High Court: If you need to revise your budget, act very quickly

Budget revision: court cannot approve incurred costs

Budget revision: court cannot approve incurred costs

There is a “high premium on swift action” when revisiting costs budgets, a High Court judge has warned, questioning why a revised budget was not prepared quicker than four days after the issue that caused it arose.

In Mr Justice Warby’s latest ruling on the budget of Conservative MP Tim Yeo in his libel action against The Sunday Times, the main revision in dispute was a £36,120 contingency to considering the impact of parliamentary privilege on the case as a result of a change in the law. Of this, nearly £21,000 had already been incurred.

Warby J rejected the submission that he could and should approve the variation pursuant to PD3E 7.6, saying this only allowed the approval of future costs.

He was pointed towards his own statement in his initial ruling on the parties’ budgets that “if work identified as a contingency is included in a budget but not considered probable by the court, no budget for it should be approved. If the improbable occurs, in the form of an unexpected interim application, the costs will be added to the budget pursuant to PD3E 7.9, unless the matter involves a ‘significant development’ within para 7.6 in which case, if time permits, a revised budget should be prepared and agreed or approved.”

Warby J said: “I still take that view, but I do not think it supports [the claimant’s] position. The key words in that passage are ‘if time permits’. If the unexpected happens, and time does not allow for a revised budget to be approved before costs are incurred, then there will often, perhaps usually, be an unexpected interim application and PD3E 7.9 will apply. The fall-back position is CPR 3.18(b).

“Mr Browne [for Mr Yeo] points out that this puts a high premium on swift action to prepare a revised budget. That must be right, but I do not see it as a good reason to adopt a different interpretation.

“Take this case. The issue is said to have arisen on 6 July. It has not been made clear to me why a revised budget could not have been prepared sooner than 10 July. There is some force in Mr Browne’s submission that the analysis I have set out is unsatisfactory for an individual paying privately, such as Mr Yeo. It leaves him in undesirable uncertainty about the recoverability of a large slice of cost until after the assessment stage.

“But I do not think that leads to a different conclusion. As I have said, such a litigant will normally have an unexpected interim application on which to peg reliance on PD3E 7.9. In any event the wording of the practice direction is too clear to allow me to accept that incurred costs can be approved in this way.”

In any event, the judge said he was not persuaded that there has yet been a “significant development in the litigation” within the meaning of PD3E 7.6 which would justify the approval of any additional costs.

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