COST BITES 119: COSTS BUDGETING: DEFENDANT ALLOWED TO VARY ITS BUDGET TO INCLUDE COSTS ALREADY INCURRED OBTAINING SURVEILLANCE EVIDENCE

There is a report of an interesting decision of Master McCloud in Yelland -v- Space Engineering Services Ltd [2023] EWHC 2823 (KB).   The report is from Sean Linley of Carter Burnett and can be read here.

There is a link to the judgment in the case and that can found here. 

The issue related to delay by a defendant in applying to amend its costs budget to include surveillance evidence. Master McCloud held that that there were strong policy principles against construing the rules to prevent amendment of the budget in these circumstances.

“In my judgment, to have revealed surveillance before the initial reports by experts in the main specialism had taken
place would run contrary to established principles which allow surveillance evidence and it being withheld until the Claimant has nailed his colours to the mast. In this case, obtaining the expert evidence unaffected by knowledge of the surveillance was a part of that, since the Claimant’s presentation and what was said and done in the presence of the experts is part of that ‘pinning to the mast’. To have revealed surveillance by including it in the budget for the second CCMC would have defeated that”.

THE CASE

The claimant brings an action for damages for personal injury against the defendant.   A CCMC took place in June 2020 and the court budgeted all the phases except PTR, Trial Preparation and Trial.

In July and August 2021 the Defendant covertly obtained video evidence of the claimant.

A second CCMC took place and the remaining phases were budgeted together with other changes to the budget. At this stage the claimant’s reports had not been produced and the defendant had not disclosed the surveillance evidence.

DISCLOSURE OF THE SURVEILLANCE EVIDENCE

The claimant disclosed his evidence and, in December 2022 disclosure of the surveillance footage took place.

APPLICATIONS TO VARY THE BUDGET

Both parties then served Precedent T applying to revise the budget. The claimant relied on the surveillance evidence as a “significant development”.

THE DEFENDANT’S APPLICATION TO VARY AND “PROMPTNESS”

The claimant argued that the defendant had not made its application to vary “promptly”, since it was made after the second CCMC at a time when the defendant was aware that surveillance evidence was going to be served.  Master McCloud did not accept that argument.

“It was argued that the Defendant should have served its surveillance evidence before
the second CCMC. That CCMC was, however, before the primary medical evidence
was complete, albeit after witness evidence. In my judgment, to have revealed
surveillance before the initial reports by experts in the main specialism had taken
place would run contrary to established principles which allow surveillance evidence
and it being withheld until the Claimant has nailed his colours to the mast. In this
case, obtaining the expert evidence unaffected by knowledge of the surveillance was
a part of that, since the Claimant’s presentation and what was said and done in the
presence of the experts is part of that ‘pinning to the mast’. To have revealed
surveillance by including it in the budget for the second CCMC would have defeated
that”.

POLICY CONSIDERATIONS

13. In my judgment, the rule must be construed as meaning that the restriction on the
court’s power to vary a budget only in relation to costs ‘after’ the Costs Management
Order is a reference to:
(i) costs relevant to the phases which were subject to costs management in that
previous order;
(ii) Whilst (i) is sufficient in this case, in any event it would not have been
consistent with the public policy as to keeping surveillance secret until the
appropriate moment, to construe the rule as meaning that where, for good
reason, certain costs are not included in a proposed variation, the court is
then debarred from making a later variation. Therefore, if it had been the
case that phases relevant to surveillance had been costs-managed by the
second CMO, I would have found that a purposive construction would allow
the court to vary the budget nonetheless for those surveillance costs predating the CMO.

14. I therefore decide that the surveillance costs, including, in particular, those incurred
before the last CMO but not covered in the phases which were budgeted, can be
subject to the court’s power to vary. The Rules Committee may wish to address the
issue in this case for clarity.