Court refuses to approve retrospective increase in budget

Fact the other side agrees means court should look even closer, says judge

The High Court has refused to approve a claimant’s increased budget retrospectively, even though there was no objection from the defendant.

Daniel Alexander KC, sitting as a deputy High Court judge, said that where, as here, the costs budgeted already appeared disproportionate, there was “a heavy burden” on a party seeking a retrospective increase.

ML Technology Ltd & Anor v BEAT Sam Ltd & Ors [2026] EWHC 2142 (Ch) was the consequentials ruling following the trial of an intellectual property dispute.

The claimants’ approved budget was £452,268 and the defendants’ £584,738.

At the pre-trial review (PTR) in February 2025, the claimants sought an additional £259,000 for the disclosure phase – more than tripling the amount in the budget – and £29,500 for each of the witness statements and trial preparation phases, on the basis of significant developments. The total estimated claimants’ costs, including incurred and budgeted costs, after the proposed variation were just over £1m.

The defendants applied for approval of a £471,000 increase for the disclosure phase, taking their total costs to £1.3m.

Though the parties did not oppose the increases in each other’s budgets at certain levels, Judge Alexander decided at the PTR it would be better to address them following trial.

The claimants sought an order seeking a further adjournment of its application to amend so it was dealt with at the same time as the detailed assessment. The defendants then withdrew their application to amend altogether.

As a result, the claimants took what the judge called “a more aggressive stance” and sought an order approving the increase in the disclosure phase. If that was done, they said, they would not seek the rest.

But Judge Alexander dismissed the application. He said the fact the defendants had agreed to the increase meant the court needed to examine the basis for the variation “with more rather than less intensity”, given there was no challenge to it.

“Control of costs is not only a matter between the parties (or for the parties to agree between themselves with the court merely rubber stamping them). The court must be satisfied that the budgets are appropriate even if the parties solicitors agree to each others’ increases.

“That is in part because spending more money on litigation imposes costs on third parties as well (such as the court needing to consider larger amounts of disclosure or devoting disproportionate time to minor claims). The more substantial the variation, the greater the justification required.”

Second, given the nature of the dispute, the costs already incurred and budgeted for at that stage seemed high and the proposed increases “would make them significantly higher”.

The judge continued: “The case law emphasises that not every development will be significant even if it has costs consequences and that the court needs to consider not only whether a development is significant but whether it warrants a revision to the costs budget…

“Stricter examination is also merited where variations are contemplated to an existing phase and, in particular, a mixed phase such as disclosure.”

It was also unclear “what value to the dispute the additional disclosure” had provided, “even with hindsight”.

“In the context of a case in which the costs budgeted appear disproportionate, there is a heavy burden in a party seeking a retrospective increase in its cost budget. It is not close to being discharged in this case.”

There was also the question of whether the application to vary should have been made at an earlier stage, in particular before the costs were incurred.

Judge Alexander said: “Costs budgeting is intended to act as a constraint on future costs. That is in the interests of justice not least because the parties incurring increased costs at an earlier stage can hinder settlement and therefore result in still further costs in taking a case to trial.

“Costs budgeting has to take that into account and is not normally a vehicle for sanctioning costs already incurred. All those considerations apply with considerable force in this case.”

Further, there was no evidence that the claimants had taken “a reasonable approach” to settling the case – the budget made very little provision for it.

He concluded: “Sixth, the court has the power to depart from a costs budget in any event, albeit in limited circumstances. In my view this would have been a case for doing so.

“My view was then and remains now that, in the light of the applicable principles, this retrospective revision to the costs budgets should not be approved, even if it is not actively opposed by the defendants.”

Judge Alexander went on to make no order for costs, finding that neither party had achieved much of what they wanted or could be said to be the “overall winner”. The difficulty in identifying an “unsuccessful party” within the meaning of CPR 44.2 with sufficient clarity meant it was “just in all the circumstances not to make an order as to costs”.

Thomas Elias (instructed by Virtuoso Legal) for the claimants. Gregory Banner KC and Emily Gailey (instructed by Fladgate) for the defendants.