Findcharm Ltd v Churchill Group Ltd

Cost budgeting is not a tactical exercise. A party must provide realistic and justified figures when commenting on the opposing party’s budget in Precedent R. Where those figures are deliberately or unjustifiably low, the court may disregard them as an abuse of the cost budgeting process. The court may then assess the opposing budget in the round, applying the requirements of proportionality and reasonableness. A realistic budget should reflect the nature and value of the claim, the issues requiring evidence, and the work reasonably needed for disclosure, witness statements, experts and trial preparation.

The claimant sought approximately £820,000 from the defendant following a gas explosion at a hotel in which the claimant operated a restaurant. The principal head of loss was business interruption and loss of profit.

At the case management conference, the court considered the parties’ costs budgets and the defendant’s Precedent R comments on the claimant’s budget. The defendant’s own budget and its proposed figures for the claimant’s future costs were substantially lower than the claimant’s figures and were unsupported by realistic estimates. The central issue was how the court should treat those figures when approving the claimant’s costs budget.

1. Precedent R and the budgeting process. The court held that parties must engage realistically and properly with the costs budgeting process. Precedent R is intended to identify genuine disputes and save judicial time. It must not be used to advance a tactical objective by putting forward unjustifiably low figures in the hope that the court will approve a similarly low budget.
2. Disregarding unrealistic figures. The defendant’s Precedent R figures were wholly unrealistic. They allowed inadequate sums for disclosure, witness statements, expert evidence and trial preparation, and in part rested on figures unsupported by any estimate from a proposed expert. The court was therefore entitled to disregard the response.
3. Approval of the claimant’s budget. The claimant’s revised budget reflected the court’s directions that expert evidence on causation would not be required unless a positive defence was pleaded within 21 days, and that a single joint accountancy expert was appropriate. Considering the budget in the round, the court found it proportionate and reasonable and approved it in the sum of £244,676.30.
4. The defendant’s own budget, which the claimant had agreed, was approved at £79,371.23. The court directed that the judgment be placed on BAILII because of the critical need for proper compliance with the Precedent R process.

Not stated in the judgment.