Costs budgets

How flexible can costs budgets of litigation be?

The background

Harrison v University Hospitals Coventry & Warwickshire NHS Trust [2017] concerned costs which arose from a clinical negligence case. Complications had arisen following the claimant’s caesarean section and a claim was brought. During proceedings, the parties were permitted to rely on costs budgets presented at the hearing.

The respondent’s total put forward at this stage was £197,000. Eventually, a bill of costs was presented for over £467,000, which was brought before the court for detailed assessment.

The decision

The court concluded that an approved costs budget can be departed from at the detailed assessment stage only where there is a good reason for variation, whether that concerns the paying party paying less than its budgeted amount or the receiving party claiming more.

Costs already incurred at the time the costs budgets are prepared are subject to detailed assessment.

Advice and action for landlords

Although its facts lie outside the property sector, this case provides useful guidance and clarity on the management of costs in large claims and the importance of costs budgeting.

The court, dismissing the appeal, makes it clear that there must be a good reason for departure from a costs budget prepared whilst a claim is ongoing; parties need to be aware that, where costs appear to vary significantly, these may not be recoverable following detailed assessment and must therefore be brought under control.