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Court refuses to increase budget for costs party brought on himself

Budget: Increases were foreseeable

The High Court has rejected a defendant’s request to revise his costs budget upwards, saying that the extra costs came from matters he either should have anticipated or brought on himself.

There have been concerns expressed in the past about the lack of applications to revise budgets due to “significant developments” in the litigation, but here the court was unsympathetic to the defendant’s bid to increase his budget by a third.

Seekings & Ors v Moores & Ors [2019] EWHC 1476 (Comm) [1] is a dispute over the running of a company, with a trial fixed for November.

On 6 July 2018, the claimant served requests for further information (RFIs), and the defendant’s failure to answer them properly has led to two successful applications for orders to force him to do so, with costs orders made against him.

On 22 August 2018, the defendant’s solicitor signed a Precedent H with a total budget of £396,327, of which £254,167 were estimated costs. The claimant’s budget was £510,493, of which £329,795 were estimated costs.

The parties agreed each other’s estimated costs, and His Honour Judge Worster, sitting as a High Court judge in Birmingham, made a costs management order recording that agreement. He did not undertake any budgeting at that hearing.

In March this year, the defendant applied to revise his budget, citing in particular the additional costs incurred due to the RFIs as well as the increased number of documents being reviewed as part of disclosure.

It sought an upward revision of nearly £130,000 of estimated costs to £383,977. Most of the extra costs have already been incurred.

“The question of whether or not the court has jurisdiction to revise a budget under PD 3E paragraph 7.6 when that involves approving costs which have in fact been incurred since the date of the last agreed or approved budget is an issue of some controversy,” the judge noted.

But in the event, because he considered that the defendant had not proven that there had been a significant development, he did not have to rule on this.

On disclosure, various issues raised by the defendant – such as an increase in the number of documents he had to review – should have been anticipated, the judge said.

In relation to work arising from the RFIs, HHJ Worster noted that the requests were made before the defendant prepared his budget, and well before it was agreed.

“The cost and extent of that work were matters which the defendant should reasonably have anticipated.”

Further, he agreed with the claimant’s argument that the defendant should not be entitled to increase his costs budget due to his failure properly to clarify his case or to provide further information when ordered to do so.

He said: “The court will only approve costs which are reasonable and proportionate. An increase in the defendant’s costs flowing from his failure to answer the requests properly, even if not reasonably anticipated, will not warrant a revision to his budget.”

He added: “So that there is no ambiguity, the costs of replying to [the RFIs] may be recovered (subject to any assessment), but only to the extent budgeted.

“But the defendant cannot recover the increase in his costs due to his failure to answer the requests properly first time, which costs include his costs of the hearings where adverse costs order have been made.”