In an important decision for insurers and litigators involved in costs management, the High Court has confirmed that approved costs budgets cannot be reopened simply because litigation proves more expensive than anticipated. The judgment provides clear authority that, in the absence of a significant development within CPR 3.15A, the court has no jurisdiction to revise an approved costs budget.
In allowing the appeal, Mr Justice Cavanagh delivered what is likely to become a leading authority on the operation of CPR 3.15A and the circumstances in which approved costs budgets may be varied.
Crucially, the Court held:
"The court does not have a general discretion to vary costs budgets even if there have been no significant developments."
That statement resolves an increasingly important question in modern costs management. It confirms that there is no wider residual jurisdiction enabling courts to revisit approved budgets merely because a case has become more expensive or procedurally more complex than originally anticipated. Instead, the statutory gateway in CPR 3.15A must first be satisfied before any discretion to vary a budget can arise.
For insurers and litigators, the decision restores clarity and discipline to the budgeting process and reinforces the certainty that costs management is intended to provide.
The underlying claim arose from a catastrophic road traffic accident in which the claimant suffered life-changing injuries and was alleged to have lacked capacity to conduct litigation. Liability was admitted, leaving only the assessment of damages in dispute.
At a Costs and Case Management Conference in December 2024, the claimant sought approval of a costs budget approaching £2 million. The court approved a significantly reduced budget of around £1 million and expressly recorded concerns regarding proportionality.
As the litigation progressed, the timetable was extended, rehabilitation arrangements evolved, disclosure obligations continued, and further expert evidence became necessary. Based on those developments, the claimant sought an increase of approximately £238,350 through a Precedent T application.
The case took an unusual turn at first instance.
District Judge McLoughlin concluded that the matters relied upon by the claimant did not amount to "significant developments" for the purposes of CPR 3.15A. Despite that finding, he nevertheless directed that the parties' budgets could be increased and listed a further hearing to determine the extent of the variation.
A key issue on appeal was the judge's interpretation of an earlier consent order. He considered that the order effectively allowed the parties' budgets to be revised and that he should remain "true" to what had previously been agreed. However, Mr Justice Cavanagh held that this was a misunderstanding of both the order and the procedural history. The November 2025 consent order neither recorded agreement that significant developments had occurred nor authorised variation of the approved budgets. It simply required the parties to exchange Precedent Ts so that the issue could be considered at a later hearing.
Although that misunderstanding formed part of the appeal, it was not determinative. The central question was whether the court had power to vary an approved costs budget after finding that no significant developments had occurred.
The appeal raised an issue of considerable practical importance:
Can a court revise an approved costs budget after finding that there has been no significant development in the litigation?
The High Court's answer was unequivocal: No.
Mr Justice Cavanagh endorsed the reasoning of Master Kaye in Persimmon Homes Ltd v Osborne Clarke LLP and confirmed that CPR 3.15A establishes a mandatory threshold test. Before any discretion arises, the party seeking a variation must demonstrate that a significant development has occurred since the budget was approved. Only then does the court proceed to consider whether a variation should be permitted and, if so, to what extent.
The Court rejected the claimant's contention that a wider residual power exists under CPR 3.15. Instead, it held that the power to revise approved budgets must be found within CPR 3.15A itself, meaning the rule's prerequisites must first be satisfied.
The claimant relied on a range of matters, including:
The High Court accepted that these matters generated additional work and potentially increased costs. However, that was not the relevant test. The question was whether the developments were genuinely unforeseen and fell outside the reasonable contemplation of the parties when the original budget was approved.
The Court concluded that they did not.
In a serious brain injury claim involving ongoing rehabilitation, evolving therapy requirements, accommodation issues and developing expert evidence, such events were foreseeable features of the litigation. They were therefore incapable of constituting "significant developments" for the purposes of CPR 3.15A.
The judgment provides welcome clarity. Litigation rarely unfolds exactly as anticipated, and costs budgeting does not guarantee that every development will be perfectly costed from the outset. The fact that proceedings become more expensive than expected does not automatically justify an increase in the approved budget.
Importantly, the claimant's position failed on two separate grounds.
First, the High Court held that, as a matter of law, the District Judge had no power to vary an approved costs budget after concluding that no significant developments had occurred. Without satisfying the CPR 3.15A threshold requirement, the court's jurisdiction was simply not engaged.
Secondly, the High Court upheld the District Judge's underlying finding that there had been no significant developments in any event. Applying established appellate principles, Mr Justice Cavanagh held that the District Judge's conclusion fell comfortably within the range of decisions reasonably open to him.
In short, the claimant could overcome neither the jurisdictional hurdle nor the factual one.
One of the most significant aspects of the judgment is its reaffirmation of what costs management is intended to achieve.
The Court emphasised that costs budgeting is a broad-brush exercise designed to establish a reasonable and proportionate framework for future recoverable costs. It is not a mechanism for continual reassessment whenever litigation develops differently from earlier expectations.
The judgment recognises that extensions of time, additional disclosure, evolving expert evidence and changes in rehabilitation frequently arise in substantial personal injury litigation. Their occurrence does not automatically convert them into "significant developments" capable of justifying budget revisions.
The practical implications of the decision should not be underestimated.
The judgment:
At a time when litigation costs remain under close scrutiny, the decision strengthens the effectiveness of costs management as a tool for controlling litigation spend and promoting proportionality.
The message from the High Court is clear.
Costs budgeting is intended to provide certainty and proportionality, not a mechanism for routine reconsideration whenever a case becomes more expensive than anticipated.
In allowing Watford Insurance's appeal, the High Court confirmed that where there are no significant developments within CPR 3.15A, the court's jurisdiction to vary an approved costs budget is not engaged. The Court also upheld the finding that developments such as revised rehabilitation arrangements, additional expert evidence and timetable extensions were foreseeable and therefore insufficient to justify revision of the approved budget.
Importantly, the Court expressly left open the separate question of whether budgets may be varied where all parties agree that a revision should occur, observing that the issue should be determined in a future case in which it genuinely arises.
For insurers and litigators, Watford Insurance Company Europe Ltd v Bassey provides significant and persuasive authority for resisting attempts to increase approved costs budgets based on developments that, while generating additional work and expense, were reasonably foreseeable at the time of the original budgeting exercise. The decision sends a clear message: costs budgeting is intended to provide certainty, not a second opportunity to recover foreseeable costs.
Keoghs secured this result on behalf of Watford Insurance Company Europe Ltd. The appeal was conducted by David Burn, Emily Skinner, Derek Chan and Danny Milne of Keoghs, together with Michael Lemmy and Winston Hunter KC of Byrom Street Chambers.
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