Sharp v Blank & Ors

Under Practice Direction 3E, paragraph 7.6, a party must revise its costs budget where significant developments warrant revision. The court assesses the revision by reference to the last agreed or approved budget, or to an earlier date specified when the budget was prepared. Costs incurred since that reference date may be placed in the estimated columns of the revised budget if they relate to significant developments.

Whether a development is significant is fact-sensitive. Relevant considerations include the size and complexity of the claim, how the litigation has unfolded, and the likely additional costs. Interim applications, and work consequential upon them, may constitute significant developments. The court should consider related developments in their totality.

This was an application by defendants in group litigation concerning the acquisition of Halifax Bank of Scotland by Lloyds Banking Group. The defendants sought approval of a revised Precedent H costs budget under paragraph 7.6 of Practice Direction 3E, relying on seven alleged significant developments, including an extended trial timetable, additional disclosure, expert evidence and interim applications.

The claimants opposed revision on grounds including lateness, oppression, lack of jurisdiction and the contention that costs already incurred could not be revised. The central issues were the proper reference date for revision, the treatment of costs incurred before the revision hearing, and whether interim applications could constitute significant developments.

1. Jurisdiction and reference date. The court held that paragraph 7.6 of Practice Direction 3E permits revision by taking the last agreed or approved budget as the base reference point. Where the budget was directed to be prepared to an antecedent date, that date is the relevant reference date.
2. Treatment of costs. Costs incurred since the relevant reference date may, for the purpose of revision, be placed in the estimated columns of the revised Precedent H where they relate to significant developments. This avoids an artificial gap between costs described as estimated in the approved budget and costs later treated as incurred.
3. Significant developments. The question is fact-specific. The court must consider the size, complexity and development of the litigation, together with the likely additional expenditure. A mistake in preparing a budget or failure to understand the case initially is not ordinarily a development. The court should consider related developments in their totality, and a single momentous event may suffice.
4. Interim applications. Paragraph 7.9 does not exclude paragraph 7.6. An interim application may itself be a significant development, and consequential work may also qualify. The provisions must be construed together.
5. Application. The extension of the trial timetable, review of 984 additional disclosure documents, and work arising from the claimant’s additional expert report were significant developments. Revisions were allowed in the sums determined by the court. The third-party disclosure application, questions to experts and response to Mr Ellerton were not significant developments, so no revision was allowed for those items.

The application was not unreasonably late, and there was no sufficient basis to refuse the court’s discretion. Directions were to be incorporated in the order on handing down.