Introduction
Practitioners have again been reminded of the need to be prompt when seeking to vary a costs budget. Today’s blog takes a look at the case of Khokan v Nirjhor (Re Costs) [2024] EWHC 1873 (KB) whereby the Defendant sought to vary their costs budget after the Claimant’s claim had been struck out.
Background
The Claimant’s claim was automatically struck out pursuant to an Order following their failure to pay an outstanding costs Order in the sum of £20,646.58. Following the striking out of the claim, the Defendant sought an Order in respect of their costs as well as an order to vary their costs budget.
Judgment
Entitlement to Costs
The Court initially considered whether the Defendant was entitled to their costs – the Claimant argued that as they had not made any application for judgment in their favour and could therefore not be considered a “loser”. The Court rejected this argument and concluded that the Defendant had obtained judgment in their favour and the Claimant had failed in every aspect of their claim.
The Court thereafter considered whether the general rule (that the loser pays, CPR 44.2(2)) should not apply. Having considered CPR 44.2(4)-(5) the Court concluded that there was no good reason to depart from the general rule and the Claimant was thereafter ordered to pay the Defendant’s costs.
Varying Costs Budget
Unusually, the Defendant sought to vary their budget after the litigation had concluded. The Defendant’s initial costs budget was approved on 8 November 2023. Following a PTR, the Court made provision for the parties to propose any variations to their costs budget by 21 June 2024.
The Defendant did not do this as the Claimant’s claim had already been struct out. The Defendant thereafter filed and served a Precedent T on 8 July 2024 – the Court was satisfied that the Defendant was entitled to await the outcome of the consequential hearing prior to filing and serving the Precedent T.
However, the Defendant’s initial estimates were approved in the sum of £76,000 and their Precedent T sought revisions of £82,954.78 – therefore doubling the previously approved estimated costs. The estimates included the following;
- The need for counsel to provide further voluntary particulars of the claim and a detailed Advice engaging with the alleged SLAPP element of the claim, and recent overseas authority on the same;
- Additional work to consider a further 222 pages of material disclosed by the Defendant during the process of preparing witness statements and some 47 hours to transcribe and translate some audio/visual material;
- Preparing witness statements for two further witnesses whose existence emerged after the Case Management Conference where the original budget was approved;
- Costs in respect of travel on the basis that the Defendant had already had to pay for the flights, accommodation and a visa for his witnesses to attend trial as well as the foreign process service fee, given that the claim was only struck out three weeks before trial.
- Contingency A - the costs incurred on the various interlocutory applications
- Contingency B - the costs of the hearing to determine consequential matters.
In reaching their decision as to whether the variation to the costs budget should be allowed, the Court considered CPR 3.15A namely;
(1) A party ("the revising party") must revise its budgeted costs upwards or downwards if significant developments in the litigation warrant such revisions.
(2) Any budgets revised in accordance with paragraph (1) must be submitted promptly by the revising party to the other parties for agreement, and subsequently to the court, in accordance with paragraphs (3) to (5)
The Claimant argued that the Defendant should not be allowed to vary their costs budget as the applications for the same should be done promptly and, in this case, it had not. The Claimant sought to rely on the case of Persimmon Homes Ltd v Osborne Clarke LLP [2021] EWHC 831 (Ch). At [99]-[101].
Appling the principles set out in the Persimmons matter, the Court allowed the revisions in respect of the disclosure, witness statement, Trial, PTR and Contingency A. This was on the basis that the Court was satisfied that the application was prompt (given the position of the litigation) and that they reflected significant developments in the litigation that were raised at the PTR.
However, the Court did not allow the variation in respect of the other phases including the advice from Counsel (which were signed on 3 April 2024) on the basis it could not be considered prompt.
Conclusion
This case is another reminder of the need to be prompt when seeking to vary a costs budget as failure to act promptly will cause a party to immediately fail in their quest to vary a costs budget. My advice is to be specific with your assumptions when preparing the budget and then keeping a close eye on any work required which falls outside of this. This will allow a litigator to not only keep track of their costs but also put you in the best possible position to vary a costs budget.
For more information contact Karl Robson here.
