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Costs Budget Mistakes

The High Court has handed down a decision concerning the revision of costs budgets under the management pilot in the Technology and Construction Court.

MURRAY & ANOR V NEIL DOWLMAN ARCHITECTURE LTD [2013] EWHC 872 (TCC)

Full Judgment

The Claimant had failed to state in their budget that it excluded a success fee and an ATE premium. The budget was approved on 1 February 2013 in the sum of £82,500. The Defendant had previously been served with Notice of Funding and was therefore aware that there were additional liabilities.

On 8 March 2013 the Defendant advised the Claimant that...

"...our client intends to argue at trial/on an assessment that your client should not be permitted to recover any sum (to include success fee and ATE premium) over and above the costs budget approved by the court on 1 February 2013"

In consequence of that warning the Claimant issued an application for relief from sanctions under CPR 3.9 on 14 March 2013. This was heard on 27 March 2013. Mr Justice Coulson noted that as there is no sanction as such from which the Claimant required relief, CPR 3.9 did not apply. Instead, what the Claimant sought was akin to permission to revise the approved budget, or for it to be rectified, or at least clarified that it excluded additional liabilities. The substantive dispute was resolved in the Claimant's favour and reasons were handed down on 16 April 2013.

The Judge found that as the Defendant had known throughout of the existence of the success fee and ATE premium and cannot sensibly have thought that, in some way, its potential liability for those items had automatically disappeared simply because they were not in the budget, there had been no misleading or of prejudice to them. However, he classed this "a very special case" saying....

"...in an ordinary case, it will be extremely difficult to persuade a court that inadequacies or mistakes in the preparation of a costs budget, which is then approved by the court, should be subsequently revised or rectified, for the reasons given by Mr Wygas. The courts will expect parties to undertake the costs budgeting exercise properly first time around, and will be slow to revise approved budgets merely because, after the event, it is said that particular items had been omitted or under-valued. I also agree that any other approach could make a nonsense of the whole costs management regime."

The particular difficulty in this case is unlikely to arise in the future under the new rules. Precedent H is different from the Form HB used in the pilot scheme and includes the statement "This estimate excludes VAT (if applicable), court fees, success fees and ATE insurance premiums (if applicable)." However, it would seem that any other mistakes or oversights are likely to be met with little sympathy.

 

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