Cost News

Lindsay Woolford

In the recent High Court decision in Hutson and Others v Tata Steel UK Ltd [2020] Costs LR 369, consideration was given to the factors to apply in an Application to revise a Party’s Budget under PD 3E, where Significant Developments warrant such revisions.

The Relevant Rules

In respect of the revision to a Cost Budget, the relevant rules stipulate the following:

‘Each party shall revise its budget in respect of future costs upwards or downwards, if significant developments in the litigation warrant such revisions. Such amended budgets shall be submitted to the other parties for agreement. In default of agreement, the amended budgets 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’.

Therefore the test to satisfy when seeking to amend the cost budget is to illustrate whether there has been a significant development.

Case law suggests that the threshold for ‘significant developments’ is extremely high (see Warner -v- The Pennine Acute Hospital NHS Trust (Manchester County Court 23rd September 2016) and Churchill v Boot [2016] EWHC 1322 9QB).

Hutson and Others v Tata Steel UK Ltd [2020] Costs LR 369

The case concerned a group industrial disease action, where a Cost Management Order had previously been made. This particular litigation is divided into ‘Phases’, and each Phase is being separately budgeted.

At the conclusion of Phase 1, the Claimants filed a retrospective Application to increase the costs which had already been approved for CMC in Phase 1 by £125,548.00, and the group co-ordination costs by £249,996.00.

The Claimants advanced their Application to revise their Budget on the basis that the Defendant’s (unsuccessful) Application for a Limitation Trial as a Preliminary Issue had increased the timetable by one year, leading to two adjourned Case Management Hearings and thereby increasing costs.

Mr Justice Turner, agreeing with the Defendant, held that the Claimants had failed to produce any evidence as to there being any “significant developments” in the litigation to justify revising the Claimants’ Budget.

It will now be up to the Claimants to demonstrate that there is “good reason” to depart from the approved Budget at Detailed Assessment pursuant to CPR 3.18;

“I recognise that the costs budgeting process must be much broader than that which is involved in an assessment. Nevertheless, in this case, I am unable to take the leap of faith which would be required to categorise the delay caused by the determination of the limitation issue as being a development which was significant.”

Considering the above, it is therefore difficult to persuade a Court that a delay in timetable is a “significant development” worthy of revising a Budget for. This is also supported by Picken J’s comments and refusal to vary the Claimant’s Budget in Churchill v Boot [2016] EWHC 1322 9QB.

However, had the Application been made at the time of the Defendant’s Application this may not necessarily have been the case. Therefore, in order to give an Application to revise a Budget, where warranted by a ‘Significant Development’, the best chance of success, it is of vital importance that this is done at the point that it becomes apparent that there has been a divergence from the Approved Budget. The above case is demonstrative of the robust stance that Courts are prepared to take to cost management. At MRN we are committed to assisting secure the best possible costs recovery and therefore if you feel that there has been a divergence from your Approved Budget, please do contact us to discuss how we can assist.