Simpsons (Preston) Limited (Trading as Simpsons) & Anor. v MS Amlin Underwriting Limited

Under CPR3.15A, a costs budget may be varied where a significant development in the litigation warrants revision and the application is made promptly. A party’s improved understanding of its own case is not automatically excluded merely because the development is internal. The relevant question is whether the circumstances could reasonably have been known or assessed, by proper and proportionate investigation, before the costs management order. The court should adopt a realistic prospective estimate of reasonable and proportionate costs, while preserving a sufficiently demanding threshold to encourage rigorous budgeting. The burden rests on the party seeking variation to establish the significant development and justify the additional costs.

The claimants sought to increase the disclosure phase of an agreed costs budget from £59,665 to £117,807.56. They relied on the discovery of two previously unknown network drives, a substantially larger document population than anticipated, duplication, additional review work, hard-copy scanning and further licences.

The defendant argued that the matters were merely an internal realisation that the claimants had underestimated their own disclosure obligations, rather than a development in the litigation. The central issues were whether the matters amounted to a significant development under CPR3.15A, whether the application was prompt, and whether the proposed increase should be allowed.

1. Application dismissed. The claimants failed to prove a significant development warranting variation of the agreed budget under CPR3.15A.
2. The threshold requirements were that there had been a significant development in the litigation since the last approved or agreed budget and that the particulars of variation had been submitted promptly. If those requirements were met, the court would exercise an evaluative judgment having regard to the overriding objective, proportionality and prejudice to both parties, as explained in Persimmon Homes Ltd v Osborne Clark LLP [2021] EWHC 831.
3. The court rejected a rigid distinction between internal and external developments. That distinction is not contained in CPR3.15A and could exclude circumstances which, although internal, might properly justify variation. The principled question is whether the circumstances could reasonably have been known or assessed through proper and proportionate investigation before the costs management order. Matters genuinely incapable of reasonable anticipation may qualify; avoidable mistakes or miscalculations generally will not.
4. The early timing of costs budgeting and the limited scope of initial disclosure mean that a party may not reasonably be expected to investigate its own case to the extent necessary to identify the full burden of extended disclosure. The threshold should therefore not be set too high, consistent with Al-Najar v The Cumberland Hotel (London) Ltd [2018] EWHC 3532. Nevertheless, it must remain sufficiently demanding to preserve the value of costs budgeting.
5. The discovery of the two network drives was capable of being a development. However, the evidence did not establish that it was significant. It did not adequately connect the additional spreadsheets, duplication, irrelevant emails, hard-copy scanning or licence costs to a materially greater disclosure burden. The claimants therefore failed to discharge the burden of proof.
6. The application would have been sufficiently prompt had a significant development been established. Consequential matters were left for the parties to agree, failing which a further hearing would be convened.