A Costs Budget confined to Court fees only can be amended where significant development occurs

 

In a recent decision of Lewis J in the Queen’s Bench Division, a Claimant, following significant developments in the litigation, was permitted to amend their original budget which had been reduced to court fees only.

In ASGAR & ANOR v BHATTI & ANOR (2017) QBD, the first Defendant was a solicitor and the second Defendant the firm. The Claimants had alleged that they had been induced to pay money to the Defendants when purchasing two properties.

The trial was originally estimated to last six days, but the Claimants failed to file a costs budget. Accordingly, pursuant to CPR 3.14, the Claimants were treated as having filed a budget comprising of only the applicable court fees. The Court made this order in October 2015 following the failure of their relief from sanctions application.

During the litigation, it transpired that the trial was likely to last 12 days rather than the budgeted six. All parties amended their budgets and these were filed at Court.

The question for the master was whether it was possible for the Claimants to revise their costs budget to include costs for the additional work not anticipated at the time of the October 2015 order. The revisions to the budgets were allowed insofar that they reflected costs which were not envisaged when the original budgets were filed and the Order made.

The key issue was whether there had been a ‘significant development’ in the case since the failure to file the original costs budget. The Master found that the additional days of trial were a significant development. Importantly, the revised budget dealt with only the extra six days of trial. The Master was clear that that amounted to a significant development, which was a matter for her discretion. The Defendant’s position was that the October 2015 order (limiting the costs budget to court fees only) would still have been made even if the parties had known at that time that the trial was likely to last 12 days. The Master held that this hypothetical situation was irrelevant.

A further point of principle was the fact that the Master had only allowed the further six days of trial, rather than allowing the Claimant the full 12 days. If the Master had allowed the full 12 days, this would have had the effect of reversing the October 2015 Order and would have been an error in law.

So all is not lost if, subsequently, it can be shown that there has been a ‘significant development’. But what change in circumstances will amount to a ‘significant development’ in the context of such a case where a party has been penalised in costs for failing to comply with an order, rule or practice direction? One would assume that the threshold is fairly high, otherwise the Court’s original penalty is undermined. Clearly, a trial that will be twice as long than previously anticipated will qualify, presumably on the basis that the costs consequences of refusing to exercise discretion would put a significant financial burden on the applicant and would amount to an unjust additional penalty. So is the level of the costs at stake the appropriate gauge for deciding whether an amendment of the budget should be allowed in such instances or is it sufficient, merely, to identify change in circumstances from the previous budget such as: an additional expert, additional witnesses, further applications etc regardless of the level of additional costs this involves. I suspect the former.

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