‘Get your budget right!’


In Murray & Anor v Dowlman Architecture, prior to the first CMC, the parties exchanged costs budgets. The judge; Mr Justice Coulson subsequently considered the same and made a costs management order. The Claimant’s costs budget was approved in the sum of £82,500. Shortly after, the Defendant’s solicitor pointed out to the Claimants’ solicitor that their approved costs budget did NOT say that it excluded a success fee and an ATE insurance premium; the Defendant therefore argued that the Claimant should not be permitted to recover any sum (to include success fee and ATE premium) over and above the costs budget approved by the court. The Claimant solicitor therefore was left with no choice but to issue an application pursuant to CPR 3.9 for relief from sanctions.

On that occasion (as a result of a number of reasons) the judge allowed the Claimant to recover the success fee and ATE insurance, BUT and it’s a big BUT, under normal circumstances it will usually be quite a challenge to sway a court to revise a costs budget that contains mistakes, as Mr Justice Coulson so candidly said “if approved costs budgets can be revised at a later date because of mistakes or self-induced inadequacies in the original, the whole purpose and effect of the new costs management regime may be thwarted”. Mr Justice Coulson added; “In my view, in an ordinary case, it will be extremely difficult to persuade a court that inadequacies or mistakes in the preparation of a costs budget, which is then approved by the court, should be subsequently revised or rectified….. The courts will expect parties to undertake the costs budgeting exercise properly first time around, and will be slow to revise approved budgets merely because, after the event, it is said that particular items had been omitted or under-valued. I also agree that any other approach could make a nonsense of the whole costs management regime.”

What’s more, is that the popular argument of ‘the other party has not been misled or suffered prejudice’ no longer holds any weight. In Justice Coulson’s own words “The whole basis of the recent amendments to the CPR is the emphasis on the need for parties to comply with the CPR, and the court orders made under it. It will, I think, no longer be possible in the ordinary case for parties to avoid the consequences of their own mistakes simply by saying that the other side has not suffered any prejudice as a result.”

It is therefore fair to conclude that expertise knowledge in the field of legal costs is quite obviously mandatory when preparing a cost budget, as parties will simply not be able to afford getting it wrong.