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No detailed assessment and departures from the budget allowed

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Sony Communications International AB v SSH Communications Security Corporation [2016] EWHC 2984 (Pat) (24 November 2016)

Mr Roger Wyand QC gave a judgment on the order for costs to be made following a trial. Despite the counterclaim having a value in excess of £10 million, it had been ordered that the costs management would apply. Accordingly the parties prepared, exchanged and agreed costs budgets which were approved by way of a Costs Management Order dated 21 December 2015.

Following the trial, the parties agreed that there was no need for a detailed assessment and invited the Judge to make a summary assessment on the basis of the relevant Costs Budget.

Sony, the commercial winner in the proceedings, sought to be allowed to increase the budgeted figure for some of the phases. There appeared to have been no good reason for the failure to keep the Court and parties informed as to variations from the agreed budget, a factor which the Court took into account.

Sony had spent £580,906.16 on the expert phase as against a budget of £215,425.75. They blamed the approach of SSH's expert. They also highlighted the fact that SSH's budget was considerably more at £323,268.98. Sony therefore sought a figure of £398,165.96 which was the half way point between the budgeted figure and the actual spend. For this phase the Judge found that there was good reason to depart from the budget. The Judge allowed Sony £323,270 in line with that which SSH budgeted for the same phase.

Sony had then over spent on trial preparation by £53,000 but had underspent on trial by £44,000 and submitted that by merging the two phases, their overall overspend was £9,000 and sought to vary the budget for these phases. In fact a further £80,675.40 was attributable to the trial phase and therefore there was an overspend on that phase also. The Judge agreed with SSH that these phases should not be merged and must be treated separately. The Judge found no good reason to depart from the budget for trial preparation. As for the trial phase, a number of difficult issues on the assessment of the costs developed which were not anticipated by either party. The Judge therefore allowed a further £25,948.62 for the trial phase.

The Judge went on to deal with the impact of the issues on which Sony failed and there were various appointments made phase by phase.

Read the full Judgment here.