VARIOUS SAM BORROWERS v BOS (SHARED APPRECIATION MORTGAGES) NO. 1 PLC & Ors.

Costs budgets must be assessed phase by phase. The court asks whether the total budget for each phase falls within a reasonable and proportionate range. It does not conduct a detailed assessment or a strict arithmetical exercise in advance. The sums in issue, complexity, wider factors and previous budgets are relevant, but comparison with the other party’s budget is informative only. A party may choose an expensive legal team, but cannot expect to recover expenditure beyond what was reasonable and proportionate. Unexplained or substantial reductions in successive estimates do not alone establish unreliability. Contingencies should not be approved where their scope and likelihood remain materially uncertain.

The judgment concerned the second costs management conference in proceedings brought by 161 consumers concerning shared appreciation mortgages. The claimants alleged unfair relationships under sections 140A and 140B of the Consumer Credit Act 1974. The court had directed a trial of 15 Lead Claims intended to assist resolution of the wider claims.

The issue was whether the defendants’ revised costs budget, and a contingency in the claimants’ budget for a possible specific disclosure application, should be approved as reasonable and proportionate under the costs management regime.

The court approved the parties’ agreed phases and revised the disputed parts of the defendants’ budget.

1. Applicable approach. Under CPR 3 and Practice Direction 3E, the court must consider whether the costs of each phase fall within a reasonable and proportionate range. It should have regard to the sums in issue, complexity, wider factors such as reputation or public importance, and the previous approved or agreed budget. It does not conduct a detailed assessment in advance.
2. Value and complexity. The potential value of all 161 claims was relevant because the Lead Claims were intended to facilitate resolution of the whole litigation. A simple comparison with the value of the 15 Lead Claims was therefore artificial. Nevertheless, the court had to avoid disproportionate expenditure, and the litigation did not have the exceptional complexity of heavy commercial litigation.
3. Comparisons and legal teams. The claimants’ budget was a useful starting point where both parties faced substantially the same work, particularly expert evidence. Comparison was not determinative. The defendants were entitled to choose their counsel, but the court could exclude additional expenditure caused by excessive duplication, unexplained fees or aspirational preparation assumptions.
4. Phase-specific decisions. The defendants’ budgets were reduced to £80,000 for CMC3, £500,000 for expert reports, £1,200,000 for trial preparation and £700,000 for trial. The agreed figures for witness statements, the PTR and ADR were approved. The resulting budget remained at the top end of a reasonable and proportionate range.
5. Reliability and VAT. Successive reductions did not, without more, establish that the budget was unreliable. VAT was not to be added when assessing proportionality because the rules and Precedent H forms provided no basis for doing so.
6. Contingency. The proposed contingency for specific disclosure was refused. The likelihood and scope of any application remained uncertain, and it was premature to estimate its cost.

First-instance costs management decision following earlier case management conferences. The court directed the parties to revise their budgets in accordance with the judgment and provide an agreed order.