Costs budgeting: a High Court update

24 Jun 2013

In the case of Elvanite Full Circle Ltd v Amec Earth & Environmental (UK) Ltd 2013 the High Court has given the latest indication of how new costs budgeting rules are likely to be applied.  The claimant was a demolition and recycling contractor.  It owned a plot of two acres within an area of industrial land in Essex.  Two months before the claimant acquired the site for £561,000, it instructed the defendant, a company which advised about planning matters concerning waste management sites, to make a planning application seeking permission for waste recycling at the site.

The intention was that the planning application would be made at the end of November 2007.  The planning application was not made until 3 April 2008.  The defendant was working towards the resolution of the application.  However, on 15 July 2008, the claimant withdrew the planning application and sacked the defendant.  Thereafter, on 4 September 2008, the claimant, using different consultants, made a fresh planning application.  That application was not granted until seven months later, on 25 March 2009.  However, notwithstanding this eventual grant of planning permission, the claimant was not able to sell the site.

The claimant made claims for damages for breach of contract and/or negligence arising out of the timing and content of the defendant’s original application for planning permission.

The claim was dismissed.  The defendant succeeded on one small element of its counterclaim to the tune of some £3,500 plus interest. The claimant therefore accepted a liability to pay the defendant’s costs.  However, not entirely surprisingly the claimant objected to the amount of costs claimed which was £497,593.66.  The case had formed part of a costs management pilot being run by the Mercantile Courts and Technology and Constructions Courts.  The last court approved budget set in May 2012 amounted to £264,708.  This was increased slightly to cover the cost of transcripts at trial but was still approximately half the sum sought by the defendant at the conclusion of the case.

Coulson J rejected the late application to increase the budget.   Taking a hard line he rejected the defendant’s submission that there were good reasons to depart from the budget.   The judgment is worth reading carefully for the guidance contained therein but it is clear that  if a party wants to seek to make significant changes to its budget it will not be sufficient simply to file an update at court.   Any application should be made early and the court will usually be looking for good reasons not including having made a mistake in an earlier approved budget!  Coulson J made it clear that an application to amend a costs budget after trial would be seen as a contradiction in terms.  First it would no longer be a question of budgeting but rather one of making an adjustment in light of actual costs and second it would encourage parties to wait and see if it was in their interests to amend the budget.  It would make a nonsense of the new costs budgeting regime if a party could apply to double the budget after trial.