Costs News

30 July 2015
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Court cannot approve incurred costs when revising budget

The provision on revising budgets does not allow for incurred costs to be approved by the court, Mr Justice Warby ruled last week in the latest contribution of Conservative MP Tim Yeo’s libel action against The Sunday Times to the case law on costs management.

The judge also warned lawyers of the need to act very swiftly when revising their budgets.

He was ruling on an application to revise the budget, with the main dispute around a £36,120 contingency to consider the impact of parliamentary privilege on the case as a result of a change in the law. Of this, nearly £21,000 had already been incurred.

Mr Yeo’s lawyers submitted that he should approve the budget variation pursuant to PD3E 7.6. He was pointed towards his own statement in his initial ruling on the parties’ budgets that “if work identified as a contingency is included in a budget but not considered probable by the court, no budget for it should be approved. If the improbable occurs, in the form of an unexpected interim application, the costs will be added to the budget pursuant to PD3E 7.9, unless the matter involves a ‘significant development’ within para 7.6 in which case, if time permits, a revised budget should be prepared and agreed or approved.”

In his judgment last week, Warby J said: “I still take that view, but I do not think it supports [the claimant’s] position. The key words in that passage are ‘if time permits’. If the unexpected happens, and time does not allow for a revised budget to be approved before costs are incurred, then there will often, perhaps usually, be an unexpected interim application and PD3E 7.9 will apply. The fallback position is CPR 3.18(b).

“Mr Browne [for Mr Yeo] points out that this puts a high premium on swift action to prepare a revised budget. That must be right, but I do not see it as a good reason to adopt a different interpretation.

“Take this case. The issue is said to have arisen on 6 July. It has not been made clear to me why a revised budget could not have been prepared sooner than 10 July. There is some force in Mr Browne’s submission that the analysis I have set out is unsatisfactory for an individual paying privately, such as Mr Yeo. It leaves him in undesirable uncertainty about the recoverability of a large slice of cost until after the assessment stage.

“But I do not think that leads to a different conclusion. As I have said, such a litigant will normally have an unexpected interim application on which to peg reliance on PD3E 7.9. In any event, the wording of the practice direction is too clear to allow me to accept that incurred costs can be approved in this way.”

In any event, the judge said he was not persuaded that there has yet been a “significant development in the litigation” within the meaning of PD3E 7.6 which would justify the approval of any additional costs.

Meanwhile, the Chancery Division has introduced a change that means the parties may now agree to extend the time limit specified in form N149C to file documents, including costs budgets, for up to 28 days without reference to the court.

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