Budget variation, timing and defining ‘promptly’

In Yelland v Space Engineering Services Ltd [2023] EWHC 2823 (KB), Master McLoud addressed the issue of timing in seeking a budget variation. The Defendant successfully applied to introduce and rely upon surveillance evidence which had been obtained before a second costs management order had been made.

The Claimant brought an action for damages for personal injury against the Defendant. A CCMC was held in June 2020 and the Court budgeted all the phases, save for PTR, Trial Preparation and Trial. This was the first costs management order.

In July and August 2021, the Defendant covertly obtained surveillance evidence of the Claimant.

A further CCMC took place in April 2022 and the outstanding phases were budgeted together with other additions to the budget. This was the second costs management order. At this stage, the Claimant’s expert evidence had not been served and the Defendant had not disclosed the surveillance evidence.

Thereafter, the Claimant served their expert evidence in November 2022 followed by the Defendant disclosing the surveillance evidence in December 2022.

In January 2023, the Defendant applied to rely on the surveillance evidence and sought variation of the budget. The parties, by consent in March 2023, agreed an Order for the Defendant to rely on the surveillance footage and for additional evidence to be permitted in response to the surveillance footage.

The parties could not reach agreement as to the budget variations and a Costs Management Hearing was held before Master McLoud on 31 October 2023 leading to this judgment and the third costs management order.

Decision of approach to “Promptness” in CPR 3.15A

The Claimant argued that the Defendant should have served its surveillance evidence before the second CCMC in April 2022. That CCMC was, however before primary expert evidence was complete, albeit after witness evidence. Master McLoud opined that:

“In my judgment, to have revealed surveillance before the initial reports by experts in the main specialism had taken place would run contrary to established principles which allow surveillance evidence and it being withheld until the Claimant has nailed his colours to the mast. In this case, obtaining the expert evidence unaffected by knowledge of the surveillance was a part of that, since the Claimant’s presentation and what was said and done in the presence of the experts is part of that ‘pinning to the mast’. To have revealed surveillance by including it in the budget for the second CCMC would have defeated that.”

Master McLoud referred to the decision of HHJ Moloney KC in Purser v Hibbs & Anr [2015] EWHC 1792 (QB) and concluded that “promptness” was dependant on the context. The obtaining of surveillance evidence was a significant development known to the Defendant (only) initially. The disclosure of the surveillance evidence was a later significant development thus marking the point at which time started running (as to promptness).

Meaning of CPR 3.15A(6)

CPR 3.15A(6) provides that the Court may vary the budget for costs “which have been incurred prior to the Order for variation but after the costs management order”. The Claimant argued that this meant the Court could not vary the Defendant’s budget for the costs associated with obtaining the surveillance evidence. Master McCloud opined that:

“In my judgment, the purpose of the rule is clear enough, albeit its wording is less than ideal and perhaps assumes, incorrectly, that there will only be one costs management order in any given case or that it will always be possible to seek variations prior to the next forthcoming costs management hearing, as was not possible (for the surveillance evidence) at the time of the second CCMC, for reasons of policy and fairness (i.e., the non-disclosure of surveillance until the correct moment).”

Master McLoud decided the surveillance costs, including, in particular, those incurred before the last costs management order but not covered in the phases which were budgeted, can be subject to the Court’s power to vary. This issue was referred to the Rules Committee for clarity.

Conclusion – how can PIC help?

Costs budgeting can be a daunting process and PIC are here to assist. PIC offer services for every step in the costs management process from preparing the initial budget, undertaking budget negotiations, providing representation at costs management hearings, monitoring expenditure of budgeted costs and dealing with variations to an approved budget.

Should you find yourself considering variation to a budget, please get in touch and we can work with you to identify the significant development and timing for proceeding with the variation.

Mathew Lawton, Costs Lawyer

07.12.2023

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