Court has broad discretion to order costs budgeting in cases falling outside mandatory regime

The High Court has considered the extent of the court’s discretion to order costs budgeting in cases where budgets are not automatically required. Under the rules in force since 22 April 2014, that means claims for more than £10 million, though in this case the relevant threshold was £2 million as it was a claim filed in the Technology and Construction Court before that date: CIP Properties (AIPT) Ltd v Galliford Try Infrastructure Ltd & Ors [2014] EWHC 3546 (TCC).

Unsurprisingly, the judge (Coulson J) rejected the claimant’s argument that the court had no discretion to apply costs budgeting in cases falling within the exceptions to the mandatory regime, saying he was in no doubt that the court has such a discretion. Although the decision relates to the construction of the rules in place before 22 April, the judge’s reasoning would lead to the same result under the new regime.

He also rejected the claimant’s fallback argument that there was a presumption that budgets would not be ordered in cases falling within the exceptions, so that the party seeking an order for budgets must demonstrate special circumstances justifying the exercise of the discretion. On the contrary, the court has an unfettered discretion and must weigh up all the circumstances of the case to decide whether the order should be made.

Whilst only first instance, the decision is of particular significance given Coulson J has been closely involved in developments relating to costs budgeting, having led the review that considered whether the original exceptions (for cases above £2 million in TCC and Chancery and all cases in the Commercial Court) should be removed and having given a number of previous decisions which take a fairly strict approach to budgets (see here, here and here).

The decision also considers the benefits (or otherwise) of ordering a stay or ‘window’ in trial preparation to allow for ADR – see this post on our ADR notes blog for more on that aspect.