Budget Variation: Newmark & Company Real Estate Inc v Newmark Property Consultants
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The decision in Newmark & Company Real Estate Inc and Another v Newmark Property Consultants Ltd and Another [2026] Costs LR 281 provides another important reminder of how carefully the courts are scrutinising applications involving budget variation.
While costs management has now been embedded into litigation for several years, disputes over revised budgets continue to increase. As litigation develops, parties often find that the original figures approved by the court no longer reflect the actual work required.
However, the courts remain reluctant to approve revisions simply because a case has become more expensive than anticipated.
The Newmark decision highlights the importance of distinguishing between genuine developments in litigation and ordinary case progression. It also demonstrates the wider commercial realities behind litigation budgeting, where assumptions made at the outset can quickly become outdated as circumstances evolve.
At ARC Costs, we regularly advise firms on costs budgeting and variation strategy. Cases such as Newmark reinforce the need for a proactive approach to costs management throughout the life of litigation.
What was the issue in the Newmark case?
The dispute concerned an application relating to budget variation within ongoing litigation.
The parties sought revisions to previously approved litigation budgets on the basis that additional work had become necessary as the case developed.
As is common in modern litigation, the issue was not simply whether more work had been carried out, but whether the developments relied upon genuinely justified moving beyond the original budgeted amounts.
The court was required to consider whether the changes in the litigation represented significant developments warranting amendment to the existing costs budgets.
Why budget variation disputes are increasing
Applications involving budget variation have become increasingly common in modern litigation. This is largely because litigation rarely progresses exactly as anticipated when the original costs budget is prepared.
Cases expand. Disclosure exercises become larger than expected. Expert evidence evolves. Opponents change strategy. Interim applications arise unexpectedly. In commercial terms, this is not unusual. Even outside litigation, organisations regularly experience situations where variances occur between a planned budget and actual expenditure.
Litigation is no different. The difficulty is that costs budgeting operates within a procedural framework requiring parties to justify why additional expenditure should be recoverable.
The court’s focus remains on proportionality and whether the work genuinely falls outside what was reasonably foreseeable when the original budget was approved.
The difference between ordinary progression and significant developments
One of the key themes in the Newmark decision is the distinction between normal litigation progression and developments that genuinely justify budget variation. This remains one of the most difficult aspects of costs management.
The court expects parties to recognise that litigation naturally evolves over time. Increased workload alone is not necessarily enough to justify revision.
The question is whether the development materially changes the nature or scope of the litigation.
Examples that may justify variation include:
- Significant amendments to pleadings
- New expert disciplines
- Major disclosure exercises not originally anticipated
- Additional trial phases
- Important procedural changes or court directions
By contrast, ordinary litigation activity or inefficiencies within a legal team are unlikely to justify revision.
The Newmark case reinforces that parties must show more than simply increased expenditure.
Budgeted costs must remain realistic
The decision also highlights the importance of preparing realistic budgeted costs from the outset. In practice, many budgeting problems arise because the original assumptions are too optimistic.
Parties sometimes underestimate:
- Disclosure requirements
- Counsel involvement
- Expert evidence
- Trial preparation
- Opponent conduct
When those assumptions later prove unrealistic, applications for revision follow.
However, the court may ask whether those issues should reasonably have been anticipated from the start. This is why strategic budgeting is so important.
At ARC Costs, we regularly advise firms that the strongest budgets are not necessarily the largest budgets. Instead, they are the most carefully reasoned and evidence-based.
Litigation budgets and the concept of a flexible budget
The Newmark decision also reflects a broader practical issue within litigation budgeting: whether costs budgets should operate more like a flexible budget rather than a rigid fixed projection. In commercial accounting, a flexible budget adapts to changing circumstances and business activity. Litigation often requires a similar approach.
The challenge is that costs management rules still require judicial approval before significant changes can be recovered. This creates tension between the reality of litigation and the structure of costs budgeting.
Changing business conditions, evolving evidence, and procedural developments can all affect the level of work required. However, unless those changes satisfy the threshold for formal variation, recovery may remain restricted to the original approved figures.
The Newmark case demonstrates how carefully courts continue to police that boundary.
Why timing matters in budget variation applications
One of the recurring themes across modern costs cases is timing. Applications for budget variation should be made promptly once significant developments become apparent.
Parties who wait until the end of litigation or close to trial often face criticism that the issue could and should have been raised earlier. This creates practical risks.
If substantial work has already been completed before revision is sought, the court may conclude that the receiving party accepted the risk of proceeding beyond the approved budget.
From a strategic perspective, early review is essential.
Firms should regularly monitor whether:
- Existing phases are being exceeded
- New work has emerged unexpectedly
- Original assumptions remain accurate
- Additional applications or evidence are likely
The earlier issues are identified, the stronger the variation application becomes.
What the decision means for detailed assessment
Although Newmark focused on budgeting rather than final recovery, the implications for detailed assessment are obvious.
Approved budgets create a framework that can significantly affect recoverability later.
Where costs exceed the approved figures without successful revision, the paying party will often argue that recovery should be restricted. This creates difficulties even where the work was genuinely necessary.
At detailed assessment, the receiving party may face arguments that:
- The work was foreseeable
- The overspend reflects poor case management
- The additional work should have been budgeted originally
- The costs are disproportionate
The stronger the budgeting process during litigation, the stronger the recovery position later.
How ARC Costs can assist
At ARC Costs, we regularly advise firms on all aspects of costs budgeting and budget variation strategy.
This includes:
- Preparing and reviewing litigation budgets
- Advising on whether significant developments justify revision
- Drafting variation applications
- Advising on proportionality and recoverability
- Supporting firms through detailed assessment proceedings
Cases such as Newmark & Company Real Estate Inc v Newmark Property Consultants Ltd [2026] Costs LR 281 demonstrate how important it is to approach budgeting proactively rather than reactively.
Effective costs management is not simply about compliance. It is about protecting recovery throughout the life of the litigation.
As courts continue to scrutinise revised budgets carefully, firms that monitor developments early and maintain realistic, evidence-based budgets will remain in the strongest position.