewers) the result of the Claimant’s own failure to give full disclosure and the inability of one of the experts to examine the Claimant,
it does not seem to me to follow that, merely because a trial is adjourned, a significant development can be said to have occurred. It is, of course, possible that an adjournment could amount to a significant development but, in this case, it is difficult to see on what basis this, of itself, might by the position.
Mr Nugent, in fairness, recognised that adjournment, of itself, is not always going to amount to a significant development.
12. The suggestion is then made by Mr Nugent, on the Claimant’s behalf, that the giving of further disclosure which was ordered by the court in January 2015 amounts to a significant development. I do not regard this as a tenable suggestion in circumstances where it is apparent from the correspondence that the Defendant has sought the further disclosure in February and March 2014, and so several months before the hearing which took place before Master Eastman on 16 June 2014. Mr Lewers makes the observation that, in any event, the type of disclosure which came to be ordered in January 2015 is what might be described as standard for claims of this sort. It included employment records and educational records which, Mr Lewers pointed out, would be expected to be produced. It seems to me, again, that there is force in that submission. Mr Nugent, in fairness to him, was inclined to accept that the giving of the disclosure, itself, would not have amounted to a significant development. His submission entailed a linkage between the giving of the disclosure, when it was given and the effect on the expert evidence which then came to be served. As to that aspect, I again reject the submission that the expert evidence which was served in this case, in any shape or form, amounted to a significant development which was not contemplated or contemplatable when the costs budget was set in June 2014.
13. I have already referred to the fact that the June 2014 order made by Master Eastman itself identified the expert disciplines in relation to which permission was to be given to the parties to adduce. There can be no issue that the expert evidence which came to be served fell within the categories which were identified in that order.
Moreover, I am clear that it was always envisaged that the experts would review disclosure of the types of documents which were sought and, ultimately, ordered in January 2015, and that reports would need to be served which dealt with that material.
14. I have previously set out passages from the June 2014 order which refer in several places to the service or exchange of “updated” reports. This is a reflection of the fact that, by the time the June 2014 order was made, the Claimant had already served the experts’ reports which were identified in the order itself. The use of the word “updated”, therefore, contemplated the service of additional or second or supplemental reports. When one then comes to consider the order which was made a year later, in June 2015, by Master Leslie, it is possible to see that nothing in that order entailed service of reports which were previously not in contemplation. Specifically, and ignoring for these purposes the report referred to in paragraph 1(a), since this was a report which the Defendant was given permission to rely upon, in paragraph 1(b), provision was made as follows:
“The parties have leave to serve supplementary reports from their medical experts commenting on the disclosure and witness statements only by 4.00 pm on 20 July 2015.”
It is apparent that this paragraph constituted an echo of paragraph 8 in the order made on 16 June 2014 because of the reference in that earlier order to the exchange of “updated reports”. The same, essentially, applies to the other paragraphs in the June 2015 order. Paragraph 1(c) provided for preparation of a joint experts’ report, as did 1(e). Again, these paragraphs simply mirror the paragraphs which were contained under the heading “joint experts’ reports” in the order made a year earlier. The same applies to paragraph 1(d) concerning service of care experts’ and employment experts’ reports. Specifically as to the care expert evidence, which was adduced on the Claimant’s behalf from Maggie Sergeant, Mr Lewers makes the submission that it would be somewhat surprising if a further report was not going to be served in circumstances where the report which was produced in the first instance dated back to 2013. Mr Lewers’ submission is that, plainly, this would need updating and that this would have been contemplated by the court in making the order back in June 2014. Mr Lewers suggests that it ought also to have been contemplated by the Claimant’s lawyers. I agree with that submission. As a result, it is difficult to see how it can be suggested that the subsequent expert evidence can amount to a significant development in the sense of a development which was significant and previously unexpected.
15. The same, essentially, applies to certain of the other medical evidence adduced on the claimant’s behalf. Mr Lewers points out that the relevant doctor’s evidence would have to have been served, in any event -by that, I mean his second report. I agree with that submission also. I agree, specifically, with the observation made by Mr Lewers that the doctor would inevitably need to consider the further disclosure given by the claimant. The same, essentially, applies to Professor Weller. It seems to me, again, that there is force in Mr Lewers’ submission that his further expert report may well have been delayed because of delays in the giving of disclosure by the Claimant but did not entail a type of additional work which could not have been contemplated when the original costs budget was established back in June 2014.
16. In the circumstances, I see no merit in the proposed first ground of appeal and refuse permission to appeal in relation to it. The Master exercised his discretion in a manner which is not realistically open to challenge by way of appeal in view of the guidance given in G v G. I bear in mind in this context, also, that the Master is very experienced in this area of the law and practice and in relation, specifically, to the type of costs budgeting issue which arose for his consideration in January this year.
The Judge dealt briefly with two further grounds of appeal:
17. I turn, then, to the proposed second ground of appeal. This is that the Master “erred in a matter of fact by finding that the case had taken a predictable route which should have been predicted when the original budget was made as being a reason for not amending the budget”. This proposed ground of appeal, essentially, duplicates the first proposed ground of appeal. It entails arguments concerning the increasing of the trial length from four to five days notwithstanding, I note, the direction made by Master Eastman in June 2014, which was that the trial should be fixed with a time estimate of five days.
18. I have already addressed other matters which are raised in this context concerned with the adjournment of the trial, the giving of additional disclosure, and the suggested further expert evidence. Another matter raised concerns the mediation which took place earlier this year. However, in circumstances where the Defendant has agreed to pay the Claimant’s reasonable costs of that mediation, this is not a matter which assists the Claimant. In the circumstances, I, again, see no merit in this proposed ground of appeal. Again, the Master exercised his discretion in a manner which is not realistically open to challenge by way of appeal in view of the guidance given in G v G and followed in the Tanfern case.
19. I turn, therefore, to the final proposed ground of appeal which is that the Master “was wrong to hold that there had been no regard for the additional budget“. The suggestion is made, in particular, that the Master misunderstood the position and failed to consider and apply the Overriding Objective. Once again, there is no merit in this challenge.
The adjournment of the trial did not result in significant additional steps having to be taken and so significant additional costs having to be incurred, nor did the other matters relied upon by Mr Nugent. Again, in my judgment, the Master’s exercise of discretion is not susceptible to challenge.
20. Insofar as the Master’s observations concerning the costs having “got out of control” are concerned, there seems to me to be force in what he had to say. I have in mind, in particular, that whilst in the approved costs budget, the Claimant included incurred disbursements of £14,844, together with an estimated further £8,500, in the event in the revised costs budget which was before Master Eastman in January this year the figure for incurred disbursements amounted to a somewhat larger amount, namely £50,342. Similarly, in relation to solicitor’s time costs, there appears to have been an overspend of nearly £8,500. In short, I consider that there was more than ample justification for the view expressed by the Master.
21. In the circumstances, I am clear that permission to appeal should be refused in relation to all three proposed grounds of appeal. I need not, accordingly, address the matter raised in the respondent’s notice, a legal matter, submitted on behalf of the Defendant concerning the ability of the Master to approve incurred costs and, therefore, decline to deal with that aspect.
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Toby Moreton
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