Court considers revision of a costs budget and the meaning of a "significant development"

Costs budgets cover costs to be incurred (not costs already incurred). PD3E para 7.6 provides that "Each party shall revise its budget in respect of future costs upwards or downwards, if significant developments in the litigation warrant such revisions …[In the absence of agreement between the parties] 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" (emphasis added).

This case involves 7 claims that are subject to a group litigation order and the claimants applied for a costs management order. Total budgeted costs amounted to just under £37 million. The defendants subsequently said that certain significant developments required them to revise their budget and the claimants refused to agree to those revisions. Some points decided by Chief Master Marsh in this case included the following:

(1) The claimants were wrong to argue that when considering a revision to a budget, the court has no power to approve costs incurred before the date of the hearing. They had sought to argue costs incurred both before and after the application for approval was issued had to be left over to be considered on a detailed assessment. That argument was rejected, and it was instead held that the court has jurisdiction to revise a budget taking the last agreed or approved budget (or antecedent date, if ordered by the court) as the base reference point: "Costs which have been incurred since the date of the last agreed or approved budget (or the antecedent date) that relate to significant developments are, for the purposes of revision, placed in the estimated columns of the revised Precedent H in one or more phase. In some cases, it may not be obvious where they go (for example a late application for security for costs) but I can see no reason why Precedent H may not be adapted as necessary to accommodate work that does not easily fit in".

(2) One momentous event may be "significant", but a series of events (taken singly or together) may not be: "Use of the plural in the paragraph 7.6 suggests to me that the court should not over-analyse developments and break them down into smaller pieces before considering whether the test in paragraph 7.6 has been satisfied".

The following factors were found to be "significant developments" in this case: (a) The trial timetable had been extended by a total of 48 business days; (b) An application for specific disclosure had resulted in a large number of documents that had to be reviewed; and (c) The claimants had served an expert's report which was a change from the agreed basis upon which expert evidence was to be provided.

However, the following factors were found not to be "significant developments": (a) The claimants' application for third party disclosure; (b) Questions put to the defendants' experts by the claimants; and (c) Modest adjustments to the claimants' case following a change in approach by the claimants' expert.