Courting costs control

When the Master of the Rolls (MR) Lord Dyson convened a special Court of Appeal judicial bench to hear appeals relating to the Jackson reforms, it was clear that the reform program would not go ahead unchallenged (29 May 2013).

Last week (14 June) the Technology and Construction Court (TCC) in Leeds delivered a significant ruling in a case, Elvanite Full Circle v AMEC Earth & Environmental, concerning the right approach for parties to take when asking permission to revise or change an approved costs budget.

The defendant had wanted to be able to recover higher costs from the claimant than the court-approved budget allowed for. The reason for the increase, 4 New Square’s Anneliese Day QC argued for the defendant, was due mainly to an increase in expert fees.

Henderson Chambers’ Peter Susman QC, who appeared for the claimant, opposed the argument and told the court it would “strongly resist” any attempt to depart from the budget set by Mr Justice Ramsay in January.

The court was asked to decide whether the defendant could recover more than the £82,500 budgeted for claimant costs, and whether it could increase its own costs budget from £268,488 to £531,946, without first seeking court approval.

Ruling, Mr Justice Coulson refused to amend the defendants’ costs budget, stating that an application should have been made to the court before the trial was set.

“An application to amend an approved costs budget after judgment is a contradiction in terms,” the ruling stated.

“First, it would mean that the exercise would no longer be a budgeting exercise, and would instead be based on the actual costs that have been incurred. Secondly, it would encourage parties to ‘wait and see’; only applying to increase the budget costs if it was in their interests. Thirdly, it would make a nonsense of the costs management regime if, at the end of the trial, a party could apply to double the amount of its costs budget.”

The judge added that expert witness costs had increased from a budgeted cost of £30,500 to £200,000. “In a case where there were no amendments of any significance, and where the expert evidence was not as critical as it can sometimes be in TCC cases, this is an astonishingly high figure,” the judge said. One witness had attended trial every day, the judge said, adding: ”That was completely unnecessary. This was never a case in which the expert evidence required that level of knowledge or involvement.”

The ruling demonstrates just how important it is to make a formal application to amend budgets as soon as it becomes apparent that the original budget has been exceeded “by a more than minimal amount”.

On whether the successful defendant could recover more than the budgeted costs, Coulson J said it was primarily a matter for the costs judge on detailed assessment. His view, however, was that there was no good reason for the significant increase in the defendant’s costs.

Despite winning the orginal case (see ruling) Weightmans was told it could not depart from the original costs budget. The ruling gives an insight into how strictly the judiciary are approaching the costs budget regime, which has been escaped by the big budget cases in the Commercial Court (14 March 2013).

Perhaps it is unsurprising that the judiciary is refusing to bend on costs applications, after all the Jackson reforms were aimed at stopping abuse of process. This ruling shows that should an amendment be needed an application to the court is necessary.

For the claimant Elvanite Full Circle

Henderson Chambers’ Peter Susman QC instructed by Birkett Long

For the defendant AMEC Earth & Environmental (UK)

4 New Square’s Anneliese Day QC instructed by Weightmans