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Precedent H Budget: A Good Reason to Deviate

BDW Trading Ltd v Lantoom Ltd EWHC 2744 (TCC)

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A Precedent H Budget is a document utilised at a Costs Case Management Conference (CCMC), and its purpose is to demonstrate the incurred costs so far in the claim, and those anticipated to be incurred should the matter proceed to Trial. Once damages have been agreed, the Bill of Costs should be drafted in line with the agreed Costs Budget/Costs Management Order made at the CCMC.

We have provided some Precedent H guidance notes on our website to provide direction on the creation of a Costs Budget which should be read alongside Practice Direction 3E. 

The benefits of a Costs Budget is that, if your anticipated costs are within the scope of the permitted amounts set in the Costs Management Order, they will be allowed as claimed.  Exceeding the permitted allowance also leads to the likely incurrence of unrecoverable costs.  Deviation from a Precedent H Budget is therefore a difficult issue to overcome as a receiving party and it is best to be pro-active, and to apply to amend a Budget if a ‘significant development’ arises which changes the case circumstances.  It is set in the CPR that in order to deviate from a set Costs Budget, one must have a ‘good reason’ for doing so if an application had not been made to amend the Budget pre-settlement. The issue of a “significant development” for the purposes of updating a Budget was explored in the case of BDW Trading LTD v Lantoom Ltd [2020] EWHC 2744 (TCC)

 

BDW Trading Ltd v Lantoom Ltd  

This case was a £5.3 million dispute over the supply of stone from the Defendant (stone supplier) to the Claimant (housebuilder).

There was a Costs Budget served by the Claimant in the case which assumed that the disclosure would include less than 50,000 documents, with around 15,000 documents having to be individually reviewed. However, as the case progressed, disclosure resulted in more than 250,000 documents being collected, and around 70,000 of those documents were required to be reviewed individually.  This represented a somewhat five-fold increase in the expected disclosure on which the Costs Budget was prepared.

Following the substantial increase in documents for the disclosure phase, the Claimant sought an increase on their Budget of £90,000 and claimed that this was a ‘significant development,’ which should constitute as a good reason to deviate from the Costs Budget. The Defendant rejected this argument, and the Claimant therefore applied to the Court for the increase of the Budget. A consent order was agreed before the hearing of the application between the parties, which allowed for the Budget to be increased in the disclosure phase from £90,000 to £178,000.

The Claimant then went on to seek an increase of £55,000 in their Witness Statement phase of the budget to cover the costs of the Solicitor’s work which they argued resulted as a knock-on effect from the Disclosure phase. The Defendant’s stance was that the extra work was covered by the Disclosure phase and that the increase in the Witness Statement phase also was not proportionate or reasonable. The Claimant went on to make an application to the Court for the increase in the Witness Statement phase.

Kerr J, at the application hearing, accepted the Claimant’s argument that disclosure of 5x more than anticipated did constitute a significant development. He went on to state that the Defendant had accepted this by agreeing to the previous Consent Order to increase the costs of the Disclosure phase.

Whilst Kerr J did not allow the full revised budget, he did allow increases to be made to the Witness Statement and Experts Report phases, stating:

 ‘… the knock-on effects of the avalanche of documents anticipated by neither side were, by the same logic, likely to impact on the adequacy of budget provision for subsequent phases unless the additional documents proved irrelevant or repetitive.”

 

How Can ARC Costs Assist?

At ARC Costs, we are specialist Costs Draftsmen and Costs Lawyers. We hold extensive experience in Cost Budget preparation (Precedent H) and negotiation (Precedent R). As Costs Lawyers, we can also represent you at any CCMC to ensure you achieve the best result.

If you need to amend a current Costs Budget to reflect a change in case circumstances, the new Precedent T process should be followed, on which we can provide guidance.  All our work is a costs neutral service, and our charges form part of your overall recovery for costs on the conclusion of the case.

In addition, we assist receiving parties in the recovery of their costs by preparing a detailed Bill of Costs on the conclusion of a case, and facilitate recovery by negotiating with the opposing party to ensure maximum return of your costs. Should you wish to discuss your query, please email info@arccosts.co.uk, or call one of our costs experts directly on 01204 397302.

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