Costs Budgets: Significant Developments and Budget Variations
Written by Alistair Merchant, Senior Costs Lawyer.
Costs budgets are not intended to be rough estimates which can be ignored once the litigation becomes more expensive than expected. Once a costs management order has been made, the approved or agreed budget matters. That is the purpose of costs budgeting.
However, litigation does not always follow the path anticipated when the budget was prepared. Disclosure may expand. Expert evidence may change direction. A trial may take longer than expected. An opponent may take a course which materially changes the work required. In those circumstances, the rules provide a mechanism for revising the budget.
The starting point is CPR 3.15A(1), which provides:
“A party (‘the revising party’) must revise its budgeted costs upwards or downwards if significant developments in the litigation warrant such revisions.”
That wording is important. The rule cuts both ways. A party may need to revise its budget upwards, but it may also need to revise it downwards. What the rule does not permit is a party to revisit an inadequate budget simply because the case has become more expensive than hoped.
The question is not whether there has been an overspend. The question is whether there has been a significant development in the litigation since the budget was last approved or agreed.
The leading authorities on significant developments
Al-Najar v The Cumberland Hotel: Scale and Complexity
That distinction is central to the authorities. In Al-Najar and others v The Cumberland Hotel (London) Ltd [2018] EWHC 3532 (QB), Master Davison made clear that whether a development is significant depends on the scale and complexity of what has occurred. He also recognised the danger of setting the threshold too high. If the courts were to do so, parties would inevitably protect themselves by filing inflated budgets at the outset. That would defeat the purpose of costs management.
There is, however, an equally important counterpoint. If the work relied upon should reasonably have been anticipated when the original budget was prepared, it is unlikely to amount to a significant development. It may simply be bad budgeting, or optimistic budgeting, or a failure to understand what the case required.
Sharp v Blank: Development, Not Bad Budgeting
That point was made clearly in Sharp v Blank and others [2017] EWHC 3390 (Ch). Chief Master Marsh drew a distinction between a genuine later change in the litigation and an earlier failure to budget properly. A mistake in preparing the budget, or a failure to appreciate what the litigation involved, will not usually justify a revision. The word “development” matters. It connotes a change from the position as it stood when the budget was prepared. If nothing has changed, save that the party now realises the budget was too low, CPR 3.15A is unlikely to assist.
Seekings v Moores: A Party Cannot Rely on its Own Conduct
The decision in Seekings and another v Moores and others [2019] EWHC 1476 (Comm) illustrates the point. The defendant sought to revise its budget upwards by approximately £130,000, relying on matters including additional costs arising from a request for further information and an increase in documents to be reviewed. HHJ Worster rejected the application. The work should have been anticipated and, in any event, some of the additional cost had been caused by the defendant’s own failure to deal properly with the requests. A party cannot create the problem and then rely on that problem as a significant development.
BDW Trading v Lantoom: When the Assumptions do the Work
By contrast, BDW Trading Ltd v Lantoom Ltd [2020] EWHC 2744 (TCC); [2020] Costs LR 1597 shows the other side of the line. There, the scale of disclosure proved materially greater than had been anticipated and recorded in the budget assumptions. That was capable of amounting to a significant development. The case is a useful reminder that budget assumptions are not mere decoration. They provide the benchmark against which the alleged development will later be judged. A party who has identified an anticipated volume of disclosure, for example, will be in a far better position to show that the subsequent exercise has materially changed.
Why budget assumptions often matter
This is often where applications succeed or fail. A budget which says little of substance about its assumptions gives the court very little to work with. A budget which identifies the expected scope of disclosure, expert evidence, witness evidence or trial preparation gives the court a clear starting point. It enables the party seeking the variation to explain what has changed, why it matters, and why the additional costs flow from that change.
Adjournments, trial estimates and increased claim value
Adjournments and trial estimates have produced mixed results, again because the answer depends on the circumstances. In Churchill v Boot [2016] EWHC 1322 (QB), Picken J held that an increase in claim value, an adjournment, or an increase in the trial estimate will not automatically amount to a significant development. In that case, an increase in the trial estimate from four to five days was not sufficient, particularly where the directions had already provided for a five-day trial estimate.
