Kigen (UK) Limited v Thales Dis France SA & Anor

Costs budgets must be reasonable and proportionate, having regard to the factors in Civil Procedure Rules 1998, CPR Part 44.3(5) and 44.4(3), and PD3E paragraph 5. Complexity and substantial sums do not, without more, justify significant expenditure. The explanation must address why the proposed costs are reasonable and proportionate.

In sophisticated and well-funded commercial litigation, the court may adopt a lighter-touch approach to costs budgeting. The parties are generally better placed to assess likely expenditure, but the court may limit a budget where the figures are insufficiently justified. A solicitor’s fixed-fee arrangement is irrelevant at the budgeting stage, and disclosure of a retainer requires a properly formulated application.

This was a first-instance case-management judgment concerning two applications in patent proceedings. The Defendants sought permission to rely on an amended costs budget correcting errors in their original budget. The Claimant did not oppose that application, but sought the costs of the correction.

The court also considered the parties’ Stage 1 Costs Budgets, covering preparation of statements of case and the Costs and Case Management Conference. The central issues were whether the proposed figures were reasonable and proportionate, the significance of the parties’ relative ability to assess expenditure, and whether the Defendants’ fixed-fee retainer was relevant to budgeting.

1. Amended costs budget. Permission was granted to the Defendants to rely on their amended costs budget. The correction application had been made promptly and was unopposed. The Defendants were ordered to bear the costs of rectifying the errors, namely the costs of that application.
2. Applicable budgeting considerations. The court assessed reasonableness and proportionality by reference to CPR Part 44.3(5) and 44.4(3), together with PD3E paragraph 5. The parties had not adequately explained why pleadings and the Costs and Case Management Conference should be so expensive. Complexity and substantial sums were relevant but did not, without further explanation, justify the proposed figures.
3. Lighter-touch approach. The court recognised that parties are generally better placed to assess likely expenditure. It also recognised that costs budgeting operates across litigation of very different types. A lighter-touch approach may therefore be appropriate in complex commercial disputes involving sophisticated and well-funded litigants, where the access-to-justice rationale for close budgeting is less prominent.
4. Kigen’s budget. Excluding an error of £6,229.45 relating to expert reports, the figures offered by Thales’s budget report were already generous. They allowed approximately £920,000, including incurred costs, for producing a statement of case and preparing for and attending the Costs and Case Management Conference. The court found no principled basis for allowing more and ordered accordingly.
5. Thales’s budget and retainer. The court allowed Thales’s costs budget. The fixed-fee arrangement between Thales and its solicitors was irrelevant at the budgeting stage. The court would not order disclosure of the retainer without a properly formulated application.
6. Costs of the budgeting application. The court’s provisional view was that the Stage 1 Costs Budgets Application was an exercise in case management, despite Thales’s greater success. The parties were permitted to make further submissions on costs.