Benyatov v Credit Suisse Securities (Europe) Ltd

In costs budgeting, the court should adopt a broad-brush approach and approve budgeted costs only where they fall within the range of reasonable and proportionate costs. The court may consider constituent figures, fee-earner deployment and hourly rates as aids to assessing future work, but it must avoid fixing rates or micromanaging expenditure. Costs already incurred cannot be approved or disapproved, although the court may comment on them and take them into account when assessing future budgeted costs. Proportionality depends on the sums in issue, complexity, importance, reputation, public interest, skill, time and the circumstances in which work is done. A substantial claim does not give parties carte blanche to incur costs.

The claimant brought a claim exceeding US $86 million against his former employer. The judgment concerned the parties’ costs budgets, prepared late in the proceedings after earlier judgments on strike-out, security for costs, amendments and related applications. The trial was due to begin on 26 April 2021.

The court had to decide whether to make a costs management order and, for disputed future phases, what costs were reasonable and proportionate. It also considered the extent to which substantial incurred costs could be commented upon and taken into account.

1. Costs management order. The court applied CPR 3.15 and the overriding objective. A costs management order was appropriate because both parties challenged aspects of the opposing budgets. The exercise concerned future budgeted costs, not detailed assessment.
2. Applicable approach. The court adopted the broad-brush approach described in GSK Project Management Ltd v QPR Holdings Ltd [2015] EWHC 2274 (TCC). The approach in CIP Properties (AIPT) Ltd v Galliford Try Infrastructure Ltd [2015] EWHC 481 (TCC) was treated as guidance rather than a straightjacket.
3. The court could examine constituent elements, including the proposed deployment of fee-earners and hourly rates, to assess whether the overall budget was reasonable and proportionate. It could not approve or fix hourly rates and had to avoid micromanagement, consistently with Yirenki v Ministry of Defence [2018] EWHC 3102 (QB).
4. The relevant considerations included the amount in issue, complexity, importance, reputation and public importance, skill and responsibility, time, and the circumstances in which the work was done. Conduct and non-monetary relief were excluded where they had no relevance to future costs.
5. Costs incurred before the budgeting hearing could not be approved or disapproved. They could nevertheless be criticised and taken into account when setting future allowances. The court considered both parties’ earlier expenditure and required particular caution in approving further work.
6. Applying those principles, the court approved revised allowances for the disputed phases and directed the parties to draw up revised costs budgets reflecting the decisions. The court expressed no view on the recoverability or reasonableness of certain already-incurred trial-preparation costs.

The judgment records earlier procedural judgments in the same action concerning strike-out, security for costs, interim costs payments, amendments and permission to appeal. This judgment itself determined the parties’ costs budgets at first instance.