Murray & Anor v Neil Dowlman Architecture Ltd

Approved costs budgets are not ordinarily revised or rectified merely because a party later identifies an omission or under-valuation. Parties are expected to complete the budgeting exercise properly and the court will apply a rigorous approach to revisions. Lack of prejudice is relevant but is not, by itself, sufficient. An exceptional revision may be justified where the omission results from the prescribed form, the opposing party was not misled or prejudiced, and refusing revision would impose a disproportionate penalty. The court may then revise, rectify or clarify the budget in accordance with the overriding objective.

The claimants entered into conditional fee agreements and obtained after-the-event insurance. The defendant was notified of both arrangements, but the claimants’ costs budget, approved during the TCC costs-management pilot, did not make clear that success fees and ATE premiums were excluded.

The claimants applied for relief from sanctions under CPR rule 3.9. The court treated the application as, in substance, an application to revise, rectify or clarify the approved budget under PD51G.6. The central issue was whether the approved budget could be amended despite the omission.

1. Application granted. The approved costs management order was revised or rectified to make clear that the budget excluded success fees and ATE insurance premiums.
2. In the ordinary case, mistakes or inadequacies in an approved costs budget will be very difficult to remedy retrospectively. Parties must undertake the budgeting exercise properly, and routine correction of omitted or under-valued items must not undermine costs management.
3. The absence of prejudice is not, by itself, enough to justify revision. The court must continue to give proper weight to compliance with the CPR and court orders.
4. This was an unusual case. The defendant had always known about the success fees and ATE premiums and was not misled. Form HB specifically contemplated exclusion of those items by ticking a box, while the later Precedent H form excluded them by default. The omission therefore arose from the particular form used in the pilot and refusing correction would have imposed a significant penalty for failing to tick, or encounter, the relevant box.
5. Revision, rectification or clarification was therefore consistent with the overriding objective. The defendant was awarded the costs of the application, assessed at £3,824.20, because the need for revision arose from the claimants’ error.

First-instance decision. No appellate history is stated in the judgment.