More time required to attack incurred costs?

The Court of Appeal has now provided some clarification on whether courts should interfere with ‘incurred costs’ at the costs management stage.

In Sarpd Oil International Ltd v Addax Energy SA & Another [2016] EWCA Civ 120, Lord Justice Sales said that where parties take issue with an opponent’s incurred costs, then the time to raise that issue is at the first costs and case management hearing. Sales J added that where a judge makes comments or observations on incurred costs at the first CCMC, then there needs to be a good reason for the court to depart from that at a later date.

Sales LJ said: “For example, if a court has commented that incurred costs in a costs budget appear to be reasonable and proportionate, it would usually require good reason to be shown why such costs should not be included in an award of costs on the standard basis at the end of the trial. In such a case, the party who had put forward the costs budget would have been encouraged by the court to litigate on the understanding and with the legitimate expectation that such costs would be likely to be recovered if he were successful, and good reason would need to exist to justify defeating that expectation. Therefore, depending on what is said by the court by way of comment, the practical effect of a comment on already incurred costs made by a court pursuant to para 7.4 of PD3E may be similar to the effect under Part 3.18(b) of formal approval of the estimated costs element in a cost budget. Parties coming to the first CCMC to debate their respective costs budgets therefore know that that is the appropriate occasion on which to contest the costs items in those budgets, both in relation to the incurred costs elements in their respective budgets and in relation to the estimated costs elements.”

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