LM-2023-000035 - [2025] EWHC 2168 (Comm)

The next issue is whether I should permit the Claimant to vary its budget. There are 3 relevant points to consider. First, given my decision in respect of indemnity cost is variation relevant? Secondly, if it is, are there significant developments in the litigation that warrant variation? If so, the third point is what should the variation be?

CPR 3.18 provides that when conducting an assessment on the standard basis the Court will have regard to the receiving party’s last approved or agreed budgeted costs for each phase of the proceedings and not depart from such approved or agreed budgeted costs unless satisfied that there is good reason to do so. If the assessment is conducted on the indemnity basis, CPR 3.18 does not apply.

CPR 44.4(3)(h) provides that when conducting a detailed assessment, the court will have regard to the receiving party’s last approved or agreed budget. It follows that when costs are assessed on the indemnity basis the Court may depart from the Budget and need not have a “good reason” for doing so. It seems to me therefore that budgets remain potentially relevant even on an indemnity assessment.

I have come to the view that simply because budgets remain relevant, that does not mean that I should deal with the application for a variation. In my view it is prudent not to do so. I reach that view for 2 reasons: first, the assessing court can easily depart from the budgets so there is no prejudice to the Claimant if I decline to deal with the application.

Secondly, the exercise of variation would require me to consider if any variation falls within the range of “reasonable and proportionate costs”. That is the standard basis test (or at least akin to it). It is not the indemnity test. Whilst that is the basis of all budgeting the exercise, it seems to be a particularly hollow one once I have ordered that the assessment should be on the indemnity basis.