Costs Budgets

Costs budgets have, in recent years, caused a number of sleepless nights for litigators but the High Court has provided some relief in the form of the case of Al-Najar and others v The Cumberland Hotel (London) Ltd [2018] EWHC 3532 (QB).

Costs budgets are required in multi track cases (mostly cases that are valued at being worth over £25,000) and are often the subject of vigorous assessment both by  the person drafting them as well as their opposite number and, of course,  the Judge. Costs budgets were introduced to try and give parties some semblance of what each side’s costs were likely to be in the event of a case going to trial. This is often easier said than done and sometimes requires the clairvoyance of Mystic Meg as well as input from experienced costs lawyers. Once a costs budget is either agreed between the parties or ordered by the court, they are pretty much set in stone, unless the parties seek an application to have their budget varied. Often it is the size of the parties’ documents (at the stage of proceedings known as “disclosure”) that can be underestimated.

In the case of Al-Najar and others v The Cumberland Hotel the Judge (Master Dawson) allowed a variation of the budget for the Claimants in relation to disclosure as the Defendant’s documentation had been so large. Even though the Claimants had expected significant documents to be sent to them at disclosure, they received double what they had anticipated: 55 lever arch files worth amounting to 3,250 documents. On this particular point the Judge very helpfully commented that “roughly three hours” of a solicitor’s reviewing time per ring-binder of disclosed documents is reasonable.

The Judge considered that the extra documentation was a significant development in the litigation and ordered the increase in the budget for the Claimants accordingly. The Judge considered his powers under Practice Direction 3E  of the Civil Procedure Rules as well as previous case law and found that:

1. Whether a development is “significant” is a question of fact which depends mainly on the scale and complexity of what has occurred. If it should reasonably have been anticipated, it is unlikely to be characterised as “significant”, or even as “a development”.
2. There is no requirement for the “development” to have occurred other than in the normal course of litigation.
3. Revised budget figures should be reasonable and proportionate in light of the “development”.

It is clear from the Judge’s remarks that he was keen to look at reasonableness, proportionality, and the fact that not every change of course in the litigation process can always be predicted. In addition, if there is a significant development then an application should be made to court to have budgets revised.

http://www.bailii.org/ew/cases/EWHC/QB/2018/3532.html

If you wish to discuss any matters relating to this article, then please contact Stephen Foote for more information.