Unexpected increase in disclosure a “significant development”, High Court rules

Disclosure that involved five times more documents than anticipated and expressly assumed in a claimant’s budget was a significant development justifying its costs budget being updated, the High Court has ruled.

Mr Justice Kerr accepted that this would also have knock-on effects for phases beyond the disclosure phase.

BDW Trading Ltd v Lantoom Ltd [2020] EWHC 2744 (TCC) is a £5.3m dispute over the supply of alleged substandard stone from the defendant stone supplier to the claimant house builder.

The claimant’s costs budget included an express assumption that fewer than 50,000 documents would be collected for disclosure purposes, with individual review required of no more than 15,000 documents after applying keywords.

However, it transpired that more than 250,000 documents were collected, of which about 70,000 would have to be individually perused.

The claimant sought a £90,000 increase in its costs budget for the disclosure phase, asserting that this amounted to a “significant development”. The defendant refused. The claimant applied for revisions to the directions, including an increase in the budget. However, a consent order was agreed before the hearing, increasing the budget for the disclosure phase by £90,000 to £178,000; the defendant’s costs budget for disclosure was increased by £70,000 to £134,000.

The claimant then sought a £55,000 increase in its budget for the witness statement phase to cover solicitor time costs, which it said resulted from the disclosure and the need to prepare twice as many statements as it had expected. The defendant did not agree, saying the extra work was covered by the disclosure phase increase and that the budget for witness statements would be nearly doubled and was not reasonable or proportionate.

The claimant made the application that was before Kerr J, seeking an increase of £70,000 (to £138,000) for the witness statement phase, and of £106,000 (to £239,600) for the expert report phase, in part because of the extra documents but also because the defendant’s materials and structural experts visited more sites than expected.

In total, the claimant’s revised costs budget would be a little under £1m, while that of the defendant would be just over £900,000.

The defendant submitted that the developments were not significant, saying the claimant’s representatives had merely underestimated the number of documents collected. It said the significant aspect of that was already reflected in the agreed increases for the disclosure phase.

Kerr J said he accepted the claimant’s proposition that having to collect and review up to five times as many documents as anticipated and expressly assumed was a “significant development” in the litigation.

He said: “It was implicitly, if grudgingly, accepted as such by the defendant when it agreed to the consent order of 28 April 2020, which also uplifted the defendant’s costs budget for the disclosure phase, following the same logic.

“I do not accept [the defendant’s] argument that all the consequences of that development were captured by the claimant’s £90,000 increase for the disclosure phase.

“The increase was not part of and did not apply to work done in the witness statement and expert report phases; but the knock-on effects of the avalanche of documents anticipated by neither side were, by the same logic, likely to impact on the adequacy of budget provision for subsequent phases unless the additional documents proved irrelevant or repetitive.”

However, while saying the additional witness evidence was “not prolix, repetitive or irrelevant”, the judge ruled the amount claimed to be excessive. He allowed an additional £40,000 for solicitor time costs and £10,000 for counsel’s fees, along with an increase of £20,000 to the defendant’s budget to reflect the need for more expansive evidence than anticipated on its side.

“As for the expert report phase, I accept that the claimant’s experts have had to review more documents than expected. But the visiting of more sites by the defendant’s experts than the claimant had expected is not in itself a separate significant development in the litigation.

“It falls the other side of the line from the plethora of documents. The visiting by experts of more sites than expected does not appear to me to be a direct consequence of the additional documents.”

Kerr J went on to undertake a “broad brush apportionment” of the increases relating to the documents and the site visits.

Rupert Choat (instructed by Ashfords) represented the claimant, and Jennifer Jones (instructed by Stephens Scown) the defendant.

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Costs News
Published date
28 Oct 2020

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