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Significant Developments and Costs Budgets - Are there any developments?

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Lawyers are still struggling to understand what a ‘significant development' is in respect of applying for a variation to their costs budget. This is not helped by the fact that the CPR does not provide any solid explanation of the term resulting in different interpretations by many practitioners.

CPR PD 3E, para 7.6 states that there must be a significant development within the litigation before the Court will vary an approved costs budget. There have been many reported cases from which it has become evident that for example, increases in the value of the claim or length of trial are not seen as significant developments. Of course, the Court will consider the claim on its own merits but at the time of writing there is very little case law to provide a strong insight into what the Courts will consider as a significant development. Guidance was previously provided by Mr Justice Warby in the case of Yeo v Times Newspapers Ltd [2015] EWHC 2132 (QB) whereby he commented that it was not acceptable to use a development in a case as an excuse to incur further costs than had previously been necessary (for further information on Mr Justice Warby’s comments on this case see Richie Rees’ article)

Warner v The Pennine Acute Hospital NHS Trust (Manchester County Court 23 September 2016)

In brief, the above recent case was a clinical negligence claim against a doctor regarding the Claimant who had suffered very serious and debilitating injuries where there was a perceived risk of future deterioration. The budget was approved in October 2015 in the sum of £277,081.00 and an application to revise that budget was heard in September 2016.


Claimant’s arguments

The relevant provision that the Claimant relied upon was that of CPR PD 3E, para 7.6 which says:-

‘Each party shall revise its budget in respect of future costs upwards or downwards, if significant developments in the litigation warrant such revisions. Such amended budgets shall be submitted to the other parties for agreement. In default of agreement, the amended budgets shall be submitted to the Court, together with a note of (a) the changes made and the reasons for those changes and (b) the objections of any other party. The Court may approve, vary or disapprove the revisions, having regard to any significant developments which have occurred since the date when the previous budget was approved or agreed’

The Claimant argued that from the date the budget was agreed (October 2015) to September 2016, further expert evidence was obtained, which advised that the extent of the Claimant’s injuries was likely to have a significant impact on the Claimant's life expectancy.  More emphasis was put on the risk that further treatment was required than was apparent at the outset and therefore the Claimant averred that this change constituted as a different case to which was put in front of the Judge in October 2015. Consequently, the Claimant was arguing not so much on the increase in the value but the increase in the level of complexity and therefore attributed this as a significant development within the litigation.


District Judge Hovington’s comments

District Judge Hovington considered all aspects and circumstances of the claim and found one significant issue.  Within the Particulars of Claim, the Claimant indicated their intention to invite the Court to make an Order for provisional damages.  The Judge considered the Particulars of Claim and it was his view that it was clear the Claimant's condition could deteriorate.  It was therefore concluded that this was not a significant development within the course of the litigation and was one which merely evolved during the case.  The Judge viewed a significant development as one which requires that 'the case has gone off in a different direction in some manner or other, that it has taken a turn that was not reasonably foreseeable or envisaged at the time of the original exercise’.

The Judge made reference to the case of Churchill v Boot [2016] EWHC 1322 (QB). Within this case, there had been a significant increase in one head of claim because the care report, when it was finalised, valued that element of the claim significantly higher than was anticipated. The High Court Judge refused to revise the budget and did not regard it as a significant development. An appeal was made in this case and the decision was upheld.  Furthermore, insight was provided by the Court where it was noted that an increase in the value of the claim or an adjournment of trial is not automatically a significant development.

In light of the above, District Judge Hovington refused to depart from the budget on the grounds that there had not been any significant development in the litigation.


Concluding Points

What is evident from this instant case is that it further emphasises the fact that practitioners need to accurately formulate their case plan prior to preparing their budget and keep a close eye on their costs throughout the budgeting process. As there is no firm definition for significant development, the Court can use its wide discretion to decide when a significant development occurs and each case is determined on its own facts.  It can be noted from the reported cases so far that the test of what is a significant development is quite high and therefore practitioners need to ensure that their costs budget covers all eventualities in their pleaded case and that assumptions are carefully worded to ensure that if the case changes then it will be clear from the costs budget that the changes were not envisaged.  In addition, this case also highlights the fact that a significant development is one which requires a serious change of course within the litigation and practitioners must thoroughly consider their position before applying to revise their approved budget.