PDF Article: Sharp v Blank

Pursuant to CPR PD 3E, 7.6 “Each party shall revise its budget in respect of future costs upwards or downwards, if significant developments in the litigation warrant such revisions (...) 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. Furthermore, CPR PD 3E, 7.4 states that: As part of the costs management process the Court may not approve costs incurred before the date of any costs management hearing.”

There is no firm definition of what a “significant development” means and the Court can use its wide discretion to decide when a significant development occurs and each case is determined on its own facts.

There is, however, some guidance given in the case law of Sharp v Blank and others [2017] EWHC 3390 (Ch) where Chief Master Marsh provided helpful directions on revising cost budgets and what constitutes a “significant development” as follows:

  1. When revising budgets under CPR PD 3E, 7.6, the Court is to take the last agreed or approved budget as the base reference point.

  1. A more pragmatic approach was preferred over a literal reading of CPR PD 3E 7.4 and 7.6 and it was accepted that “some degree of retrospectivity is inevitable if the costs management regime is to be made to work.” Chief Master Marsh further commented that “Costs which have been incurred since the date of the last agreed or approved budget that relate to significant developments are, for the purposes of revision, placed in the estimated columns of the revised Precedent H in one or more phase.”

  1. With regards to the meaning of “significant development”, it was stressed that each case is to be assessed on its own facts and that factors such as the size, complexity and manner of unfolding of the litigation were all relevant, along with the likely additional costs that have been, or are expected to be, incurred.

In Sharp v Blank the Court found that the following factors had amounted to a “significant development” justifying a revision to the Costs Budget given that they had an impact on the further work and costs required:

- an extension to the Trial timetable by 48 days (almost doubling its length);
- substantial specific disclosure;

- service of a report by the Claimant from an expert that it was not anticipated the Claimant would instruct as well as the Defendant’s additional expert evidence as it was a direct cost that followed from this.

Nevertheless, the Court also found that the following did not amount to a “significant development:”

- the Claimant’s third party disclosure application;

- questions put to the Defendants’ experts;

- a lengthy response from the Claimant’s expert.

The Court held that the adjustment of the above further evidence was “modest” and could not therefore be described as “significant.”

Further guidance of the meaning of a “significant development” was provided in the case of Warner v The Pennine Acute Hospital NHS Trust (Manchester County Court 23 September 2016) where the Judge viewed a significant development as one where '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’.

In conclusion, parties are required to revise their Precedent Hs in circumstances where there is a significant developments warranting a revision upwards of downwards since the last approved budget. There is no clear definition of a “significant development” and each case will be decided on its own merits. Practitioners need to be cautious when trying to argue that a significant development had occurred as it has to be something more than a modest increase in the anticipated costs and work.