BDW Trading Ltd v Lantoom Ltd

A revision to an approved costs budget may be justified by a significant development: an event, circumstance or step going beyond what was expressly or impliedly allowed for in the existing budget. A matter is impliedly allowed for if it was, or reasonably should have been, anticipated when the budget was prepared. The court assesses the total for each budget phase, using a broad-brush approach to whether the revised costs are reasonable and proportionate. A development affecting disclosure may also have knock-on effects on later phases. Those effects are assessed separately. A court should allow only the part fairly attributable to the significant development and should not undertake a detailed assessment or fix hourly rates at the budgeting stage.

The claimant, a house builder, sued the defendant stone supplier over allegedly substandard stone used in a housing development. The claim included contractual and statutory causes of action and was listed for an eight-day trial. At a pre-trial review, the claimant sought further increases to its approved costs budget for the witness statement and expert report phases. It relied principally on the unexpectedly large volume of disclosure, additional witnesses, increased expert work and testing, and the effects of the Covid-19 pandemic.

The defendant resisted the increases and sought corresponding increases to its own budget. The central issue was whether the developments relied upon were significant developments justifying revision under the applicable costs-budgeting rules.

1. Budget revision. A significant development is an event, circumstance or step of such a size and nature that it goes beyond what was expressly or impliedly taken into account in the previously approved or agreed budget. A development is impliedly taken into account if it was, or reasonably should have been, anticipated when the budget was prepared. The change from practice direction 3E paragraph 7.6 to CPR rule 3.15A did not affect the relevant body of learning in this case.
2. Assessment approach. Where an increase is justified, approval concerns the total for each budget phase, although the court may consider constituent elements. The court does not conduct a detailed assessment in advance or fix hourly rates. It applies a broad-brush assessment of whether the budgeted costs fall within the range of reasonable and proportionate costs, as explained in GSK Project Management Ltd v QPR Holdings Ltd [2015] EWHC 2274 (TCC).
3. Application. Collecting four to five times more documents than expressly anticipated, and reviewing nearly five times more documents, was a significant development. Its effects were not confined to the disclosure phase and could affect later witness and expert phases. The additional site visits by experts were not, by themselves, a separate significant development.
4. The claimant received increases of £50,000 for the witness statement phase and £83,000 for the expert report phase. The defendant’s budget was increased by £20,000 for witness statements and £25,000 for expert reports. The claimant was awarded £2,426.42 for the April application, being the assessed costs less the £255 court fee. Costs of the July application were left for agreement or brief written submissions.

not stated in the judgment.