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A party seeking to amend or revise a costs management order after judgment was unsuccessful as a formal application should have been made as soon as it was apparent the costs budget had been exceeded by more than a minimal amount.
Civil Procedure – Costs Budget – Cost Management Orders – Indemnity Basis – Standard Basis – Timing of application to amend or revise Cost Management Order - Civil Procedure Rules 1998 r.3.15(3), r 3.18(b) r.1.1, Pt 3 r.3.18(b)
Mr Justice Coulson
14 June 2013
On 24 May 2013, the claimant’s case against the defendant for breach of contract was dismissed at trial and one element of the defendant’s counter claim allowed in the sum of £4630.62. The claimant accepted it was liable to pay the defendant’s costs however, disputed the basis of assessment of the costs having regard to the existing costs management order which approved the defendant’s costs to £268,488 and the costs subsequently sought by the defendant of £497,593.66.
The parties had made pre-trial offers, including the defendant’s offer of £150,000 plus costs. This had been rejected by the claimant.
The issues which the court were required to determine were: (i) whether the defendant was entitled to its costs on an indemnity basis? (ii) if so what the relevance (if any) of the existing costs management order (iii) If costs are assessed on a standard basis, whether the defendant could recover more than £268,488 by seeking to amend the costs budget after judgment, or by asserting good reasons to depart from the existing costs budget.
In the circumstances, no indemnity costs were allowed as the claimant had not conducted the claim unreasonably or disproportionately. In any event, if indemnity costs were applicable, the existing cost management order would have been the court’s starting point in assessing costs. The court would not permit the costs management order to be disregarded in assessing costs on an indemnity basis, as this would be contrary to the certainty which the new regime provides and the guidance given in the leading case of Henry v News Group Newspapers (Ltd  EWCA Civ 19. The defendant should have made a formal application at court to seek approval to revise the costs budget, rather than simply file the material at court. This should have been done at the earliest possible opportunity when it was apparent the costs budget was exceeded. The defendant could not retrospectively seek to revise the budget so as to double the original costs approved.
Comment: This case illustrates the court’s firm attitude to costs management orders and the limited circumstances when they will permit good reason to depart from existing cost management orders. Practitioners should be aware that it is imperative to make an application to amend or revise costs budgets as soon as it becomes apparent more than a minimal increase has arisen, and in any event before trial because the alternative could be a very costly mistake.