The Dekagram: 1st September 2026

This week Megan Bithel-Vaughan considers the circumstances in which a costs budget may not be varied, whilst Imogen Todd takes us back to the 80s, a Golden Age of litigation, when parties ambushed each other at trial and judges behaved even more splenetically than they do now. Your editor, Sarah Prager KC, recalls fondly the District Judge at Clerkenwell County Court who used to launch the White Book at anyone whose submissions displeased him, and the Southend County Court judge who notoriously once commented that he wasn’t prepared to believe a word said by any witness who hailed from Mersea Island (entirely unfairly in our experience, it has to be said). How times change! One can only imagine how these judges would have grappled with the issues raised by costs budgeting, let alone applications to vary budgets. Irascibly, one speculates.

Watford Insurance Company Europe Ltd v Bassey [2026] EWHC 2126 (KB): When a Party May not Apply to Revise its Costs Budget

This article considers the case of Watford Insurance Company Europe Ltd v Bassey [2026] EWHC 2126 (KB) which is an appeal against an order made by DJ McLoughlin, concerning variations to a costs budget, the meaning and effect of CPR 3.15A and “significant developments”.  Whilst the appeal is relatively straightforward, it is worth reading, as it serves as a warning to practitioners. First, it is a reminder that once a costs budget is set, it can only be varied if there have been significant developments in the litigation since the budgets were finalised or by the agreement of the parties. Second, it warns practitioners to be clear when drafting a consent order to ensure that it reflects the understanding of the parties, and if it is agreed that there should be variation of a costs budget (which the High Court determined it was not in the index case), this should be explicitly stated in the draft order to avoid confusion.

The chronology underlying the appeal was as follows:

CCMC in December 2024: whereby DJ Maddison approved the Respondent’s budget at £1,028,580.85, having recorded that the incurred costs claimed in the much larger Precedent H of £1,981,163.55 were disproportionate.

Consent order made after hearing in November 2025: amending various case management directions and directing the parties to file Precedent Ts to “take account of the increased costs” associated with the amended directions.

Hearing in February 2026: whereby DJ McLoughlin made an order, the relevant part for the purposes of the appeal reading, “Upon the Court recording that the amendments to the Order of DJ Maddison dated 18th December 2024 were not a significant development within CPR 3.15A but does not prevent the costs being increased”.  DJ McLoughlin then set various directions and set a further hearing to determine the quantum of the increased costs budget.

The appeal considered the following questions:

1. Whether the November 2025 consent order had itself decided by agreement that the budgets would be revised. Cavanagh J decided that no such agreement had been reached, both based upon the wording of the consent order, the submissions made by the parties and contemporaneous evidence, including an attendance note from counsel.
2. Whether, in the absence of agreement, “significant developments” are a necessary precondition to varying a budget. Applying Persimmon Homes Ltd v Osborne Clark LLP [2021] EWHC 831 (Ch), Cavanagh J held that variation under CPR 3.15A involves a two-stage process: the applicant must first establish a significant development, and only then does the court’s discretion to approve, vary or disallow arise.   Whilst the Court does have a general discretion as to costs, this does not give it the discretion to vary budgets absent either the agreement of the parties or if there is a significant development.
3. Whether the Judge had erred in deciding that there had been no significant developments.  This required looking at the definitions and case law surrounding the meaning of “significant developments”, which must be events that were not and could not reasonably have been anticipated when the budgets were set.  On this matter, Cavanagh J held that DJ McLoughlin’s decision was well within the ambit of reasonable disagreement and could not be disturbed on appeal.  This was because in a serious personal injury claim it was an obvious possibility that further expert reports, additional disclosure and updated quantum statements might be needed, and the prospect of a change of accommodation affecting therapy and rehabilitation had been within the parties’ contemplation at the budgeting stage.

The appeal against DJ McLoughlin’s order was therefore allowed.

About the Author

Megan Bithel-Vaughan gained tenancy having completed pupillage at Deka Chambers. She has already been led by Sarah Prager KC in a case of significant value involving complex issues around the interpretation of the Montreal Convention, and in particular the interplay between the operation of the partial compensation cap and contributory negligence.

