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Winning party not to be restricted to out of date approved budget

The High Court rejected a bid to limit a winning party’s costs to a previously approved budget on grounds that this had been due to an oversight by both the parties and the court.

NATIONAL MUSEUMS AND GALLERIES ON MERSEYSIDE (TRUSTEES OF) v AEW ARCHITECTS AND DESIGNERS LTD [2013] EWHC 3025 (TCC)

This was another case run under the Technology and Construction Court costs management pilot. The claimant won and the judge’s latest ruling dealt largely with costs issues. The court made a costs management order in February 2012 when it approved the claimant’s costs budget in the sum of £ £492,727.57. By 3 January 2013, the claimant’s estimate had gone up to £1.1m. A revised budget was lodged with the court for consideration at the PTR on 22 March 2013. The intention was to review them, but this did not happen. Paragraph 6 of PD 51G – which governed the pilot – said that “a party whose cost budget is no longer accurate must file and serve a budget revision… The court may approve or disapprove such departures from the previous budget”. Paragraph 8 said the court would not depart from the receiving party’s last approved budget unless satisfied that there was good reason to do so. A similar provision can be found in CPR 3.18(b). Arguing about an interim costs payment, the defendant pointed to the Elvanite decision (where Coulson J rejected the successful party’s bid to nearly double its approved costs budget after the case had concluded) in submitting that the costs judge could not depart from the last formally approved budget.

 

Akenhead J said he agreed with the principles set down in Elvanite. However, observed that…

“There are, however, important differences between the Elvanite case and this, the most prominent being that here there was, simply, an oversight by both parties and, indeed, by the court at the PTR to get round to addressing the substantially increased costs budgets [of both parties].

“So far as I can recall, this was because there was a lot of business to get through on what was a busy Friday in the TCC. There has been no hint or suggestion that either was challenging or would have challenged the other’s revised budget. Indeed, it is more probable than not that each would actually have agreed the other’s.”

The judge listed “some very obvious reasons” why the budgets had substantially increased and said that as the trial judge and at this late stage…

 “…it would not be appropriate as such to revise [the claimant’s] only formally approved budget. This is, however, a very obvious case, based on my knowledge of the case and the case management, for a substantial upward departure from the approved budget.

“It is most appropriate, however, to leave the detail of this issue to the costs judge but, doubtless, he or she can take into account what I have said.”

He said it is “more likely than not” that he would have approved a revised budget of at least £1m.

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