UNANTICIPATED SIZE OF DISCLOSURE WAS AN “UNANTICIPATED DEVELOPMENT”: UPWARD REVISION OF COST BUDGET ALLOWED

In  Al-Najar & Ors v The Cumberland Hotel (London) Ltd [2018] EWHC 3532 (QB) Master Davison allowed an upward variation of the cost budget.  The scale of disclosure given by the defendant could not have been anticipated and it was reasonable to increase that stage of the budget.

“What is required is a standard of reasonableness. It is no answer to the application to say that disclosure on the scale that has occurred could have been foreseen or anticipated. That would be to impose an altogether unrealistic burden and encourage the sort of bloated, defensive budgets which are to be deprecated. “

THE CASE

The claimants were seriously injured by an attacker whilst guests at the defendant hotel. They allege the defendant is responsible.  Liability was described as “complex”.  The matter was set down for a trial on liability only.  The matter had been budgeted and the Master was considering an application by the claimant to increase the size of the budget of the disclosure stage.

COSTS BUDGETING

The case had been budgeted in November 2017.  the claimant’s budget was approved in the sum of £1,028.197.

THE DISCLOSURE STAGE

The amount that was allowed for disclosure was £62,262.50.

THE ASSUMPTIONS BEHIND THE DISCLOSURE STAGE AND WHAT WAS DISCLOSED

1. The amount that was approved for the phase was £62,626.50. That was, in fact, agreed by the defendants and therefore approved by Master Eastman. I am told and I have no reason to doubt that the claimants’ solicitors were expecting somewhere between 1,000 and 1,500 documents, which they expected would fill twenty to thirty lever arch files. (I will say that it is perhaps not only with the benefit of hindsight that it might have been prudent to have recorded that in the assumptions.) Be that as it may, what arrived comprised 3,250 documents filling fifty-five lever arch files. The scale of that is getting on for double what was anticipated and the claimants further say, (though I do not attach too much importance to this), that they were not forewarned by the defendants that that was the number of documents that would be forthcoming even though, so the claimants say, the defendants must have known that that was the case.

THE CLAIMANT’S APPLICATION TO INCREASE THE BUDGET: “A SIGNIFICANT DEVELOPMENT IN THE LITIGATION”

The Master reviewed the Practice Direction and relevant previous authorities.

1. 1. From the Practice Direction and the decision of Chief Master Marsh I would derive the following broad principles:

(a) Whether a development is “significant” is a question of fact which depends primarily on the scale and complexity of what has occurred.

(b) If what has occurred is something that should reasonably have been anticipated by the party seeking to revise its budget, then that party will probably be unable to label it significant or, for that matter, a development.

(c) However, there is no requirement that the development must have occurred other than in the normal course of the litigation. That is clear from the final sentence of para.37 of Master Marsh’s decision which I have quoted and also from the fact that in that case a revision of the trial estimate, the disclosure of 984 documents and the service of an expert report were all characterised as significant developments.

(d) As a matter of policy, it seems to me that the bar for what constitutes a significant development should not be set too high because, otherwise, parties preparing a budget would always err on the side of caution by making over-generous (to them) assessments of what was to be anticipated.

(e) Lastly, and I think this is uncontentious, if there has been a significant development, then the question is whether the figures in the revised budget are reasonable and proportionate in the light of the development.

THERE HAD BEEN A “SIGNIFICANT DEVELOPMENT” IN THE CURRENT CASE

The Master came to the conclusion that there had been a significant development.

1. I have come to the clear conclusion that there has been a significant development. The disclosure has been of a scale and complexity that is much larger than was actually budgeted for, which was not, in fact, envisaged and which could not reasonably have been envisaged. In coming to that last conclusion I ask the question: was the assessment in the original budget a reasonable one? If it was, then ex hypothesi, what has occurred is something that falls outside that reasonable assessment. What is required is a standard of reasonableness. It is no answer to the application to say that disclosure on the scale that has occurred could have been foreseen or anticipated. That would be to impose an altogether unrealistic burden and encourage the sort of bloated, defensive budgets which are to be deprecated. I find that the assessment of the disclosure phase in the original budget was a reasonable one. It follows that disclosure that has come in at approximately double what was then anticipated amounts to a significant development in the litigation.

2. As to the amount that is now sought in the revised budget, it seems to me that with one qualification it is reasonable and proportionate. It is in fact less, one can work out, than the amount that Master Marsh allowed in the Sharp case, if the arithmetic is done on a pro rata basis. It amounts to very roughly three hours per ring-binder of documents disclosed and that seems to me if anything an underestimate. It allows double the figure for counsel, which again seems about right. The only figure that has caused me to raise an eyebrow is the eightfold increase in the expert’s costs. That is unexplained and that figure, at the risk of tinkering, I will not approve. I would allow a doubling in the expert’s costs but no more than that.