Car-Wizard Limited v Vixen Surface Treatments Limited [2026] EWHC 2177 (Ch): When a Party May Apply to Revise its Costs Budget

On 17^th August 2026 HHJ Paul Matthews handed down judgment in a dispute between Car-Wizard Limited (a small vehicle repair business) and Vixen Surface Treatments Limited (a supplier of commercial lathes).

HHJ Matthews had handed down his written reserved judgment on 26^th March 2026 dealing with liability alone. A draft judgment, which dealt with liability and quantum, had been circulated a few days earlier. However, following representations from the defendant, the assessment of damages was to be dealt with following further submissions. Prior to the court hearing submissions on the assessment of damages, the claimant applied to revise its costs budget on 13^th April 2026.

HHJ Matthews criticised the conduct of the litigation, describing it as reminiscent of “longer drawn-out, far more aggressive, and certainly more expensive” cases seen in the 1980s. He further commented that main responsibility for lack of cooperation lay with the defendant, whose aggressive approach, destruction of records after the dispute had arisen, and interference with expert evidence drew particular censure.

HHJ Mathews granted the claimant’s application to revise its costs budget upward by £19,710 (about 7%). The judge distinguished authorities such as Queensgate Place Ltd v Solid Star Ltd & Ors (No. 3) (Consequential Matters) [2024] EWHC 2139 (Ch)and Elvanite Full Circle Ltd v AMEC Earth & Environmental (UK) Ltd [2013) EWHC 1643 (TCC) for three reasons, reminding the parties that there are cases where the trial judge has allowed variation to costs budgets after trial. First,the trial had not concluded; further submissions were required on the assessment of damages following representations from the defendant. Second, there was a “significant development” under CPR rule 3.15A, as the revision was sought promptly to cover unforeseen submissions on damages. Third, the defendant had failed to particularise their submission that the additional amount claimed was excessive and duplicative of effort, and further failed to set out how much the further written submissions had cost them (HHJ Matthews suggested this indicated the defendant’s additional costs may well have exceeded the claimant’s).

The claimant had made a Part 36 offer of £65,000 and was awarded around £86,000. The defendant argued that the amount awarded did not beat the claimant’s Part 36 offer, as the amount considered should exclude losses relating to trade customer SJ Curtis. HHJ Matthews rejected this argument for two reasons. First, he identified an arithmetic flaw in that the accrued interest would mean the amount awarded in relation to Vixen Surface Treatments would still exceed the offer. Second, the claimant’s losses were pleaded without how they were derived from different sources of individual business, and the defendant knew the case; there should have been no surprise to the defendant. He therefore applied the consequences of rule 36.17(4) CPR.

On interest, the judge awarded 5% over base rate for the first period (to 14^th November 2024), treating the claimant as a small business akin to a sole trader under the Carrasco v Johnson guidance. For the second period, he awarded the maximum enhanced rate of 10% over base rate, citing the defendant’s disclosure failures and expert interference as justification, more as encouragement than penalty.

As for costs, the judge ordered the defendant to pay 90% of the claimant’s costs, rejecting a 25% reduction despite lower-than-pleaded recovery, and awarded indemnity-basis costs given the out-of-the-norm conduct of the defendant. He also awarded interest on costs and ordered a payment on account of £214,000, plus the additional amount under rule 36.17(4)(d).

Comment

While there is significant criticism of the defendant in the judgment, it seems plausible that the claimant would have enjoyed the increase in their costs budget and the benefits of Part 36 regardless of the defendant’s conduct. However, the high rates of interest and cost consequences remind parties that what was acceptable in the 80s may now receive heavy criticism and financial consequences.

About the Author

Imogen Todd was called in 2020. Having completed pupillage at Deka Chambers, including a period under the tutelage of Dominique Smith, she was taken on in October 2025. She now undertakes a broad civil practice, with a strong track record in personal injury, travel claims, inquests, stage 3 hearings, infant approval hearings and credit hire litigation.