PI Brief Update

A High Court determination on revised cost budgets and 'injustice' in the context of Part 36 cost consequences - Maia Cohen, Temple Garden Chambers

25/09/26. In Car-Wizard Ltd v Vixen Surface Treatments Ltd [2026] EWHC 2177 (Ch), a High Court judge held that the Claimant could revise its cost budget during an adjourned trail after judgment on liability had already been handed down, where the Claimant had made their application promptly, and the increase in costs was the result in unforeseen additional work.

The claim concerned a dispute between two small companies, and the litigation had been protracted and aggressive. HHJ Paul Matthews originally intended to deal with liability and quantum together. However, after he circulated his draft judgment, he determined he needed to hear further submissions from the parties on quantum. He adjourned the trial for that purpose and handed down judgment on liability in the meantime.

Revised Cost Budget

Following the Judge’s order for an adjournment, the Claimant applied to revise its cost budget, seeking an increase of £19,710 in the trial phase of the claim to cover its written submissions on quantum (approximately a 7% increase in its overall budget).

The Defendant objected to the application, referring to 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), which maintain that it would not be appropriate for budget approvals to be sought by the court after the trial had concluded. The Defendant further submitted that the increase sought by the Claimant was “excessive and duplicative of effort”.

HHJ Matthews allowed the Claimant’s application. He held:

• The trial of the claim had not concluded, as quantum had not been determined
• The extra costs the Claimant was seeking had not previously been contemplated and were necessitated by his request for further submissions, rather than anything the parties did. The Claimant made their application promptly, which contrasted with Queensgate and Elvanite in which there was unexplained delay.
• The Defendant did not give any particulars of how the increase sought by the Claimant was “excessive and duplicate of effort” and notably had not stated how much the written submissions had added to its own costs, from which HHJ Matthews inferred that it was at least as great as that of the Claimant.

Part 36

HHJ Matthews went onto consider the effect of an unbeaten Part 36 Offer, and the Defendant’s submissions that it would be “unjust” to award the Claimant the ordinary cost consequences set out under r36.17(4) that resulted from obtaining judgment against the Defendant “at least as advantageous to the Claimant as the proposals contained in the Claimant’s Part 36 offer”.

The Defendant stated such an order would be unjust because part of the damages awarded by the court were in respect of lost work from a trade customer who did not appear in the Claimant’s statement of case and of whom the Defendant only became aware of on service of the Claimant’s expert report. The Defendant stated that if the value of the damages awarded in respect of this lost work were excluded from the total, the Claimant would not have beaten their own Part 36 offer.

HHJ Matthews rejected the Defendant’s argument on the following bases:

• If the trade customer losses were excluded, while bare damages would fall to less than the Part 36 offer, the offer included interest up to the expiry of the relevant period. Even at the interest rate offered by the Defendant, the accrued interest on the reduced damages would exceed the Part 36 offer.
• The Claimant’s losses were pleaded. How they were derived from individual sources of business was not pleaded. Doing so would simply be evidence of the loss claimed, and there is no requirement to plead evidence. Further, the Amended Particulars of Claim referred to the possibility of updating the Schedule of Loss to the date of trial. The Claimant included the details from the customer as part of their calculation of loss and the Defendant came to the trial well aware of the Claimant’s case on loss and the evidence being put forward to prove it.

Costs

The Defendant sought a reduction of 25% on the costs awarded, on the basis that the Claimant recovered only a small part of the damages it sought, which it submitted justified a departure from the “general rule” under r44.2(2)(a).

HHJ Matthews declined to make this reduction, stating that there was nothing to suggest the claim made was a deliberate exaggeration, and the Defendant had made no attempt to settle at or about the lesser sum actually recovered. The judge held that the Defendant pay 90% of the Claimant’s costs of the claim, to be subject to detailed assessment if not agreed.

The effect of the Claimant’s unbeaten Part 36 offer meant it was entitled to indemnity costs after the expiry of the relevant period. HHJ Matthews held that the Defendant’s conduct, including the destruction of relevant documents, had been sufficiently out of the norm to also justify an award of costs on the indemnity basis for the period prior to this.

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