Sharp & Ors v Blank & Ors

Under CPR rule 3.12, whether costs budgeting is automatically excluded depends on what the claim form itself states. Later schedules or documents cannot be used to read a claim as stating a value of £10 million or more.

Where budgeting is not mandatory, the court has an unfettered discretion to require budgets. The discretion must be exercised by weighing the circumstances, including the benefits of costs information and control against the cost and burden of preparing and revising budgets.

An order requiring budgets does not necessarily require a costs management order. The court may defer budgeting until important applications have clarified the issues for trial.

The claimants in group litigation concerning Lloyds Banking Group applied for costs budgeting under Section II of Part 3 of the Civil Procedure Rules. The aggregate losses were estimated at between £215 million and £280 million, but the claim forms stated only that the claimants expected to recover more than £25,000. Some forms left the amount claimed blank, while others stated “TBC” or “TBD”.

The court considered whether the claim forms fell within the exceptions in CPR rule 3.12(1)(a) or (b), and, if so, whether the court should exercise its discretion to require budgets. The central issues were the proper construction of the claim-form requirements and the scope and exercise of the discretion concerning costs budgeting.

1. The claim forms did not state that the amount claimed was £10 million or more, nor that the claims were valued at £10 million or more. CPR rule 3.12(1)(a) and (b) required the relevant statement to appear on the claim form itself. The court could not read later schedules of information, or information obtained by collating documents, into the claim forms.

2. The court nevertheless held that Section II of Part 3 applied to these Part 7 multi-track claims. The opening words of CPR rule 3.13 gave the court discretion to direct that budgets need not be filed and exchanged. That discretion, like the discretion under rule 3.12(1)(a), was unfettered.

3. In considering the discretion, the court followed the approach in CIP Properties (AIPT) Ltd v Galliford Try Infrastructure Ltd [2014] EWHC 3546 (TCC). The court had to weigh all the circumstances. There was no presumption against costs budgeting in claims exceeding £10 million and no additional burden on the party seeking an order.

4. The benefits included information about costs exposure, assistance with assessing after-the-event insurance, and the possibility of controlling costs. The disadvantages included the professional cost of preparing budgets and the burden of revising them as the litigation developed. The large sums at stake reduced, but did not eliminate, proportionality concerns.

5. The court ordered the parties to exchange costs budgets. That order did not create any presumption that a costs management order should follow under CPR rule 3.15. Budgets were to be prepared after determination of the anticipated summary judgment and strike-out applications, so that unnecessary work on alternative trial scenarios could be avoided. The question whether a costs management order should be made was left for later determination.