Maurice Hutson & Ors v Tata Steel UK Ltd

A retrospective variation of an approved costs budget requires, at the least, a significant development within Practice Direction 3E para 7.6. An unforeseen procedural delay does not necessarily qualify. The applicant must provide evidence showing that its consequences were significant and must overcome the court’s discretion to refuse variation.

Where a phase has concluded and the costs have been incurred, the proper opportunity to justify expenditure above the budget may be detailed assessment under CPR 3.18, by showing good reason to depart from the approved figure. Subsequent phase budgets must be reasonable and proportionate, taking account of incurred costs, hourly rates, anticipated time and the nature and scale of the work.

This was a costs management decision in group litigation concerning occupational disease claims brought by former coke oven workers against Tata Steel UK Ltd and its predecessors.

The claimants sought retrospectively to increase the approved phase 1 budget, relying on delay caused by an unsuccessful limitation application. They also sought approval of higher figures for five categories in the phase 2 budget and disputed the costs arising from a previous case management hearing.

The court considered whether the delay constituted a significant development under Practice Direction 3E para 7.6, whether retrospective variation was available, and what sums were reasonable and proportionate for phase 2.

1. The application to vary the phase 1 budget was refused. The court was prepared, without deciding the point, to assume that the rules permitted retrospective variation. That assumption did not resolve the application.

2. The claimants failed to establish a significant development under Practice Direction 3E para 7.6. The unsuccessful limitation application was unforeseen, but the collateral economic consequences of the resulting delay were likely to be modest. The evidence did not justify the substantial increases claimed. A lengthy adjournment does not necessarily amount to a significant development, consistent with the observation in Churchill v Boot [2016] EWHC 1322 (QB).

3. Even if a significant development had been shown, variation remained discretionary. In the circumstances, the completed and compartmentalised phase 1 budget, the broad-brush justification advanced, and the fact that the costs had already been incurred made it more appropriate for the claimants to seek to demonstrate good reason at detailed assessment under CPR 3.18. The court distinguished the circumstances considered in Sharp v Blank [2017] EWHC 3390 (Ch), where the budget had been set conventionally through to trial.

4. For phase 2, the court assessed reasonable and proportionate figures by considering incurred costs, hourly rates, anticipated hours, the work required, the number of documents, the number of lead claimants and the extent of duplication. The approved figures were £150,000 for CMC and CCMC costs, £200,000 for group co-ordination, £750,000 for disclosure, £300,000 for lead claimant selection and £200,000 for lead claimants’ statements of case.

5. The costs claimed for the November 2019 hearing were disproportionate. The court limited hourly rates to those previously allowed, reduced excessive time claimed, and allowed counsel’s fees of £3,500 for each solicitors’ firm.

First-instance costs management decision. No appellate history was stated in the judgment.