BDW Trading Limited v Ardmore Construction Limited

A costs management order may be made after the date on which budgets were filed. Such an order is not retrospective where it records the court’s assessment of estimates as at the earlier date, rather than ruling on costs already incurred.

An application to vary a budget under Civil Procedure Rules 1998, rule 3.15A, may succeed where significant developments have changed the underlying assumptions. The increase must nevertheless be reasonable and proportionate. Document volume does not necessarily bear a direct or proportionate relationship to cost, and a party is not automatically penalised because its original budgeting assumptions proved too narrow.

This was a costs ruling following a case management conference on 7 June 2024. The court had not then made a costs management order because unresolved disputes concerning the parties’ budgets were not brought to its attention.

The claimant later sought to amend its budget, particularly for disclosure, following changes to the disclosure review document, search parameters, custodians, date ranges and the volume of potentially relevant documents. The issues were whether the court could now determine the reasonableness of the earlier budgets and whether the claimant had established significant developments justifying variation under rule 3.15A.

1. Power to make an order after the budget date. The court could make a costs management order recording its view of the reasonableness of the budgets as at 27 June 2024. Under Civil Procedure Rules 1998, rule 3.15(2), an order could be made at any time. This was not a retrospective order because it assessed historical estimates, rather than incurred costs or costs assessed under changed assumptions.
2. Claimant’s original budget. Leading Counsel’s involvement in preparing witness statements and expert reports was reduced because significant involvement was not reasonable or proportionate for inter partes recovery. Limited high-level and strategic involvement was appropriate, particularly for important expert evidence. The claimant’s disclosure estimate was reduced to reflect increased incurred costs.
3. Defendant’s budget. The court reduced the estimated hours for senior and junior fee earners and junior counsel. It declined to approve duplicative contingency items for senior counsel because there was no sufficient basis to conclude that a silk would be instructed.
4. Variation of the claimant’s disclosure budget. The claimant established that its assumptions had materially changed. The disclosure task was substantially larger than anticipated, although the claimant had provided little substantiation for the additional solicitor time and its original scoping appeared too narrow. A party is not automatically penalised when budgeting assumptions prove inaccurate, since a budget necessarily proceeds on assumptions. The court approved only part of the requested increase, allowing £120,000 for future solicitor time, £50,000 for other disbursements and £8,000 for junior counsel. Leading Counsel’s estimate was not increased.
5. The same conclusions would have been reached under rule 3.15 without relying on the significant-developments test in rule 3.15A. Both parties’ approved budgets were at the high end of reasonableness. Revised budgets and proposed costs management orders were to be filed within seven days.