That can be contrasted with JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2015] EWHC 1247 (Ch), where Birss J allowed a variation to reflect an increase in the trial estimate by one and a half days. The difference was not simply the number of additional days. The court will look at the reason for the increase, whether it was reasonably foreseeable, and how it affects the litigation as a whole.
The same approach applies more generally. An adjournment may be significant, but not every adjournment is. An increase in the value of the claim may be significant, but not every increase is. A heavier disclosure exercise may be significant, but only where the additional work was not reasonably anticipated and is not merely the product of poor original budgeting or the applicant’s own conduct.
Promptness: the modern emphasis after Barry v Barry
The more recent authorities place particular emphasis on promptness.
In Cranstoun and another v Notta [2021] EWHC 133 (Ch); [2021] Costs LR 47, the court considered an application made after trial. The case shows that a late application is not necessarily hopeless, but it also illustrates the obvious difficulty. The later the application, the more closely the court is likely to examine why it was not made earlier.
That point is brought into sharper focus by Barry and another v Barry [2025] EWHC 819 (KB); [2025] Costs LR 695. Dexter Dias J considered a late application to revise a budget where the trial had already started. The application succeeded in part, but failed in part. The disclosure and witness statement variations failed because they had not been pursued promptly. The trial preparation variation was allowed because it arose from significant developments and had been sought promptly once those developments materialised.
Barry is likely to be one of the more useful recent authorities for practitioners. It shows that promptness is not simply a procedural nicety. It is central to the operation of CPR 3.15A. A party cannot identify a significant development, allow the costs to be incurred, and then seek a broad retrospective reworking of the budget at the end of the case. That is not costs management. It is an attempt to rewrite costs history.
Practical points for practitioners
The points for practitioners are therefore clear.
- Do not assume that overspend equals significant development. It does not.
- Do not assume that an adjournment, increase in trial length, increase in claim value, or heavier disclosure exercise will automatically justify a revised budget. It may do, but only if the change was not reasonably anticipated and has had a material effect on the future conduct of the litigation.
- Budget assumptions should be drafted with care. They may later determine whether a party can demonstrate a genuine development, or whether the court treats the application as an attempt to repair an inadequate budget.
- Any application should also be made promptly and should be confined to the additional work caused by the significant development.
- The court is not being asked to approve a new budget from scratch. It is being asked to approve revisions caused by the development relied upon
CPR 3.15A: a safety valve, not a rewrite
CPR 3.15A is a safety valve. It allows for genuine changes in the litigation. It is not a cure for an inadequate budget, and it does not allow a party to re-write history once the approved figures have been exceeded.\
Frequently asked questions
What is a significant development under CPR 3.15A?
A significant development is a change in the litigation, occurring after the budget was approved or agreed, that materially affects the work required and was not reasonably anticipated, or reasonably capable of being allowed for, when the budget was prepared. It is judged by reference to scale, complexity and the original budget assumptions.
Is going over budget enough to revise a costs budget?
No. Overspend on its own is not a significant development. CPR 3.15A is not a mechanism for correcting an inadequate or optimistic budget; it addresses genuine changes in the case.
Does an increase in trial length automatically justify a revised budget?
No. As Churchill v Boot shows, an increased trial estimate will not automatically qualify. The court will examine the reason for the increase, its foreseeability and its impact on the future conduct of the litigation.
How quickly must a party apply to revise its budget?
Promptly, and as soon as the development is identified. Barry v Barry [2025] shows that delay may be fatal to part or all of the application, even where a genuine development exists.
Can a costs budget be revised downwards?
Yes. CPR 3.15A(1) expressly provides for revision upwards or downwards. Where developments have reduced the work required, the rule obliges parties to revise the budget down as well as up.
How Kain Knight can help
Kain Knight is the UK’s leading firm of independent costs lawyers, with five decades of experience in complex costs disputes. Our team regularly advises solicitors on drafting robust costs budgets and Precedent T applications under CPR 3.15A across commercial litigation, clinical negligence and serious injury, insurance, Court of Protection and group litigation matters.
For tailored support on a costs budget variation, contact our team. For further analysis, see our Knowledge Hub and Monthly Case Law Updates.
