16 October 2013Print This Post

High Court: winning party should not be kept to out-of-date approved budget

High Court: revised budget overlooked

The High Court has rejected a bid to limit a winning party’s costs to a previously approved budget where a substantially revised one was seen by the court and other party but not dealt with at the pre-trial review (PTR).

While leaving the detail for the costs judge to sort out, Mr Justice Akenhead said he would have approved at least a doubling of the claimant’s £493,000 approved budget.

In National Museums and Galleries On Merseyside (Trustees of) v AEW Architects and Designers Ltd [2013] EWHC 3025 (TCC), involving the Technology and Construction Court costs management pilot, the claimant had won and the judge’s latest ruling dealt largely with costs issues.

The court made the costs management order in February 2012. By 3 January 2013, the claimant’s estimate had gone up to £1.1m.

It was contained in the then appropriate forms, lodged with the court for consideration at the PTR on 22 March 2013. The intention was to review them, but this did not happen.

Paragraph 6 of practice direction 51G – which governed the pilot – said that “a party whose cost budget is no longer accurate must file and serve a budget revision… The court may approve or disapprove such departures from the previous budget”.

Paragraph 8 said the court would not depart from the receiving party's last approved budget unless satisfied that there was good reason to do so.

Arguing about an interim costs payment, the paying party said that, applying paragraph 8, the costs judge could not depart from the last formally approved budget, pointing to Mr Justice Coulson’s recent ruling in Elvanite, where he rejected the successful party’s bid to nearly double its approved costs budget after the case had concluded.

Akenhead J said he agreed with the principles set down in Elvanite. However, he observed that paragraph 6 “suggests that no formal application needs to be issued by the parties seeking a revision and that the court may of its own motion approve or disapprove the revision, albeit doubtless giving the parties the opportunity to be heard”.

He continued: “There are, however, important differences between the Elvanite case and this, the most prominent being that here there was, simply, an oversight by both parties and, indeed, by the court at the PTR to get round to addressing the substantially increased costs budgets [of both parties].

“So far as I can recall, this was because there was a lot of business to get through on what was a busy Friday in the TCC. There has been no hint or suggestion that either was challenging or would have challenged the other's revised budget. Indeed, it is more probable than not that each would actually have agreed the other’s.”

The judge listed “some very obvious reasons” why the budgets had substantially increased and said that as the trial judge and at this late stage, “it would not be appropriate as such to revise [the claimant’s] only formally approved budget. This is, however, a very obvious case, based on my knowledge of the case and the case management, for a substantial upward departure from the approved budget.

“It is most appropriate, however, to leave the detail of this issue to the costs judge but, doubtless, he or she can take into account what I have said.

He said it is “more likely than not” that he would have approved a revised budget of at least £1m.

By Neil Rose