‘Significant development’ requiring budget revision need not be a specific event

A ‘significant development’ in litigation requiring a budget to be revised need not be a specific event but can be a “collection of factors” which mean that the nature of the claim has changed, Master McCloud (pictured) has ruled.

She also said that, in the event the need to revise becomes apparent between filing the budget and the case and costs management conference (CCMC), the priority was to do a “proper job” of budgeting and revise the budget later if necessary.

That was the situation in the case before her, Thompson v NSL Ltd [2021] EWHC 679 (QB), where a personal injury claim started life in the county court valued at about £150,000 but then jumped to £3.9m because of evidence received shortly after the budget was filed and served.

The increased value of the claim was known by the court and parties by the time of the county court budgeting hearing, at which the case was transferred to the High Court.

The claimant then applied to increase the budget on the basis that the case had turned out to be more complex and more demanding of legal time and cost than was reasonably anticipated when the budget was drafted.

The claimant’s solicitors said it was not feasible to seek to revise the budget before the district judge in part because the impact of the new medical evidence, other than on value, was not yet clear.

It now was and the significant developments were said to be a “significant delay to the eventual trial date”, far more disclosure than had been anticipated, and more time needed for the lawyers to deal with the claimant because of a brain injury and the adjustments they needed to make to accommodate this, which meant the work took longer than expected.

Master McCloud began by clarifying the concept of ‘a development’. She said: “The term perhaps unfortunately might be taken to mean that one has to point to a specific event, at (in principle) a specific date so as to establish a ‘development’…

“However, there will be cases, and I think this is in part one of those, where the nature of the claim evolves and a time comes when it is reasonably appreciated that it is a different type of beast from the claim which was initially pursued, and that one may not be able to point to one specific event which led to that so much as a collection of factors.

“A change of value may not alone be enough. If a solicitor was to be expected to ‘jump’ at the earliest possible date when some development takes place but before it is reasonably clear what the effect will be, then one would see inflated, precautionary budgets of the sort which Master Davison [in Al-Najar v The Cumberland Hotel (London) Limited [2018] EWHC Civ. 3532 (QB)] I think rightly saw as something to be avoided.

“I agree with his general point that setting the bar too high in budget variation cases could as a matter of policy be undesirable.”

Master McCloud ruled it would not be fair to say that the claimant’s solicitors ought reasonably to have foreseen the dramatic increase in the claim value – “rather they could reasonably be expected to anticipate that such was possible but to an unknown extent, depending on the expert evidence later to be obtained the content of which was not known. Mere possibility I think would be to set the bar too high and to encourage inflated, precautionary budgets”.

She said that where a significant development took place before the budget was filed, it should be taken into account in the budget, with the party applying for an extension of time if necessary.

But in this “presumably relatively rare” situation of it happening in the period between filing the budget and the CCMC, Master McCloud said, “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”.

She continued: “None of this is by way of discouragement to parties to try to vary a budget if it is feasible just before the CCMC to avoid a later variation, by agreement, or to deal with modest points of variation ‘on the hoof’ if the judge is willing and able but in a case where the nature of the claim changed along with its value, as here, justifying transfer up to the High Court, that would have been too much to expect either from parties or judge.

“It is far better in my judgment that a ‘proper job’ of budgeting is done on the basis of properly drafted and served budgets at a CCMC with clear assumptions served in time for the strict CPR deadline… and that if an intervening event or general evolution of the case means that the budget then before the court may in fact have to be revised later, then unless it is possible (competently) to revise and consider a new budget, either budgeting should be deferred or it should be proceeded with but subject to a likely revision later.”

She concluded that the claimant’s side here “acted reasonably” in applying for the revision without undue delay after the case was transferred to the High Court.

“Furthermore, I think that it would have been unwise, even if theoretically possible, for claimant’s counsel to guess at suitable figures on the day at the county court CCMC in the light either of the unexpected delays in the defendant’s experts or in the light of the then-relatively recently received expert evidence (even though in the latter case it was at least known that the value of the claim and its complexity was increasing).”

Master McCloud went on to decide the revised figures for various phases.

Marcus Grant (instructed by Bond Turner) for the claimant. Anna Symington (instructed by DAC Beachcroft) for the defendant.

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Costs News
Published date
12 May 2021

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