Despite the prolific number of published articles providing help and guidance in relation to budgeting, cases still arise where it is necessary to be reminded about some of the practical measures that can be considered to avoid loss. Reasons for failure to file budgets on time, ensure they cover the work and cost that could reasonably be anticipated or making timely applications for revision can be due to lack of knowledge, lack of experience, failure to utilise available resources or panic when up against a deadline. However, with proper planning and forethought the difficulties can be overcome.
Master McCloud found it necessary to consider a number of issues when deciding upon an application to revise parts of a budget in the case of Thompson v NSL Limited [20210 EWHC 679 (QB). This is a personal injury claim arising out of an accident that occurred in 2015. Following initial investigation, it was thought that the case was one of mild traumatic brain injury and vestibular concussion, with symptoms at an estimated value of £150,000.
The case commenced in the county court and the claimant’s budget was filed and served on the 1st February 2019 in advance of the CCMC later that month. It transpired however between preparation of the budget and the date of the CCMC, medical expert evidence was received and as a consequence of a review of this the claim was then valued at about £3.9 million.
The district judge approved the budget save for trial preparation and trial phases having acknowledged that there would be some delay in dealing with expert evidence and the trial date was not likely to take place until April 2020.
Provision was made for transfer of the claim to the High Court and shortly thereafter the claimant made an application to revise the budget. The proposed revisions were not agreed by the defendant, who did not seek to revise their own budget. It was necessary to address a number of issues including:
(A) were there significant developments per CPR 3.15A?
(B) does a ‘significant development’ need to be a specific event at a specific date or can it be the nature of the claim that involves into something different than initially pursued involving a collection of factors?
(C) did the claimant act reasonably in making the application when she did?
The master considered the observations of Judge Davison in Al-Najar v The Cumberland Hotel (London) Limited  EWHC Civ. 3532 (QB) that the bar for what constitutes a significant development should not be set too high and also the observations of Judge Marsh in Sharp v Blank and Others  3390 (Ch.D.) that a mistake or failure to appreciate what the litigation entails will not amount to a significant development, since a development connoted a change to the status quo that had happened ‘since the budget was prepared’.
In this case the expert evidence was received in the relatively short period between the date of preparation and service/filing of the budget and the date of the CCMC. There were therefore elements that were not known or anticipated at the date of preparation of the budget. As a consequence, the claim mushroomed into a much larger claim with added complexity.
Because of the knock-on effect of the expert evidence, additional disclosure, delay and the claimant’s position there was a collection of the events that would give rise to increased time cost and expenditure. When considering what was known to the judge at the time of the budget hearing analysis showed that the court had available:
(1) the claimant’s witness statement,
(2) information as to delay in getting expert appointments with a delay to the eventual trial date,
(3) disclosure assumptions including extensive disclosure and the need for experts’ review,
(4) updated medical evidence would be required,
(5) a revised and very detailed schedule of special damage,
(6) a revised estimated value of quantum,
(7) a case summary.
The master concluded that in this case it could not be fairly said that the solicitors for the claimant could reasonably to have foreseen the fact that the claim would increase as much as it did when the budget was drafted, and whilst some increase could reasonably be expected to an unknown figure, depending on the expert evidence later to be obtained, which was not known. Mere possibility would set the bar too high and encourage inflated precautionary budgets.
She held that:
(1) if a development requiring a revised budget takes place before the date by which the budget has to be filed it must be taken into account in the budget. If it occurs or is realised so closely before the budget deadline thus needing an application for extension of time the expectation should be that this is agreed and/or granted if reasonably required.
(2) if a significant development takes place after the budget is filed but before the CCMC the best practice would be for the revising party met with a significant development, after service of the budget and after the deadline has passed, to completely draft a revised budget utilising the necessary costing expertise. The proposed form should be provided to the other side for agreement. If not agreed then an application should be made to revise the budget and this should be made promptly. It was not reasonably practical to do that in this case.
(3) in this case it would not have been reasonably practical to do so as it was a case where the actual practical impact was something that was still ‘bedding in’ at the date of the CCMC.
(4) the application was made without undue delay following the transfer to the High Court and the claimant acted reasonably in making the application when she did.
(5) it is better that a ‘proper job’ of budgeting is done on the basis of properly drafted and served budgets at the CCMC.
She also suggested that, in what may be a relatively rare case such as this, the parties can only do their best in their professional judgment, keeping the relevant court informed, and that requiring something too close to perfection would turn the budget revision rules into a snare for the unwary.
This is another example of helpful guidance that is worthy of note and demonstrates the importance of full and proper consideration of the budgeting of cases at all stages as the case progresses. Here the claimant was able to satisfy the test. In other cases, where the suggested guidance is not followed, a different result could arise.
ARTICLE FROM THE ASSOCIATION OF COSTS LAWYERS FOR THOMSON REUTERS DISPUTE RESOLUTION BLOG – 29 June 2021
written by David Cooper, Chartered Legal Executive and Costs Lawyer, Council Member of the Association of Costs Lawyers